But Where Did It Go?
Sudhama Ranganathan, 18.01.2012 15:53
There is so much talk from all corners about the stimulus bills that went through Congress in 2008 and 2009. There are people that supported them both and thought they were precisely what we needed to stave off far greater financial repercussions as a result of the sub-prime mortgage bond fueled collapse. There are those that supported just the Bush stimulus saying either we needed that, but not the Obama stimulus, or that they were wrong to have supported even that and that we needed neither. Those that supported both are almost universally from the left side of the isle and criticize the right for what they call not having the courage to go further.
There was the passage of what some have called a quiet stimulus since then happening at the end of 2010 passed by both Democrats and Republicans under the radar while the nation was arguing about whether or not to extend the Bush tax-cuts especially with regards to the wealthy. One of former President Clinton's favorite conservatives,Charles Krauthammer, noted in December of 2010, “Barack Obama won the great tax-cut showdown of 2010 - and House Democrats don't have a clue that he did. In the deal struck this week, the president negotiated the biggest stimulus in American history, larger than his $814 billion 2009 stimulus package. It will pump a trillion borrowed Chinese dollars into the U.S. economy over the next two years - which just happen to be the two years of the run-up to the next presidential election. […] If Obama had asked for a second stimulus directly, he would have been laughed out of town. (The American Recovery and Reinvestment Act of 2009) was so reviled that the Democrats banished the word [stimulus] from their lexicon throughout the 2010 campaign. And yet, despite a very weak post-election hand, Obama got the Republicans to offer to increase spending and cut taxes by $990 billion over two years. Two-thirds of that is above and beyond extension of the Bush tax cut.” ( http://www.washingtonpost.com/wp-dyn/content/article/2010/12/09/AR2010120904472.html)
This is a stimulus, no matter how you look at it, as the budget is intended to help get us out of the current economic predicament and increase our GDP while decreasing unemployment. Without spending reductions to balance tax reductions you have budget shortfalls and that money needs to come from somewhere. If not from taxes or what former President Ronald Reagan used to term “revenue enhancements,” then the money has to be borrowed.
Now in terms of TARP the message was that it had to be done. There was no alternative we were told. People supported TARP and the decision to implement it including Mitt Romney who called Ben Bernanke “the most skilled and capable person of guiding us out of the mess we're in.” ( http://www.youtube.com/watch?v=aX6T--U8Ll8) Governor Perry, “released a letter, co-signed by Democratic Governor Joe Manchin, urging D.C. lawmakers 'to leave partisanship at the door" and "pass an economic recovery package'” on the same day the Senate was to vote on TARP. ( http://www.americanthinker.com/2011/09/the_tarp_test.html) Newt Gingrich admitted to supporting it when he said, “I said this morning if I had been in the Congress, I would have hated it -- it makes me very angry, but I would have voted yes.” ( http://www.realclearpolitics.com/articles/2011/12/07/is_support_for_tarp_hindering_gop_candidates__112306-2.html) Both Rick Santorum and Ron Paul opposed it. ( http://www.thepoliticalguide.com/Profiles/Senate/Pennsylvania/Rick_Santorum/Views/TARP/) ( http://www.thepoliticalguide.com/Profiles/House/Texas/Ron_Paul/Views/TARP/) President Obama was not yet president when it was voted on, but he voted in favor of its passage as a member of the Senate. ( http://www.slate.com/blogs/weigel/2010/08/11/poll_voters_think_tarp_passed_under_obama.html)
The second stimulus package, the American Recovery and Reinvestment Act of 2009, was passed along party lines in the House and almost so in the Senate. Not surprisingly none of the current candidates supported that stimulus effort.
Whatever the case in terms of party politics and votes, in the end, the issue comes down to effectiveness. The real issue with regards to all of the stimulus efforts is how effective they were. As of yet the economy has seen no real boon directly attributed to the stimulus efforts either from the Republicans with TARP and the automaker bridge loan, which many forget about, and also the American Recovery and Reinvestment Act of 2009 passed under President Obama and the third quieter one passed at the end of 2010.
The unemployment numbers have been up and down, though to be fair it went up, stopped and then went down with a slight upward tick that seems to be headed back down again. Manufacturing seems to be doing better, but the jury's still out. Banks did not take all the money we gave them in part to increase lending initially and inject capitol into the system. They held onto it which really hindered the progress of the recovery and made the stimulus pointless in many ways. What they were doing with it besides making themselves wealthier (which didn't trickle down to the rest of us in the way of jobs or capitol) God only knows. Retail sales over the holidays were strong considering.
But, we had huge stimulus efforts that between just TARP and the American Recovery and Reinvestment Act of 2009 alone put us roughly $1.5 trillion in debt. What was the outcome? Where did it all go? Only $70.1 billion approx. has been returned thus far. In the end, what was stabilized? How well have things gone? People have been wondering that and still are.
There was so much money mostly lent to banks and financial institutions. The list can be seen online. ( http://www.nytimes.com/packages/html/national/200904_CREDITCRISIS/recipients.html) Why did we give it? If the economy is crawling along so slowly what has been the real outcome? People will be wondering this come election time and asking the same questions. That is they will unless the situation really shows significant improvement.
If the unemployment numbers drop (including the real numbers), hiring increases, housing sees some traction and manufacturing begins to see a boost, people will start to feel the stimulus was worth it. Otherwise, there will be some real and pointed questions, and rightly so. It's still very relevant as “sixty-eight percent of Americans in the latest ABC News/Washington Post poll still say the country's headed seriously off on the wrong track.” ( http://news.yahoo.com/economic-sentiment-stirs-does-change-dynamic-050142304--abc-news.html) We are on the hook for quite a bit and America expects a return on their investment here. We have a right to be concerned and we'd be foolish to be unconcerned.
To read about my inspiration for this article go to www.lawsuitagainstuconn.com.