American Morning
Economist: Obama's stimulus doomed to fail
[cnn-photo-caption image= http://i2.cdn.turner.com/cnn/2009/images/07/15/morici.peter.art.jpg caption="Peter Morici of the University of Maryland says President Obama's economic stimulus plan is doomed to fail."]
It's been five months since President Obama signed his stimulus plan in to law. It includes more than $250 billion of government spending and tax breaks meant to create jobs. Yesterday, the president said unemployment may get worse before things turn around.
Peter Morici is a professor of international business at the University of Maryland and former economic director for the United States International Trade Commission. He says President Obama’s stimulus plan is doomed to fail. He spoke to Kiran Chetry on CNN’s “American Morning” Wednesday.
Kiran Chetry: The nation’s unemployment rate hit 9.5% last month. There's debate on whether the stimulus is working and if it's working quickly enough. The White House says we are on target. But a lot of people are asking when are we going to see the effects? You, though, say it's doomed to fail. Why?
Peter Morici: The stimulus money is very badly spent. We knew the tax cuts from the Bush stimulus don't work. People are simply saving it. If you wanted stimulus to work, spend it mostly on shovel-ready projects, infrastructure, schools, hospitals, etc. But only $100 billion of the $800 billion is spent there.
Chetry: When you say shovel-ready – they found it a challenge within the administration to find shovel-ready projects, at least that’s what many are saying, in these various states. How do you get that better organized so indeed if the money is there, only 10% has gone out, they can get it to projects that are ready to go?
Morici: I'm no Republican, but what President Obama is discovering is how slow the bureaucracy moves. It's very hard to push this kind of money through the system. Also, all of the red tape that the government has created doing construction has made it very difficult. I could get the money out there. But Obama doesn't seem to be capable of getting it done. The advisers don't seem to be able to get it done. What you got to do is just hand it to the mayors and county executives and say, “You got to spend x by the end of this year.” Then give them another chunk for next year – “You got to spend that by the end of the year and so forth or you don't get to keep the money.” Most municipalities and counties have a long list of renovation projects they’re holding in abeyance because they don’t have enough cash. That’s the way to get it out. President Obama is not thinking in those terms. Instead, he beefs up the Department of Education.
Chetry: What they're saying within the administration is some of this money has actually been going to plug budget gaps. We know a lot of these local municipalities and state governments are suffering right now. If it's not sort of earmarked for something, it’s going to go to plug the budget holes. How do you make sure it’s actually going to go to things that will create jobs, like building roads, jobs, schools, construction?
Morici: You have to require it. You have to say, “We're giving you $100 billion by the end of 2009“ – you divide it up by population – “it must be used for the following kinds of projects: renovating schools, reconditioning hospitals, things of that nature.” And you know, the state and local governments for all their crying, and all of Mr. Obama’s exertations, weren't laying people off. Employment was growing through the time the stimulus package was signed. Both education, noneducation, state, and local. And since it's been signed, it’s continued to grow at approximately the same pace. I can find no discernible effect in the Department of Labor statistics for state and local employment that would indicate the stimulus is having any effect whatsoever. It’s an absolute fraud in that regard.
Chetry: Yesterday, the president said we have to have patience when it comes to this and the plan was intended to work not in a couple of months but in two years. You say, though, that patience would fix a normal cyclical problem, a downturn and then an upturn in the economy. But you're calling this a structural problem – and it has to do with the fact that we don't manufacture enough here. What is the solution?
Morici: Well, we import too much from China without selling there. One of the best-selling cars in China are Buicks, believe it or not. But they won't buy any Buicks made in the United States. They have a 25% tariff and they require General Motors not only to make them there, but to move their suppliers there. That's why the Midwest is melting down. Because it’s not just Buicks and cars, it's all manner of high-end industrial products for which China's cheap labor doesn't provide an advantage. That’s about 50% of the trade deficit. The other half is oil. President Obama's windmills are not going to solve that. We need dramatically higher mileage standards right now. And we need a real clunker subsidy to get the big cars off of the road. For example, replace the Tahoes with Traverses – very big car but it gets twice the gas mileage.
Chetry: The other thing you talked about is the private sector shedding 6.6 million jobs, half of those being shed in manufacturing and construction. We know the housing market is struggling. What's the solution if you use that stimulus money to try to get people back to work and beef up manufacturing here in our country?
Morici: Well, essentially, you have to recalibrate trade with China, one way or the other. You have to get it to unhinge its currency and stop manipulating its currency. It's buying about $400 billion a year of U.S. dollars with yuan that it prints, basically giving them to us and then that basically keeps their currency cheap and makes those products artificially cheap in our markets. With regard to construction – we really have built too many houses. We're over-housed right now. There’s an excess supply. So what you need to do is move those construction workers, as I said earlier, in to infrastructure – rehabilitating schools. The same guy that can put a roof on a house can put a roof on a school.
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He probably would have lost his job by now if not for Obama's bold moves...
To reference one of the prior comments – "The Bush Tax Cuts did work"... I would like to say that yes they did, but at an extreme cost. As President Bush went tax-cut happy – cutting the tax rates for primarily the wealthy and businesses – he also we spending crazy. The influx of revenues from those remaining taxes were insufficient to meet the demand for the increased spending (i.e. Wars in Iraq and Afghanistan). In order to meet those obligations the US had to sell treasuries, a tremendous amount. A large recipient of these treasuries was China. So in essence we did have a "booming" economy, but at the expense of a completely unbalanced budget, a skyrocketing deficit, and the selling of America to the Chinese. Thank you, Mr. President.
sorry – line 3, "10 years later" not letter
We have truly become a nation of whiners. The federal government did not identify the so called "shovel ready" projects. That came from the state governments. Many projects are mired in special interest groups that have agendas other than to create jobs. The Bush administration funded a stimulus that put money in the hands of the taxpayers and the money ended up either in the bank or used to pay down debt.
