Jeffrey Sachs, Keynesian economist, tells Joe Scarborough that President Obama’s stimulus has failed to jumpstart economy.
Do you think President Obama’s stimulus package has failed? Well, the Heritage Foundation’s Conn Carroll thinks so. As you know, the jobs report released by the Department of Labor last Friday showed private sector job creation fell by 190,000 between April and May 2010. That led to the worldwide markets tumbling, specifically the Dow Jones Industrial Average which sank 3.2%, its lowest level since early February. According to Carroll, the U.S. economy has lost a net 2.2 million jobs since President Obama signed the stimulus bill and the administration is now 7.2 million jobs short of what he promised the bill would help create by 2010. Jeffrey Sachs, a prominent Keynesian economist and director of the Earth Institute at Columbia University, admitted on MSNBC’s “Morning Joe” that the president’s stimulus failed, but this is nothing new. Sachs has been saying Obama has failed on the economy since last year.
For objective observers the failure of President Obama’s $862 billion stimulus has become increasingly difficult to deny. But not for the White House. Last week, Vice President Joe Biden told Charlie Rose on PBS that the stimulus was “an absolute success.” Betraying a common perception about unemployment, Biden told Rose: “[W]e lost 8 million brand new jobs … since … 8 million brand new jobs since we hit the skids. On top of the 6% that were already unemployed. It took us several years to get there, it is going to take several years to get back to that number.” That is not quite true. In fact, the American economy has shed 55.4 million jobs since the recession began in the First Quarter of 2008. But at the same time the economy has only added 46.5 million jobs. Putting the two together produces the net approximate 8 million jobs lost that Biden referenced.
But isn’t net jobs all that really matters? Why should anyone care exactly how many jobs were lost and created since all that really matters is the net number of Americans who are no longer employed? Here’s why: despite an unemployment high of just 6.4%, more jobs were lost in the first seven quarters of the 2001 recession than were lost in the first seven quarters of this recession. How is that possible? How could job losses have been worse in 2001 but unemployment so much higher now? Weak job creation. The latest Bureau of Labor and Statistics data show that employers have created 8.6 million fewer new jobs this time around than they did almost a decade ago. Heritage Senior Labor Policy Analyst James Sherk estimates that lower job creation accounts for 65 percent of the recession’s decreased employment. Source: The Foundry
The reality is that President Obama was dealt a terrible hand when he ascended the presidency, but it doesn’t help that the only way the president and the Democrats can think of improving the economy is to run up huge deficits and out-of-control spending. I don’t want to throw a wet towel on the Obama Administration, but it’s safe to say that many people are disappointed in his performance thus far. Still, there’s more drama to come–financial regulations, implementing Obamacare, impending tax increases, immigration reform, among other issues on the table.
I have never been more uncertain of the economic outlook in America as I am today. Conn Carroll makes the argument that canceling the rest of the stimulus, plus renouncing many of the policies I mentioned above, would do more to spur private sector job creation than anything the White House has done thus far. Well, that’s not entirely true. We need to unfreeze the credit markets so small businesses can get money to borrow. Banks aren’t lending nearly as much as before the economic downturn occurred. It is also obvious that the financial markets must be regulated to avert another meltdown of the magnitude we saw recently. Lastly, Main Street is crying out for help. Foreclosures and job losses are still mounting.
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