When the housing bubble popped in 2007 and financial mayhem ensued over the next two years, revenues to the federal and state governments dried up. This has produced untenable budget situations as states struggle to keep spending at pre-financial crisis levels. “Stimulus” has been justified in part to give the economy the juice it needs to restore growth, which in turn would promote higher revenues.
“We need a big stimulus package that will jolt the economy back into shape,” said Barack Obama on January 2th, 2009.
The trouble is that it just has not happened.
The American people are still waiting for this fabled recovery. With growth slowing to 1.7 percent in the second quarter and unemployment remaining unacceptably high, the long-awaited recovery has now become an article of faith on the Left. It has become akin to the belief that the end times will come in our lifetimes.
A key indicator to look at over the past few years has been state budget deficits. In Illinois, reports Bloomberg News, the state faces yet another $15 billion deficit for fiscal year 2012. “The state’s financial condition ‘continues to deteriorate,’ [state comptroller Dan] Hynes said, citing 36 percent surge in fiscal 2010 bills to be paid from current-year revenue,” according to the report.
Despite the terrible numbers, Illinois Governor Pat Quinn “is committed to paying all” the bills from 2010. Cutting spending is apparently not on the menu.
In New York, next year’s deficit could be another $8.2 billion. California’s shortfall remains at $19 billion. Despite Governor Chris Christie’s herculean efforts in New Jersey to eliminate an $11 billion deficit and balance the budget, the state “is expected to face a similar gap next year,” according to the Daily Record.
So, nobody is expecting an immediate rebound, despite all of the Keynesian deficit-spending that was promised to turn the economy around. The first $150 billion “stimulus” in 2008, the $700 billion TARP, the failed foreclosure “prevention” and mortgage modification programs, and the second $816 billion “stimulus” in 2009 did not work.
The near-zero interest rates, and the Federal Reserve more than doubling the money supply and purchasing $1.25 trillion of mortgage-backed securities, the government seizures of Fannie Mae, Freddie Mac, GM, and Chrysler, the $26.1 billion states bailout passed this year, and then the government takeovers of the health care and financial sectors have not worked either.
None of it has produced the fabled recovery.
All told, the federal government has contracted more than $4.6 trillion in new debt since 2007 under the congressional leadership of Harry Reid and Nancy Pelosi — all to no avail. Housing prices are still slowly declining. New jobs are only being created at a snail’s pace and well below the rate of new entrants into the workforce. Exports and wages remain flat.
Meanwhile, the 2001 and 2003 tax cuts are set to expire at year’s end, which will result in automatic tax increases across the board on all Americans, including critical job creators. Gold has spiraled up to $1,341 an ounce, signaling future inflation. Already food and other commodities are inching upward in prices. Medical costs are still on the way up.
Together with the new regulations from ObamaCare and the Dodd-Frank financial takeover, higher prices and tax hikes will impose new, dramatic costs on American businesses, hamper economic growth, and leave Americans out of work.
The United States cannot compete in the global marketplace with these sorts of costs being imposed on jobs and wealth creation. With over 14.8 million Americans unemployed, virtually unchanged from a year ago, now is the time to begin rolling back these disastrous government policies that have critically damaged the economy.
Nobody believes the propaganda anymore. The American people are not holding out for the government “stimulus” to kick in. They’ve seen what it does and does not do, and they want a change. It didn’t work. The fabled recovery is nowhere to be found.
Bill Wilson is the President of Americans for Limited Government.