President Obama did not start this mess and not everything that is attempted through the current administration is going to work as planned. Face it, if the solution was going to be easy, they would have one you whiners fix it.
Accountability does not begin and end at the federal level. President Obama said many times that the recovery is going to take time. We did not get into the mess overnight and it will not be solved overnight.
It is obvious that many "Americans" want the recovery to occur in their timeframes and on their terms.
I was fortunate to have travelled to other countries during the presidential campaign and asked the locals what they thought of Americans. By far, the most common responses were:
1. Americans are too arrogant.
2. Americans think the universe revolves around them.
3. Americans do not have patience.
4. American think they are better than everyone else on the planet.
5. Americans are spoiled.
6. When things don't go our way, we attack everyone around us.
We should be so proud!
Most of this so called stimulus was just pork barrel projects for democrat backers as a reward for the election and is going to be wasted. Spend it all on the interstates and rail networks to help keep us competitive. Giving money to big city mayors is the equivalent of throwing it down the toilet, the only one who will benefit are friends of the politicians.
As for the tariff, when we start importing cares from China (bet money on it, its going to happen) are we going to slap them with a corresponding tariff? I doubt it....
Now some guys here just totally forgot why we have this mess. Last administratino "DOUBLED" our national debt, remember? And we have to pay huge interests every year for these IOUs. Do you think there was any choice you could do when whole financial market crashed last year (in Bush administration)? I don't think any president like to do stimulus package, but without government intervention, the economy woulde definitely sink into depression.
Typical naysayer. We are 5 months into a multi-year program. But he already knows how it's going to turn out? C'mon. This sounds like the Senate and House floors where a few loud voices are crying out and saying the same thing because they WANT it to fail.
It took GW EIGHT YEARS to get us into this hole. It's going to take time to get us out. We don't determine if a pizza is ready after 2 minutes of the 20 it takes in the oven. If in 20 minutes it's still not ready, then by all means throw it away. But give it a chance to cook first.
Only contribute to this if you can form a cogent thought, please.
Obama better hope that stimulus kicks in soon. 2010 is just around the corner and if the unemployment is still close to 10% in November 2010, no amount of kool-aid or Obama musings will prevent a wholesale exodus of libs out of the House and Senate.
Obama wants to win the support of those with little education and living off subsidies. His kind preach they want to help these folks but never will as they need them for votes, so they will always make sure the downtrodden exist while lying to them and counting on their lack of education to recognize the scam.
This was the most useless article I've ever read. Just hand over x amount of cash to the mayors and county executives....yeah, that's a sound plan....and then 10 years letter you'll find out that so-and-so mayor/county executive received kickbacks from a construction project and pocketed x amount. I find it amusing (but more troubling) that people think that in 6 months Obama is going to turn the country around. Is that realistic? I'm not blaming Bush (i.e pointing fingers) and by no means am I going to say that everything that Obama is doing is right but let's be realistic....look how long it took for this mess to develop right under the noses of those who should have seen it coming. Is it reasonable to think that anyone (Bush, Obama, McCain, whoever) would be able to fix the problem in six months?
Tyrone: you shouldn't talk about Bill Clinton that way. He was just trying to be the hero to the lower income class and then got out of office before the bubble burst. Granted Uncle George did a horrible job to fix the problem that's on him, but he didn't cause the problem, that's on slick Willy.
It's all Bush's fault, hopefully we can continue this until the 2012 elections. After Bush's first term he mentioned his predessesor Clinton twice during the first 2 weeks of his term , after that the country and its problems became his...Man up Obama.
TIM,
July 15th, 2009 11:13 am ET
The stimulus is a huge failure. The 787 billion represents over $2,000 for every man woman and child in this country. Are you any better off now than when this huge thing was passed.
ACTUALLY I AM BETTER OFF....BETWEEN 100 BUCKS BACK IN MY & MY WIFE CHECK A MONTH AND THE 150 A MONTH WE SAVED ON REFINANCING....I HAVE AN ADDITIONAL 250 NET A MONTH TO PUT AWAY OR SAVE...i WILL PURCHASE SOME NEW WINDOWS AND TAKE ADVANTAGE OF THE DEDUCTION... DOING OK HERE IN BOSTON..!!
We don't need another stimulus package. The big oil companies and Saudi's will take that by raising the gas prices to over $4.50 again. Didn't you all notice that before Bush left office on his stimulus, that is what took it from everyone or else it might have worked. As soon as all of the stimulus checks were gone, then the gas prices went back down.
The egos of professors like Morici indicate that no matter what your title you can do harm to the country by stating your educated view to the media. Why don't you, Morici, do something smart and just teach. You are not helping by predicting failure. Look in your mirror. Think about how much good that does? You are showing your ego and that is all. Sorry for you and others like you; over educated without a lick of common sense and what is good for the country. Go away. Bill
Wow, still playing the Bush-card.
I doubt this will get posted because for one it's true and secondly it would work .
The numbers have been changed only slightly for ease of understanding.
Last U.S. Census -– 430 million americans.
For the sake of ease, let's assume that all 430 million are taxpaying working adults.
You give every single one 1 million dollars.
that would come to 430 million dollars.
That would be less then half of 1 billion dollars
Myself- I would almost instantly go out and #1 buy a home, a really nice home, payed for, which is a form of power.
#2 several cars with over 40 k price tags.
#3 a few degrees in science and arts, etc.
#4 The rest goes into a secret location protected from everything short of the almighty. even weather.
I highly doubt my spending would be rare, infact, likely people would buy much more if not spend it all.
While this is going on, the law should suspend all credit. Whatever a million dollars can get you, once it's gone go soak your head. No one is going to listen to a sob story of how you wasted your million.
