Sunday, December 13, 2009

ObamaNomics And Einstein's Definition Of Insanity

Albert Einstein’s famous quote “insanity is doing the same thing over and over again and expecting different results” would make the perfect slogan for President Obama’s U.S. job recovery strategy. When President Obama’s administration pushed through his democratic Congress his $787 billion stimulus plan he promised it would cause to create 3.5 million new jobs. The results of that stimulus plan as of December is a 10% unemployment rate and more than 4 million jobs have been lost in 2009, the worst year for job losses since World War II. The jobless rate that Obama’s advisers projected would peak at 8% in 2009 is currently at 10%.

Please refer to the accompanying unemployment chart courtesy of the Heritage Foundation illustrating a jobless rate of 10% through November. As one can see from the chart, the Obama administration promised an unemployment rate of approx. 7.6% with the passage of his $787 billion stimulus package. So with his huge taxpayer funded stimulus package the U.S. jobless rate is almost a full 3% points higher than he predicted. Obama is certainly no Nostradamus when it comes to economic predictions.

Well then, where do we go from here? So Mr. Obama on December 8, 2009, at the Brookings Institution, unveiled his “new, improved” strategy for stimulating jobs. And what is the thrust of his “new, improved” job stimulating strategy? Drum rolls please—MORE STIMULUS SPENDING!! Prof. Einstein must be laughing hysterically in his grave. Yes, believe it or not, our President after a ten month review of his utter failure of a jobs creation strategy spending $800 billion of precious taxpayer funds that escalated the unemployment rate, has decided to solve the job market problem by, as Prof. Einstein laments, doing the same thing over again to try to get a different result.

James Sherk’s article in the Heritage Foundation, comments on the President's economic speech and offers the on-going analysis and insight that has been advanced by many economists on the impact of using federal spending to stimulate jobs.

"Business startups have dropped 18 percent. Expanding or startup companies are creating 25 percent fewer jobs than before the recession. That represents 1.9 million jobs not created in the first quarter of the year. Rather than investing in new projects that would create jobs, businesses have retrenched wherever they can. In other words, unemployment has risen mainly because of the new jobs that entrepreneurs haven't created.”

Mr. Sherk reiterates the “crowding out” theory espoused by most economists who have commented on the Obama stimulus/job creation strategy. This is when the public sector, by increasing its spending, “crowds out” spending in the private sector’s investment and consumption, thereby inhibiting job growth in the private sector. Mr. Sherk states that,

"First, the president announced another stimulus (though without calling it that). He wants to use hundreds of billions in unspent TARP funds on more government spending: more highways and "cash for caulkers" home-weatherization funds. And, despite Obama's rhetoric, most of his "pro-employment" proposal consists of such government spending to create more taxpayer-funded jobs. This government spending doesn't make new businesses more likely to succeed. So it won't encourage entrepreneurs to invest, unless they receive the federal contracts. Bigger government doesn't encourage entrepreneurs to create jobs. Worse, it discourages them. The more resources Washington consumes, the fewer entrepreneurs have to invest in their own projects. The academic research is quite clear that government jobs are created at the expense of a greater number of private jobs -- with the one reliable study (Algun et al, in Economic Policy, April 2002) suggesting that for each 100 jobs "created" in the public sector, another 150 private-sector jobs vanish. So it should surprise no one that private-sector hiring has remained low -- and unemployment has kept rising -- since the last stimulus became law.”

If we couple the ObamaNomic insanity of more government spending with increased taxes and fees on businesses due to his socialistic health care bill and increased business and consumer costs due to his “cap and tax” bill, job losses will be greatly exacerbated even more.

GOP Solutions
Rep. Eric Cantor, R-VA, spoke at the Heritage Foundation on December 11th offering the GOP’s common sense solutions to stimulate the U.S. job market. Among many ideas presented by Rep. Cantor are:
  • block any federal tax increases until unemployment drops below 5 percent.
  • freeze domestic discretionary spending at last year's level without raising taxes.
  • reform the unemployment system to help people out of work find jobs, and
  • take action to reduce regulatory and tax barriers that inhibit domestic job creation.
These solutions, along with all GOP recommendations for health care reform, defense and other critical public policy issues offered to President Obama have fallen on deaf democratic ears in the Obama “era of bi-partisanship and transparency”.

On the face of it President Obama seems to have taken Prof. Einstein’s theory of insanity to a new level of relativity. Although, given the President’s holistic agenda to socialize America and his recent stimulus redux strategy, he may very well be insane like a fox.

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