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Go Home Why We Need a Second Stimulus

POLITICS JUNE 26, 2009

Why We Need a Second Stimulus

BY JOHN B. JUDIS

Our country’s unemployment rate, which has risen every month this year, now stands well above the worst case scenario of the Treasury Department’s stress tests. Yet we are inundated each month with reports that, in spite of a rising rate of unemployment, the slump has "bottomed out” or is even over. This week, the Federal Reserve announced that "information received since the Federal Open Market Committee met in April suggests that the pace of economic contraction is slowing.” If you want even more fanciful predictions, you can hear them on CNBC.

These reports dismiss unemployment as a "lagging indicator”--a figure that is not keeping pace with the economy a whole, and thus doesn’t necessarily have any bearing on whether a recovery is occurring. This is a mistake, and it contributes to complacency about the depth of the slump and about the kind of measures necessary to get ourselves out of it. Unemployment isn’t a lagging indicator, but rather at the heart of the current recession.

When people they say unemployment is a "lagging indicator,” they are usually referring to the unemployment rate, or the percentage of people who are seeking work but not finding it. They argue that even if this rate is increasing from 8.9 percent in April to 9.4 percent in May, a recovery could still be underway. Literally speaking, this is true. According to the National Bureau of Economic Research, the 1990-91 recession began in July 1990 and ended in March 1991, but unemployment rose from 6.8 percent in March 1991 to 7.8 percent in June 1992.

But while the rate of unemployment may be a lagging indicator, the number of employed has actually served to be quite a good predictor of economic recovery over the past century. For example, as the 1990-91 recession was starting to reverse, the percentage of unemployed people rose--but so did the number of employed, which grew by about one million workers from March 1991 to June 1992 as a result of more people entering the workforce. In that case, the number of employed was not a lagging indicator, but rather a fairly good indicator that recovery was afoot. In the case of the present slump, the number of employed have continued to fall since December 2007.

Harvard economist Jeff Frankel takes this argument a step further, arguing that if you want to use employment figures to gauge economic recovery, you should look at the total hours worked rather than at the number of employed, because the beginning of a recovery businesses are likely to increase production by getting their employees to work overtime, or by raising them from part-time to full-time, rather than by hiring new workers. Frankel notes that increased work hours correlated with the beginning of recovery for both the 1990-91 and 2001 recessions.

If you apply this gauge to the current situation, there is little reason for optimism. Though some have used the Bureau of Labor Statistics’ May figures--which showed that the rate of unemployment growth had been slightly reduced--to predict an imminent recovery, Frankel observes that if you look at the figures in terms of hours worked rather than people employed, "the rate of decline (0.7%) was very much in line with the rate of contraction that workers have experienced since September." Indeed, in May, the average length of the work week fell to its lowest total since 1964--a sign that businesses are cutting back by reducing their employees’ hours. "The labor market does not quite yet suggest that the economy has hit bottom,” Frankel concluded diplomatically.

Policymakers in Washington should thus not be fooled by the slowed increase in unemployment numbers; they have to keep doing things that will get people back to work. The most important trigger for economic recovery over the last century has been the growth of aggregate demand for consumer goods--which comes primarily from employed workers. If the number of employed workers declines, then there is a corresponding decline in income and demand. In a recession, that kind of decline can degenerate into a vicious spiral, as those who are still employed, seeing the threat of unemployment looming, choose to save rather than spend. As a result, demand is further reduced, more people are laid off, and the downward spiral continues.

So employment numbers aren’t just a good sign of whether we are headed upwards or downwards; increasing employment through government spending is the most important way that the White House and Congress can get us out of this slump. That's worth remembering as Republicans and renegade Democrats call for budget cuts. This is not a time for cuts--it's time to begin thinking about whether a second stimulus program will be necessary.

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66 comments

Isn't it a bit silly to talk about "needing" a second "stimulus" package, when 90% of the first "stimulus" package remains unspent? Why do these Keynesians want to bury us in a mountain of debt that we, our children, grandchildren, and descendents ten generations hence cannot hope to overcome?