That is what we missed out on. Being the first nation or culture to do so well that we could give our citizens a fortune, literally.
Guys like bush however who inherited their fortune not from their parents but from great grandparents who actually did work hard, maybe not the oil folk, but others, they don't think you deserve it, not that that's the role of the president, to decide. It's merely to enforce the constitution, which is not open for interpretation.
800 billion dollars folks. Versus' 430 million
But what no politician will say, but all beleive is that were stupid minions who exist to work hard so they can skim off the top.
How to aviod this you say, simple, One term limits on senators and congressmen and no more then two from one family may participate. This is needed now as are current problem is born from secret royalty like the bush and kennedy families. JFK spoke out against this and his Vice president clan murdered him. This is now common knowledge and it's simply because some of the conspirators , BUSHS' DAD!! are still alive.
Hi Melissa,
My guess is that you are poor and want some money. Am I right?
-Alex
What part of hope and change does he not understand? Let the man work his magic. I just know he can.
Morici: I’m no Republican......Get outa here. Look in the mirror, see that stupid Bushesque looking grin on your face and tie to match, now say with a straight face, I'm no Republican. My bad, I'm sure you could, just like Bush did when he said there were WMD in Iraq and we don't torture, etc.
This is tyaxpayer money..not Obama's money. Why must the great Obama force these issues through a rubber stamp congress without anyone being able to carefully read them. The stimulas is a big govt spending failure just the cap and trade will be. Now the forced unread medical overhaul will be the same way. WE won't be able to afford much more govt. Or course, thats what liberals like Obama want, lety the govt furnish your day to day needs while you turn all your money over to them.
Dave you are spot on with your analysis of China. As long as we have no local production of goods, and remain a service-based economy, we will face issues like this. Cheap labor must now be government funded projects. Once China ends its currency manipulation and puts it on the free market, trade will be more free because markets will be more efficient due to competition. Goods from China will go up in price, and it will again become profitable to produce them in the US. This in and and of itself will help correct unemployment and the lack of balance in our service/goods sectors
Such partisan bickering in the comments. At least get the facts straight when it comes to who owns this economy. And the facts are the Democrats own this economy.
George Bush proposed his stimulus and it was passed by Democrats, not Republicans. In fact, House Republicans were livid. Presidents don't make law, they just sign them. The Democrats have been in control for the last 2 1/2 years. Amazingly coincidental that's when the economy goes into the crapper.
It seems that Melissa is missing one BIG point. It is not the "Rich" getting the money...it is big businesses who donate HUGE sums to the political party they think they can get the most back from, and in this case it is Obama's party. Granted, both parties have taken money from business, but that's not the point. The point is, that your version of "what happened" is behind the current curve. How do you feel about the huge executive bonuses paid with YOUR money (and MINE)? Look at your neighbors driveways over the next few months and see if any new cars appear. The "little" people will never see any of this money, even though that is where THEY, meaning your friend Obama, promised it would go. Did YOU get any? Did the lady photographed standing on top of the phone booth waiting for her "Big Screen T.V. that Mr. Obama promised me" get any? Did any of your neighbors get some? Neither did I...
Wake up.
thanks for the promising positive words. people like you give no ideas in an economy. this is a very delicate time in our country and yet..economists like these come out and talk rubbish.
Morici may be a economist, but he is fundamentally wrong. He is accursing china of printing money, but it is the US that is buying chinese goods with printed money. The race is not in who is printing more money, it is about who can sell.
We can't borrow our way out of our debt problem.
We can't stimulate our way out of a worldwide recession.
We need to cut spending a suffer through a recession and then we'll come back stronger in a few years.
Because we are too weak to face the cyclical downturns that happen (no bodies fault!) we borrow against our children and grandchildren to make our lives seem easier for the moment.
President Obama's economic policies are failing and will damage our country for decades. I would like to say that Bush did a better job, but alas he was almost as bad as Obama. We need a 3rd party alternative!!!
I am a fairly socially liberal democrat, but am considered an economically conservative blue dog. As painful as TARP and the funding goes, doing research into the asset sheets and the way our economic system works provides that the bailout of these companies was 100% necessary. Regardless, this individual has some interesting ideas. I think we forget sometimes that the new model of Economics, what is referred to as Keynesian economics, is one which involves government regulation. This is not socialism, but simply the capitalistic economic notions on which our country is based. However, spending can get out of hand. Government doesn't have the ability to be efficient in a purely competitive marketplace because they have no competition. Welfare and social services are very important, but when we start depending on the government to provide jobs, things start to get scary. Keep the welfare and social programs that our taxes have traditionally payed for, and start to help the individuals from the ground up. I guarantee that 99% of citizens could use that $2,000 significantly more efficiently than government projects and program. I'll bet this loss for those saving against government efficiency any day of the week.
Have we all forgotten that small business employs more folks than large companies or the gov't? What was in the stimulus for small business? These businesses must hire in order for us to emerge from the recession. Consumer spending must also increase. A lousy $8-$10 a pay period isn't going to stimulate spending. Obama boasts about this tax cut but it had no impact and wasn't large enough.
One thing is for sure. Increasing taxes on the wealthy for healthcare reform and increasing taxes on us all with cap and trade is a recipe for disaster in a recession. Raising taxes is the last thing we should do!
If the stimulus succeeds in the short term, the economy and American way of life will be decimated by our runaway debt. We can point the fingers at Bush or Obama, but our fate is still the same.
Many economists predict around 2015-2020 the interest payments alone on our national debt will consume well over 80% of our GDP. At that point even the most aggressive taxation plan (not just the rich) and cuts in spending will not dig us out.
We can all keep pointing fingers, but I'm afraid the "train has already left the station."
First thing we have to do is stop out sourcing; bring the jobs back to the US. Next, don't spend what you don't have., simple basic household budgeting...to be silly have Chaney give back all the money he made from Haliberton. HA! That will never happen.
