By Bill Wilson
“In fairness, Larry Summers did a heck of a job…” Barack Obama started to say of the performance of his embattled top economic advisor, who will be leaving the Administration before year’s end, amid high unemployment and slow growth.
Comedy Central host Jon Stewart appreciated the irony of Obama giving his adviser, the architect of the $816 billion “stimulus,” a pat on the back saying he “did a heck of a job.” He obviously recalled President George W. Bush’s misplaced praise of FEMA Administrator Michael Brown in the midst of the Hurricane Katrina catastrophe: “Brownie, you’re doing a heck of a job.” The audience caught it, too, as it began to sputter in laughter.
“You don’t want to use that phrase, dude,” Stewart interrupted as the audience cackled. With good reason. The economy is not, by Obama’s own admission in the same interview, “growing as fast as it needs to”. The irony dawned on Obama, too, as he attempted to catch himself by blurting out, “Pun intended!”
Only, it was not a pun. Unless he really meant to compare Summers’ handling of the economy to Brown’s performance in New Orleans. In which case, we actually agree with Obama. The cataclysm of government “stimulus” has not done much to wash away the many fires of the recession.
If the trillion-dollar stimulus plan passed, the Obama Administration promised there would be 3 percent growth in 2010, and unemployment would not rise above 8 percent. Instead, growth is only an anemic 2 percent and joblessness remains persistently high at 9.6 percent, marking the worst period of high sustained unemployment since the Great Depression.
Moreover, foreclosures remain at all-time highs despite hundreds of billions of dollars spent by Congress for foreclosure “prevention”. The first $150 billion “stimulus” passed in early 2008 didn’t work. The Federal Reserve’s rescues of Bear Stearns and AIG did not prevent markets from crashing later that year. The government takeover of mortgage giants Fannie Mae and Freddie Mac have cost over $150 billion of taxpayers so far and not prevented home prices from continuing to decline.
That’s not all. The Troubled Asset Relief Program was not used to purchase troubled assets and instead was converted into a bank recapitalization fund. GM and Chrysler were seized by government, despite TARP being intended to rescue financial institutions, and then were redistributed to the UAW.
The Fed took interest rates down to near-zero, purchasing $1.25 trillion of mortgage backed securities, and increasing its shares of treasuries now to $834 billion. Government mortgage modification programs have a projected 40 percent re-default rate.
Obama signed his own $816 billion “stimulus” that still hasn’t worked. The minimum wage was hiked up to $7.25 and then youth unemployment rose to over 26 percent. Unemployment insurance has repeatedly been extended to 99 weeks with no end in sight to the extensions.
Bankrupt states like New York and California have been bailed out repeatedly of their budget troubles, getting over $145 billion in the Obama “stimulus.” That included $87 billion for state Medicaid spending and another $53.6 billion for states and local government to balance their budgets. That was in 2009. In 2010, they got another $26.1 billion bailout from Congress.
One could go on. But by Summers’ own logic, it all should have worked brilliantly. In January 2008, he wrote for the Financial Times that “a $50bn-$75bn package implemented over two to three quarters would provide about 1 per cent of gross domestic product in stimulus over the period of its implementation.” By his own Keynesian logic, if you combine all of the spending mentioned above, we should be growing at well over ten percent right now.
But we’re not. So, Obama was right to chastise his outgoing top economic adviser by comparing his stewardship of the economy to one of the worst natural disasters in American history.
Only, he wasn’t. In the next breath, he said to Stewart, “Larry was integral in helping to think through some really complicated stuff.” So, Obama really does believe Summers has done a “heck of a job”!
This is pretty revealing of Obama’s character, showing that his first instinct is to pander to his audience. And that he doesn’t think things are so bad economically, after all. That’s a relief, but perhaps he should try telling it to the 26.3 million Americans looking for the dignity of full-time work at the moment. Somehow, I doubt they’ll feel any better on account of Obama’s “pun.”
Bill Wilson is the President of Americans for Limited Government.