- INTJ

June 26, 2009 at 1:05am

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The Democratic Congress is incapable of fashioning an effective stimulus. Most of stimulus 1 is unspent and the bulk of the spending projects were on ideological projects, not on jobs projects. The Republican alternative which scored better on job creation by the CBO and cost half as much, was ignored. Real tax cuts, not welfare giveaways to those that pay no taxes, have always spurred economic growth. Cut capital gains taxes, business taxes and change personal tax rates. Repeal the unspent porkulus bill. Return TARP money to the treasury as the gov't is reimbursed. Stop bailouts and immediately sell government stakes in private companies. These are the elements of a real stimulus.

- Jersey Paul

June 26, 2009 at 1:29am

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jesus, you people are dangerous. a second stimulus, though the first one hasn't even begun to be spent, with the effects of what little has been spent so very underwhelming? do you have any shame in your agenda? mind-boggling. the best way, which ignores the role of govt and as such is unappealing to you and your ilk, is to simply put the money in the hands of the people. payroll tax moratorium, etc. and no, i'm not worried about what happens to the people that don't have any money anyway. this isn't welfare, this is "stimulus." people will spend the money, or if they save it their banks will lend it (hopefully). what was passed was so patently full of s**t it makes one see red. and now you want more. idiot. fool. charlatan.... sub, nyc

- sub

June 26, 2009 at 1:42am

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And the money for a second stimulus would come from, where?

- dellbabe68

June 26, 2009 at 2:23am

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"Our country's unemployment rate, which has risen every month this year, now stands well above the worst case scenario of the Treasury Department's stress tests." The stress tests were designed to determine if the banks had sufficient capital to survive under deteriorating conditions. Yet, the article does not once address the health of the financial industry. If what the author says is true and that the conditions have so exceeded the "worst-case scenarios" predicted for the BANKS, then the implication would be that it is the banks that would need further assistance. Ask the guys at Goldman Sachs how they're doing these days. According to Reuters, not too bad. Instead, the author uses the fact that unemployment has surpassed the worst-case scenarios predicted for the mega-banks as a justification to spend more yuan in order to boost employment. The stress tests were not meant to gauge national economic health-- they were meant to gauge the capitalization of banks under harsher circumstances that went beyond just the unemployment rate (or the number employed, whichever you prefer). To single out unemployment and suggest that it was even the most important factor in predicting a bank's fiscal health is misleading. For instance, say in the "worst-case scenario" the unemployment rate is at 8%. But then home foreclosures spike up 10% because even though the homeowner is still employed, his/her mortgage is under water due to rapidly declining home values. Clearly it is the foreclosures that represent the real threat to the banks, not necessarily the unemployment rate. This article misrepresents selective pieces of worst-case scenarios in the banks' as though they were summary predictions of the worse things that the country could face. What's really bad for a bank and what's really bad for the country at large, while often interrelated, are not the same. If their charge was to perform a stress test of the nation, certainly the Treasury Dept.'s test scenarios, including the worst-case scenario, would have been different. And all of this assumes the Treasury was accurately testing against what it truly considered to be "worst-case scenarios." The ostensible purpose of the tests was to determine if the banks required further capitalization; the real purpose was to boost public/global confidence in the financial markets. If the stress went too far in their projections of "worst-case scenarios", many of the banks would be exposed as under-capitalized. This would trigger a run on the banks by panicked investors. The ensuing chaos would have unpredictable causes that government would never risk. Thus, it seems that the "worst-case scenarios" were the projected "harsh-but-passable scenarios" for nearly all of the bank. Ultimately, it was not the charge of the Treasury Department to recommend stimulus levels based on projected economic conditions. The stress test conditions were paper tigers (or Quixotic windmills) for the banks to slay. If the Treasury Department was ordered to perform a stress test of the national economy, perhaps they would have projected a worst-case scenario of 12% unemployment and recommended $787 billion in stimulus fund. We'll never know, because it was not their task to recommend stimulus goals or predict how bad things could get for the country. If you believe the PR, they were determining how to best finance banks. Others would say it was a no-fail test meant to restore investor confidence. Either way, it does not have jack to do with the stimulus and it is manipulative and misleading to use it as evidence for a second round of stimuli.

