The Reasoned Review

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Sour News for Deficit-Watchers

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Time Magazine reports that Obama is planning another stimulus package in what they refer to as a “stealth stimulus” – it bears all the characteristics of a new round of spending without the now-discredited moniker.

In fact, Obama officials have been adamant that what they are proposing is not a new stimulus. They prefer such woolly phrases as “tax credit” and “other measures to improve the economy”. But by whatever name you choose to call it, the measures being proposed could eventually add up to more than $100 billion, according to Time.

Meanwhile, if the old stimulus has had any effect, it remains somewhat difficult to tell. The administration touts various figures of “saved jobs” (according to recovery.gov, my home state of Michigan saw 397 jobs created), but they present small relief when compared to the still-horrifying monthly job losses. It is also clear that the original stimulus is not being spent quickly enough. According to the government’s own statistics, the states have received only 11% of the original stimulus, even though 73% of the amount specified by the bill has officially been awarded.

This indicates a bureaucratic bottleneck that no amount of extra “tax credits” can relieve. Authorizing a new stimulus when the old one is still 89% unspent will only add to the deficit while having no other discernible effect. Most indicators would suggest that the stimulus money is now being spent at its fastest possible rate – our bureaucracy literally cannot allow for the funds to be distributed any faster. In light of this, a second stimulus would seem positively irresponsible. No wonder the Obama Administration doesn’t want to call it that.

An addendum: Christopher Flavelle over at ProPublica did some math and calculated that jobs created by the current stimulus bill cost $533,000 apiece. Even more evidence that a stimulus bill might not be the most efficient way to mitigate job losses.

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Written by pavanvan

October 22, 2009 at 11:54 pm

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