Economists and bankers are not worth spit !
However, his comments on China and foreign oil are worth merit, and we need to stop sending our dollars and jobs abroad. Both the Chinese and Arabs countries are not our friends, but they have hidden agendas.
Wow – what a contorted set of facts – half truths – and omissions
For example
"""And you know, the state and local governments for all their crying, and all of Mr. Obama’s exertations, weren’t laying people off. Employment was growing through the time the stimulus package was signed. Both education, noneducation, state, and local. And since it’s been signed, it’s continued to grow at approximately the same pace"""
1. Agree until date of signing the states and cities were not laying off
2. Agree the pace of employment at local gov is about the same
From this the so called economist connects the dots and says stimulus money is not saving jobs at local levels. If has done any research in his life he knows he needs a control group – say half the the states if they had not received stimulus money vs those that did.
With no control he has no way of being honest in what he says as a fact
One could argue – again without the control group a hypothesis – that things got worse as houding prices and spending and unempoyment declined and city and state budget situations deteriorated a ton since the signing -– thus the lack of massive layoffs suggests that the stimulus money IS BEING USED AS THE GOVERNORS AND MAYORS IN SO MANY PLACES HAVE SAID – TO SAVE POLICE FIRE SAFETY EDUCATION HEALTH ETC WORKERS
That is just one example of lies lies and statistics in the above analysis of the situation. (My favorite being the assumption that if you gave the mayors and governonrs a deadline to spend money they would find ways to circumvent their diligent procurement processes – I assume the so called economist is saying GRAFT and Cousins would have gotten the money spent?
With all respect to the professor, a good part of a strong economy relies on the consumer's state of mind. His comments about the stimulus being "doomed to fail" don't help. Zip it.
I've worked as a Logistics/Production mgr in Manufacturing for a number of yrs, and have watched the mfg sector meltdown 1st hand.
Readers need to know that no major policy decisions, ie. foreign trade or setting currency values, takes place in China without approval of central party planning committees – it does not happen willy-nilly. The removal of our jobs (and economic strngth) by China is the result of planning, not accident.
When will we wake up and discover that we've been taken to the cleaners?
I just got two shipments of stainless steel (from a Chinese supplier) which were radioactive. Caught by Homeland Security at the port, the steel was sent back to China. We believe the bad steel came from decommissioned nuclear reactors.... Defective goods – but they are cheapest, which matters most.
Having driven most US competitors out of business, this vendor can now dictate prices to us, and have passed on some healthy $$ increases lately.
– I want every member of Congress to be aware of what's going on, and hold China accountable for their currency manipulation and quality problems.
Anybody that finds it appropriate to wear a bowtie like that, making himeself look like a comedy, shouldn't be taken seriously on anything of importance. 😉
Notamused, who said that stimulus is WELFARE? You are very daring (or ignorant) to apply a welfare study to an economic stimulus.
The reason might be that in you wish the stimulus to fail, so you reason accordingly even if it does not make sense. Remember: Wishing something does not make it so!
It seems that Melissa is missing one BIG point. It is not the "Rich" getting the money...it is big businesses who donate HUGE sums to the political party they think they can get the most back from, and in this case it is Obama's party. Granted, both parties have taken money from business, but that's not the point. The point is, that your version of "what happened" is behind the current curve. How do you feel about the huge executive bonuses pai with YOUR money (and MINE)? Look at your neighbors driveways over the next few months and see if any new cars appear. The "little" people will never see any of this money, even though that is where THEY, meaning your friend Obama, promised it would go. Did YOU get any? Did the lady photographed standing on top of the phone booth waiting for her "Big Screen T.V. that Mr. Obama promised me" get any? Did any of your neighbors get some? Neither did I...
Wake up.
When we are importing new citizens as quickly as we are importing goods from the countries they come from, what do you expect but a meltdown? Those new citizens don't understand the concept of BUY AMERICAN, nor do they care.
I agree with spending on schools so that we build a foundation of our own citizens that can comprehend when the wool is being pulled over their eyes like it was during the Bush regime. Fostering a sub-intellectual populous is a goal of many tyrants who want to keep control by distracting uneducted people from what is really happening.
What was really happening while Bush was in office was Machiavellian phylosphy of "I will do absolutely everything in my power to stay in office" which is what Bush Sr. actually said in his failed re-election bid. We're paying that price now.
Give a year or two to repair damage done over 8 years. That damage was so significant, it's likely to take a generation...not six months. It will not happen with republican interferance and rhetoric like Morici is spouting. We buy cheap junk because we have a disposable mind-set, and have been burned so badly by US made junk, that even when it has improved, we still haven't shaken that ill feeling that was created...and is still around due to AIG and the like burning us still.
Educate the population and we will again be able to compete. Stop bringing every Tom, Dick and Harry over the boarder, and stop giving freebies to those here illegally that spend my tax dollar. Make a good product. Market it intelligently, not dumbing down to the lowest common denominator that's been policy for 8 years of Bush.
It's not just the governments red tape – it's also the unions! Non-union people are ready to work NOW – and their services are not as expensive as unions. When a non union company gets the job – all people on that job work unlike 1 works while 5 stand around watching with their arms crossed (union). Like the joke says "Jesus told the union workers not to start working until He comes back.
Why is President Obama waiting to act? Why are tens of millions of ordinary Americans suffering under the weight of this economic downturn being ignored by this administration? Why could the abundant credit lines of the Clinton era that grew small business and helped towns and communities flourish be replaced by government cheese lines?
Two reasons. President Obama's disdain and disconnect with working class, ordinary Americans is a constant, not an anomaly. President Obama's comments at the closed-door California fundraiser about how blue collar Pennsylvanians cling to their Bibles and guns in times of uncertainty wasn't a Freudian slip, it was what we call in the legal profession an excited utterance, which are often accepted as exceptions to hearsay because statements blurted out in the moment have an amazing capacity to be "accidently" true.
