Hazlett: Stimulus Chant Has Fallen Silent
Our nation's fourth round of federal deficit creation has resulted in abandonment of the "stimulus" tag that has been used previously to describe them, says Professor Thomas Hazlett, writing with George Bittlingmayer and Arthur Havenner in Real Clear Markets.
Hazlett cites as evidence of this the president's recent signing ceremony in which the latest "deficit enhancement plan" was termed a "jobs bill."
Massive U.S. deficits are not stimulating private sector job gains, says Hazlett, pointing to evidence that counters the Administration's year-old prediction that more than 90 percent of jobs creation would be in the private sector.
"With each dry day, the deficit dancing intensifies," Hazlett says. "When the rain finally falls, we will be told that the recovery is a tribute to the Keynesian Gods. But it's already clear that something has gone wrong: the 'stimulus' chant has fallen silent. Our dance on a fiscal cliff has lost its theme music."
They Don't Call It Stimulus No More, Real Clear Markets, March 26, 2010. By George Bittlingmayer, Arthur Havenner & Thomas Hazlett.
"In late 2009, the Congressional Budget office pegged employment gains due to the American Recovery and Reinvestment Act (A.R.R.A.) of 2009 at 600,000 to 1.6 million, while estimating its full cost at $862 billion.
"This implies a price tag, at the median estimate, of about $800,000 per job. These forecast job gains are not permanent, but temporary. The Administration's January 2009 forecast was that the A.R.R.A. was needed to reduce the path of unemployment for five years, when the unemployment rate - if we did nothing - would decline to the level projected with the 'stimulus.' Using this five-year time horizon projects annual costs of approximately $160,000 per job.
"That's a rich bonus payment. The system is borrowing heavily to finance it. Deficits last year and this are running at 10 percent of GDP, easily the largest in post-WWII U.S. history. They are projected by CBO to remain at three percent of GDP in 2020 - when over 3% of GDP will be devoted to simply paying interest on the national debt."