The fear-mongering from the Obama administration led a hurried passing of TARP without proper scrutiny by Congress or citizens. Now it’s clear that the stimulus isn’t working as unemployment numbers leap past the administration’s prediction and V.P. Biden coming out to admit the administration “misread” the economy. According to the government and market analysts, the worst is yet to come.
Rich Lowry of the National Review writes:
Out of the $787 billion of the stimulus, roughly 60 percent goes to individuals in temporary tax rebates and increased entitlement spending. This will provide little boost to the economy. History says that people will only spend 20 percent to 40 percent of a temporary tax rebate, for the very good reason that they know it’s temporary.
According to the Bureau of Economic Analysis, disposable personal income increased at a healthy 1.2 percent in April and 1.6 percent in May. Is this money coursing through the economy? No, it appears most of it is being saved. In April, personal consumption declined 0.10 percent, and in May it ticked up a mere 0.20 percent. Americans refuse to spend their money as heedlessly as Obama’s economic gurus hope.
Then there is the direct government spending. It will definitely make its way into the economy. The question is when. It has to run through various bureaucracies, which means delay. According to Doug Elmendorf, the head of the Congressional Budget Office, only about half of the $308 billion in spending will make it out the door by the end of fiscal year 2010 (i.e., by next September). That’s about $150 billion during the next year and a half in a $14 trillion economy – in other words, a trifling 0.70 percent of the economy during that period.
Yet the administration is contemplating a second stimulus package?! This is insanity. The first stimulus will burden our grandchildren. A second stimulus will burden our grandchildren’s grandchildren.