Secondly, this President has a miser's grip on political capital and is unaware or unwilling to consider risking a tenth of a percentage point in approval rating among moderate voters by enacting emergency measures to speed relief to struggling families. It was laughable to see the mainstream media attempting to compare Barack Obama to FDR when in fact, Obama claims Ronald Reagan as his Presidential role model, disdained the Clinton legacy at every turn during the primaries and has not made a political move inconsistent with that for the whole of his Presidency.
There are solutions that can resolve the continuing spiral of unemployment, foreclosures and middle class misery in the United States. This mere African American lawyer in Washington D.C., knows of three "21st New Deal" type actions that would provide relief from day one. But in President Obama's Katrina moment, Obama dislpays the very lack of political will he accused Washington D.C. of having when it comes to taking risks to help ordinary Americans.
The economic challenges crippling millions of Americans right now required bold leadership and action from day one of the 44th President of the United States. It should have been Hillary. The Clintons have done this before and have never lost their connection with the ordinary, working class Americans who drive this economy. Obama never had it and unless he embraces "radical change" that he promised to bring...won't have it.
Great perspective from Morici here. The stimulus was marketed with the expectation that it would have immediate results and stop the unemployment rate from rising. It was just another broken promise along with the list of his other campaign promises. Only thing I disagree with Morici here is the mileage standard. Let's use an "all of the above" approach with our own oil, natural gas and power plants here in the US for energy.
To Melissa:
Obama's plan is supposed to help the middle and lower class. So when people point out the short comings of Obama's plan to assist that group, you suddenly defend his actions?
I fall into Obama's "rich" after my wife and I have worked our way through school to secure reasonable paying jobs. He's now going to be taking more of money away from me with increased taxes.....money I would have spent on products and services which would have required people to create and support. But since MY dollars are now going to fund budget deficits that government didn't protect itself from, I won't be able to use my funds to create jobs.
So sure, tax the rich like crazy. We'll see how many jobs get added.
Ever since this recession began, the credibility of economists and their predictions have declined faster than the economy. These "artists" that are judging the President's policies are the same people who claimed that the country could not survive but indeed thrive as it switched to a service economy. Well their predictions were wrong then and are probably wrong now.
Perhaps they should go back to the institutions that gave them their PhDs and ask for their money back or at least go back and relearn their class lessons.
The stimulus was good for "Government Street", but not for "Main Street". They thought that it would trickle down, but it didn't. Republican's wanted tax cuts, but that would not work either. Obama is a great leader, but stimulus was a mistake. Unfortunately, they cut out Paul Volcker early on, and he has an enormous amount of wisdom.
Morici is very right about his view of the Stimulus. We have switched from a national economy to an international economy. Unfortunately, China (and other countries) is manipulating currency. We need to adjust our tariff system for countries that do not want to play fair. We can take that extra tariff money and grant it to disadvantaged businesses who are damaged by this practice. Afterall, this is what China is doing! This is a very simple solution that would reverse our massive trade deficit, and put a lot of Americans back to work. A very simple solutions that would pay for itself.
Most of the stimulus money that has come into our area is not being spent. We are not sure where the money is, or when it might be spent. The money needed to be flooded into the economy to be effective. And, that just did not happen.
Ah I love the comments here compared to FoxNews...people here disagree with Obama but they give reasons. Way better than the name-calling that goes on over there.
I think (and hope) that the stimulus will have a positive effect, if not directly on the economy then on the development of green energy and on the improvement of education and infastructure.
They keep saying that America's economy is 3/4's driven by consumer spending.... okay...got it. They say we American's for the most part ("...unless your Warren Buffet") are one serious illness or medical cause away from bankrupcy... yeah... I can see that. They've (our government) have given a small amount of the stimulus total too nothing much... yeah, well I thought it was suppose to create or 'save' 3 or 4 million jobs...seems we are loosing that number ...so show me the money.
As I see it, if it is us: Joe Q Public that keeps the economy running why not give each and every American a large substantial amount of stimulus? After all wouldn't that prevent payment defaults and possibly create new investments and new businesses that would hire, pay taxes, pay off balances and generate new tax dollars on new sums from those new monies generated from that stimulus to we Americans? The creeps that run shows in our finance and properties industries, when given the money to prop their loosing concerns are given these bailouts, nothing is getting done. I am as American and proud of that as any loyal citizen can be, but I don't see much to look forward to anymore except to do my time on this earth and hurry up and die! If there was ANYWHERE on this earth to go to I would gladly leave this country for greener pastures and opportunities then to stay in this very selfish and ignorant nation. This is not my America any more. Government and corrupt people have changed it so dramatically I don't recognize this nation as the one I was pledging aligence to since age 5. I don't care anymore... USA... to the highest bidder or most underhanded.
The entire Obama plan is so amusing, when you read that NY has committed a stimulus project to a Dutch-owned company. I'm sure that is going to produce a lot of jobs for American workers in NY.
Most Americans knew this plan was going to be about waste, based on the surveys of the public taken. There are times, you know, when the congress should listen to their own constituents.
Plenty of articles like this, quoting long-dead and forgotten economists, were written about FDR in the 30s. I've got news for Mr. Bowtie: you may have generated publicity for yourself now, but when school children of the 22nd century are learning how Obama was one of our greatest presidents, you'll be lucky if the grass over your grave has even been mowed!
Melissa you are an idiot. I hope BO's comming depression bankrupts you and then MAYBE you will get a clue.
