Joblessness spikes in Obama 'recovery'
Created on July 8, 2009
Time to Declare 'Stimulus' a Failure
and Encourage Growth
President Obama's promised job gains from the $800 billion
"stimulus" continue to elude detection.
Unemployment rose higher -- to a 26-year
record of 9.5 percent for June -- than what Obama's economic
advisers predicted would be the case if Congress passed a bold
"stimulus" plan. Not only that, unemployment climbed higher than
what the Obama team estimated if Congress did not approve
massive new government spending.
By the president's own measure, then, the stimulus has failed,
say Heritage Foundation senior policy analyst Rea S. Hederman Jr.
and James Sherk, Heritage's Bradley fellow in labor policy.
"While less grim than at the start of the year, the economy
continues to weaken and signs of a recovery remain distant,"
Hederman and Sherk conclude in a new paper. "If the
stimulus has helped the economy, its benefits have not appeared in
any economic report."
Two of Obama's top economic advisers, Christina Romer and Jared
Bernstein, predicted unemployment would rise to 9 percent by 2010
if Congress didn't pass the stimulus. But with a stimulus, they
said, unemployment not only would fall off but be held below 8
percent. (See page 5, The
Job Impact of the American Recovery and Reinvestment
However, Heritage's chart tracking the monthly unemployment rate
alongside the White House's predictions -- with and without a
big-spending recovery plan in place -- shows actual joblessness
spiked far higher in five months than under either scenario. This
despite Congress' rushed passage of $800 billion in new
"The stimulus plan is a failure because governments cannot
simply spend the economy out of a recession," Hederman, also
assistant director of Heritage"s Center for Data Analysis, says in
a blog post. "If Congress passes a third stimulus bill
following the same policy prescriptions, that stimulus will be yet
another failure that will add to the deficit and impede economic
"Congress could pursue an effective stimulus bill [by] repealing
the remaining wasteful spending ... and focusing on policy
proposals to encourage capital formulation and reduce tax rates on
successful companies, both large and small."
Though his recovery plan largely consisted of more spending on
liberal priorities, Obama pledged to business leaders and the
public that it would
"create or save" 3.5 million jobs by the end of 2010.
With employers shedding another 467,000 jobs in June and total
employment falling again to 131.7 million jobs, however, the "jobs
deficit" between reality and what the president pledged grew from
3.6 million jobs to 4.2 million jobs.
A month ago, Obama said the stimulus had "created or saved"
150,000 new jobs, and accelerated spending would
create or save another 600,000 jobs by summer"s end.
"If the stimulus prevented jobs from being lost, the monthly job
loss rate would be expected to decline," Hedermanand Sherksay, but
"accepted measures show job loss rates increased sharply since the
start of the recession, and have not fallen since President Obama
signed the stimulus bill."
The Heritage analysts add: "Employed workers are just as likely
to lose their jobs today. Nothing in the data shows the billions of
dollars spent has saved jobs that otherwise would have been
Asked June 29 on MSNBC"s "Hardball with Chris Matthews" when the
public should begin to judge the effects of the stimulus, White
House Press Secretary Robert Gibbs replied,
"I think we should begin to judge it now."
Hello, 9.5 percent unemployment.
It's not only safe to judge the stimulus a failure, Hederman and
Sherk conclude, it's imperative to postpone an increase in the
minimum wage and "flatly reject" a third stimulus (don't
forget President Bush's tax rebate) because the third time will not
be the charm.
McIntyre is the Marilyn and Fred Guardabassi Fellow in Media
and Public Policy Studies at The Heritage Foundation.