The money should have gone to the middle and lower class. They are struggling and would've put the money against their bills instead of hoarding it. This would've went throughout the system and stimulated virtually every sector. The infrastructure claim seems to help a very small segment. Even worse banks are making it nearly impossible to get money due to greater credit restrictions, higher rates, etc. - even from those accepting bailout money. That money did nothing. This was a pork filled package that is the greatest travesty of a president ever. What he is talking about now (two years) would've happened all on its own without any stimulus money of any kind. Way to give the future of this country away! This is an ACORN method of intentionally imploding the system so you can rebuild it the "socialist" way.
Common sense is not common anymore. It is a rarity in the world of politics and almost nonexistent in the world of national politics. Our present self-exalted elected officials pass legislation with no more thought of the long term consequences than a bathroom break and for nothing more than a political advantage or a campaign contribution. Each political party blames our problems as a country on the other as if either had the interest of the common American in the forefront of their considerations. Think of the problems we face and have been facing for decades. The problems are basically the same. No solutions, only ill conceived legislation that has done nothing but erode the basic freedoms defined by our Constitution and our Bill of Rights at a cost of over three billion dollars a year just to pay their salaries and expenses. A common denominator regarding most of our problems as a country: we have repeated elected the same do nothing, egocentric, rotten politicos over and over. Consider how many of our congressmen and women have turned a public service position into one of the most lucrative and corrupt jobs in the world. They talk only of raising taxes or cutting social programs. There is no talk of cutting foreign aid or rescinding their recent salary increases. They frivolously spend from 150 billion to well over 200 billion per year in foreign aid. That is money we pay to support non-Americans and foreign countries many of whom are enemies of America. Recent surveys indicate that over 80% of Americans do not support our foreign aid programs and less than 5% even have any idea of the vast sums of our money that actually goes to the support of foreigners. America needs proactive forward thinking officials; men and women with common sense not a PhD. How many of you know a PhD who has more than sprinkling of common sense? I can tell you from experience, not many. I know this sound harsh but the alternative will be the destruction of our beloved country and the future of our children. Right is right. Wrong is wrong and something has to be done.
All of this sounds interesting, but the real issue is that the stimulus money was never really intended to pump up the former capitalist system and create jobs. It is instead a layered series of payoffs to unions, blue states, and other assorted heathens sympathetic to NoBama's plan to fulfill a very large and permanent social engineering plank. Oh, and we forgot: it's also a plan to reward certain banks and other vampires at the gate for their past vast monetary support of liberal causes.
Well now I'd say to:
force 47 million people to retire give them each a million dollars,
and they have to buy a house or pay off their mortgage, buy a new car, and never go back to work and spend the rest as they like which would be for food and goods
that would create
47 million jobs, feed the housing economy
and the auto industry will boom again
then the jobs created will boost the economy and put us back on target.
why keep just giving us a small boost when this will stimulate everything
Sounds logical. Neither Bush nor Obama are economists. It will take actual experts to fix this nightmare. Let's start making things work. The Obama years can be great as long as there are good ideas for him to work with. We got stubborn Bush out of there so I don't see any reason why we can't turn his mess around.
Prof Morici sounds right on many counts, and the outcomes do not augur well for anybody. To complicate matters, the official employment figures clamoflouge the underlying issues: underemployment, part-employment, and shrinking wages to levels not seen in this century even for the employed. If a broad notion of gainful employment is used or the payroll data are the main source we do not get the realistic scene. In other words, the route to recovery is very much constrained by limited job creation attenuated by the above features. As long as the refinance and loan modification in the mortgage sector cannot be brought to order, the serious problems of recovery will prolong. Fortunately some of these are avoidable if there is a will.
Dr P K Rao.
The stimulus is NOT a fraud. I'm so tired of people like Dave spreading lies and trying ot cause trouble. But then, thats the Republican way, isn't it. Someone muzzle these people before they start a civil war.
I voted for and continue to be a supporter of president Obama; however, I completely agree with Mr. Morici regarding the failurs of the stimulus package. This money must be rammed through the advisers and red tape and be spent now! Giving it to the mayors and state governments with spending strictures attached is a good idea.
economists are historians only. They have be very poor in predicting this financial mess. They draw analogies from the great depression.
Peter you are so smart....you need to be our nation's economic advisor. I have always admired you candor and your comments do make sense and only wished the Obama administration would ask for your help.
I agree with quite a bit of what is said here. However, I would add the following:
a. Why is is that HealthCare and Education were the two elements of the economy that are still adding jobs? If someone could answer that question, then maybe something learned there could be applied to other sectors of the economy
b. Invest in small business. Beef up the SBA, and provide not just loan guarantees, but also business grants or venture funding. To get funded by a VC, you need to know someone who knows someone who knows someone..Most entrepreneurs coming out of the blue will get little attention from the VCs. This is where the government can step in, fund these small businesses and create a support structure to facilitate their (small business) success. At the end of the day, the small business creates jobs, small businesses enhance innovation (as they have traditionally been the seed of most innovation), and the government can recoup its initial investment when it cashes out.
c. Invest in new technologies (nan-tech, and others). Provide grants to unviersities for research in these areas; provide tax breaks for companies that invest heavily in R&D. What this will do is generate new technologies and manufacturing methodologies that will make the US a competitive economy. China has us beat on the labor costs, well, where can we beat China to off-set this advantage and regain manufacturing? India has us beat on labor costs for IT workers and customer service related jobs..well, where can we off-set this advantage and regain our edge? This is where investment needs to flow
d. Education.. I read somewhere that about 15% of americans are college educated..this in a country where education (grade school through college) is virtually free. This needs to change, an uneducated population can not compete in a global economy. We need to make education a priority, and even if immigration reform is implemented, it should be mandated that for an illegal to become legal, they must obtain a bachelor's degree, at a minimum. We must force those people receiving Public Assistance to obtain an education...something like, "You can be on public assistance for 3 years, BUT at the end of those 3 years, you must have at least a bachelor's degree". We must elevate our overall educated status. And we must focus not on the simple and useless majors, but majors that will make us competitive again - engineering, science, technology...this is what wll put us in the lead. We must revamp our MBA programs such that they stop churning out Yes men and start producing TRUE LEADERS who can lead and grow business without off-shoring all aspects of the business. Business leaders who can think out of the box, and on their feet.
Why doesn't Morici run for president. At the very least, Obama should put this guy on his staff as an advisor. It makes sense to force states to put the money into their infrastructure...it puts people to work, lots of them. Why is this so simple and yet seemingly impossible to execute. What a crock this stimulus is. fJust another way for our Congress to take our liberty and increase the size of government.
So now it is "Obama's Stimulus"? You have every reason why it won't work and the suggestions you have are impracticle i.e. "...get China to unhinge its currency........" Good luck on that! See you at the QB table on Monday.........:)
Why? Because it didn't come from the Republicans? You do remember that the FIRST stimulus package came from the George Bush regime in 2008 before Obama took office, right? And that it was released with NO strings attached, right? Seems to me that its the original stimulus thats the problem. The second stimulus has only been a problem because Congress is delaying its release while Republicans try to stop the money from going out to those that need it.
Sorry, but I'm tired of the Obama bashing, I'm tired of the Republicans, and I'm tired of the incredible greediness of the far right in this country.
This may be a shocker to you people but the world does NOT revolve around the greedy rich, its built on the backs of the middle and lower classes.
I'm am so tired of the people on the top that just want to rob the people on the bottom. We do NOT need a return to the Industrial Revolution mindset where the little people lived in abject poverty so that the rich could live high on the hog.
What we need is exactly what Obama is doing. What we need is another stimulus to put money directly into peoples pockets, pay off debt from the little people, and allow us all to start spending again. Giving money to the rich doesn't help a thing when the middle class and poor are the ones hurting.
Finally, someone with enough guts to say this stimulus is a fraud. Everyone knew it would be now someone has come out and said it publicly. We are mortgaging future generations with debt. Your children and mine will be paying for this their lifetime. Wake up folks and vote these clowns out of office. Giving labor unions control of GM is like giving the keys to the jail to the inmates. We, the taxpayers, will be paying for this error for years.
Our founding fathers, (Washington, Jefferson, Franklin and all) are spinning in their graves at the sorry state this nation is in.
It is unfortunate that most of that money went to pet projects. And now we are seeing the same with the health care bill and the cap and trade. This administration has spent too much money with no accountability.
why professor, you failed to mentioned the private sector and it's role in pulling the country out of the current economic climate (have you ever held a private sector job?). look at the last 7 recessions and analyze what role business (not gov't) has played. the "Washington Knows Best" mentality; mandate what type of car I can drive (take those SUV's away from people!) more regulations for private sector, more taxes on 'the rich'... Same old dem philosophy... change we can believe in – keep going in that direction and see how many more will be unemployed in the next 2 yrs. build a bridge – great. what happens to the bridge and ironworkers after project completion? back on unemployment – no chance of long-term, recurring income.. back on unemployment. spend, spend, spend and keep bloating Uncle Sam – brilliant! Hosanna Obama!
great read.
This is not a stimulus because the majority of the borrowed money is being spent to sustain areas we can not afford. In two years when the money runs out we will again note that we can not afford it but we will also owe the Chinese a trillion dollars. Hope is not a plan folks
All of Obama's so-called plans are doomed to fail because that is the democrat/liberal way. Why on earth people keep voting for tools like Obama is beyond me. All i know is that in the mid-term election in 2010 is the time to get rid of these democrat clowns in congress.
The " Shovel Ready" term is a joke. I travel through 4 different states on a regular basis. All of them are doing massive re-paving jobs. The bridges that need extensive work also need Engineering prior to being re-worked/replaced therefore they do not meet the "Shovel Ready' term. These states are not spending the money on the infrastructure that needs to be done ....they are spending it on re-paving. Many of the roads were re-paved 2-3 years ago. What a waste of the taxpayers money......However if I worked for a paving company I guess I would be thrilled.
I agree. Obama should have put $800 billion into high speed rail and been done with it. Helps the environment, creates jobs, improves commerce. The WPA left a long legacy of projects that still help people today. This stimulus looks like it will leave no such legacy.
Finally someone and not a Republican sees the light of reality & truth. Finally someone who not a republican has stopped drinking the cool-aid & has come back to reality. the government should have just said send us your bills at the end of the year relating to contruction projects like roads,levys, dams, education, health care. But no osama the cult leader is so stupid & inexperienced enough to realize this. He hasn't done a single thing right and yet people still drink the cool aid.
this isn't any new revelation .... every conservative was saying this from the very beginning ... and were bulldozed by the Obama administration and its allies.
President Obama had one agenda from the beginning and used the economic downturn as an excuse to try to implement that agenda ... and the agenda is a socialist agenda ... defined as the government is the solution to our every problem and will take care of all of the serf citizens from cradle to grave.
"What you got to do is just hand it to the mayors and county executives and say, “You got to spend x by the end of this year.” Then give them another chunk for next year"
I work for a city and that's exactly what's happened. This guy doesn't know what he's talking about.
Um, GM's website says the Tahoe gets 14/20mpg and the Traverse gets 16/23. And actually, the Tahoe HY 1HY version gets 20/20mpg with a fuel/electric combo powertrain.
The facts don't add up here but I still know what he's getting at.
That is exactly right. We need to REBUILD, no build. Jobs, and we use up less land, helping the environment at the same time. pretty soon we won't have that land.
If you want to help the economy help individuals-we are GDP. And not 1k at a time. Pay off all the bad consumer loans at .30 on the dollar (or whatever it takes) -make life affordable and we will spend again.
Giving tarp $$ to corporations so they don't fail is wrong. Obviously all they are doing is hording it. Look at Goldman Sacks-Washington gives them money all of a sudden they are profitable-amazing-is it new math or just common sense they invested it properly this time. . Washington does not have any common sense – Everything is over analyzed.
OBAMA SHOULD HELP THE TAX PAYER NOT CO'S THAT HAVE GREATED THE PROBLEM THEY SHOULD HAVE STUCK WITH THE PLAN TO BAIL OUT THE HOME OWNERS WHO LOST THERE JOBS.
I JUST WONDER SOMETIMES IF ALL THOSE FIRES BURNING AROUND THE U.S. LAST YEAR WERE SET BY HOME OWNERS NOT WANTING TO DEAL WITH THERE MORGAGE CO'S.
P.S. ROME BURN TO THE GROUND WHEN NERO WOULD NOT HELP THE TAX PAYERS. COULD THIS BE THE FUTURE FOR AMERICA. A DEMOCRACY ONLY LAST SO LONG . TIME TO REBEL
OUR LABORERS BUILT THE U.S.A. THEY CAN BURN IT TO !!!!
About time someone spoke out about the waste that's been shoved down our throat.
Why do presidents never listen to the really intelligent people on these issues?
Those who can – do....those can't become Economists. Just another egghead comment without merit. When was the last time he ran a government?
President Obama’s stimulus doomed to fail... This country was failing before President Obama became President... What would you have done Peter!!!!!
Sheez, I am so glad I didn't go to University of Maryland to learn ECON. I'm sure fascism is the topic du jour in that state school.
HE should of been president. maybe we wouldnt be in such a mess
Let's talk about shedding a few economists. Where were these supposed "experts" when the economy started to fail, in reality, about four years ago? they were shouting that there was no end to the growth pattern that was based, in many ways on false economic theory. While I do not fully agree with all aspects of the Stimulus Plan, much of it was based on assumptions the banks and other financial institutions would do things like provided the needed banking support for small business, perform appropriate "work outs" on defaulted mortgages, and the banks would resume acting like banks rather than dealers in exotic investment. The next big bubble burst will show up in the next several months as mortgages on commercial properties come due. Many of these mortgages were interest only for a fixed period, typically five or so years, and then a balloon payment is due. The property holder then either re-fied, sold the property or let it fall into foreclosure. The later will become very common as the mortgages were often for much more than the value of the commercial property. Again the banks and investment firms will cry the blues for theri mistakes. The banks literally or hording cash at the expense of small business and retail consumers. The reason for failure of the stimulus plan points directly at the banks and their economists. They are blaming anyone but themselves.
This is a good, quick commentary. I hope more people like Mr. Morici are trying to speak out in a positive and helpful way and advise our government. We need everyone throwing out real ideas; too often you only see politically charged slamming of a policy without a practical suggestion of a different policy, or a more nuanced policy.
Newington High School, CT... needs repairs... send a check to the Newington Board of Education.. They have no problem spending tax dollars...
"We knew the tax cuts from the Bush stimulus don’t work."
Excuse me, but the Bush Tax Cuts took us out of a recession and resulted in 6 years of outsanding growth. Where was this guy? During this same time, revenues to the Treasury actually exploded rather than contracted, because the tax cuts spurred economic activity (as they always do).
The increased deficits under Bush were due to 9/11, 2 major wars and umpteen natural disasters – none of which Clinton faced. If not for those events unique to the Bush Admin, we would have finished 2008 with a HUGE surplus – due to the tax breaks.
This liberal lie that the "Bush Tax Cuts Cause The Deficit" is unsupported by any facts.
The stimulus is a huge failure. The 787 billion represents over $2,000 for every man woman and child in this country. Are you any better off now than when this huge thing was passed.
I am an independent minority voter. Quite frankly, President Obamas spending on this, on bailouts, on housing, are nothing more than ineffective payoffs to his constituents, unions, and others than benefit from entitlements.
I cant wait for the 2010 elections. Please stop this spending madness.
It's not too late for America and the rest of the world for O'bummer to resign and get out of the way so we can save what is left.
Who will lead in '12? It won't be this president.
$100 Billion on shovel ready construction projects sounds like a lot to me; why is this guy complaining? anyway, people are spending money to see movies like...Bruno, so everything's prolly ok. also, nice, um, bow tie. it doesn't make you look gay at all.
The Economist backed George W Bush in the 2000 election. The Economist failed to expose all the financial wheelings and dealings that helped bring on the recession, until it was too late. We really don't have to care what the Economist thinks.
I would suggest Mr. Peter Morici being such a great professor should provide suggestions to Mr Obama than critisizing it. The most important thing in the world to raise finger on someone and critisize and the most difficult is to take responsibility and make positive suggestions. If atleast can't provide suggestion better keep quite than criticizing. I also expect media to stop expoliting negatives it does not do any good rather make joint efforts together to make things work.
I think it was Harry Truman who said, "You can lay all the economists in the world end to end, and they would still point in different directions," or words to that effect.
that's crazy!! the money hasn't been spent! duh! only 7% has. it was ment for it to gradually be released. and even if he did nothing at all. it would be even worse. how quickly we forgot it was that idiot president that came before him that got us in this mess in the first place!
this is junk. well even if what this liberal appologist has to say was 1/4 true he is trying to polish a turd. He is just trying to set in motion, a notion that taking money out of the hands of the public and into the money laundering govermental system in any compasity is a smart thing to do. There was a study done about 10 years ago that for every dollar spent on wellfare, only %25 actually made it to the hands of welfare receipients. Meaning 75% of your tax dolalrs where lost via red tape, corruption and mismanagement. Government run spending programs are doomed to fail because the impact of government spending is not a one to one relationship like private transactions. When I buy a hamburger I do not pay someone to figure out what I think I want to eat who then tells the cashier what they think I am wanting.