- Alex

June 26, 2009 at 2:23am

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First, we need to cancel what remains of the first Obama stimulus/porkulus, then we can go about drafting a second stimulus-- one that is designed to actually stimulate the economy rather than pay off political allies.

- renata

June 26, 2009 at 2:24am

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A second stimulus? Why? So you can make sure that the Democratic Party does well in the 2010 off-year elections? Let's pile the deficits higher and higher. That way the USA can become the largest province of the new Sons' of Heaven in Beijing. Also, when do you stop stimulating? When the markets tell you?. When the employment figures tell you? Or when the politicians feel they're secure for at least one more election section?

- sauruman56@yahoo.com

June 26, 2009 at 2:25am

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good luck with that

- John Q Public

June 26, 2009 at 3:27am

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Your piece is a very good high school primer on Kenysian theory. Other than that, I have trouble finding any merit in this piece. You repeat the false assertion that only government can spend money that does not yet exist; a currisorary look at modern financing should disabuse you of this notion. Further, you completely ignore the effect that rising debt has on interest rates, and more importantly, the exchange rate. Get an education, then opine upon current economic news, you hack.

- jasonski

June 26, 2009 at 3:43am

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if the 1st stim bill was a stimulus bill we wouldnt need the 2nd. keep borrowing and spending. wait to you see the recession/unemployment that high interest rate, inflation, cap and tax, disincentives and over regulated economy brings. clinton era created a false notion that dems are good for the economy, not so. for all fdr's programs, unemployment was high until world war ii forced productivity from the economy

- sbon

June 26, 2009 at 3:55am

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Stimulus packages have a problem. They have to be paid back. Obama wants to take more money out of the economy with all his plans like cap and trade and universal health care. Any payback slows any recovery. What the government needs to do is look at job creation and help small businesses grow since small businesses are what create 75% of the new jobs. For instance there are not enough prisons and crime labs in the U.S. Both of those would create lasting jobs. Also the government could do research such as surveys to tell fucture business owners what businesses would work well in which cities and which cities are businesses over saturated. The government could also offer free training of employees and low interest loans.

- Greg_D

June 26, 2009 at 4:34am

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Deficit spending = stupidity that never has and never will work. National health care = death to seniors. Illegal alien amnesty and citizenship - disaster for the "melting pot" Cap-and-trade = destruction of your economy and way of life. Obama is simply equal stupidity, disaster, death and destruction. OBTW, we have a huge surplus of really stupid blathering writers.

- cedarhill

June 26, 2009 at 6:59am

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We do not require a second stimulus. We require the deportation of undocumented aliens who are now pushing the unemployment percentage skyward. There is no reason to have upwards of twelve percent unemployment in the central valley of California when a simple investment in labor-saving farm machinery will negate the "need" for slave labor. Remove the slave-class, unemployment falls. Occam's razor was never sharper.

- Robert Lee

June 26, 2009 at 7:04am

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Conservatives really do have an enormous political opportunity that is opening up. The equation for economic activity is production and consumption. It's just that simple. You can't have economic activity without one or the other. And there are two sides to the financial system problem: the lender and the borrower. Both are in over their heads with leverage, which is historically normal at the end of a credit supercycle. (Nickolai Kondratieff still lives! -- Russian economist that documented the cycles of credit booms and busts of Western economies) The degree of leverage by the financial system and the borrowers (currently probably a historical record) means all deficit spending should be focused on stabilizing the financial system, and supporting the economy in a way that allows repayment of debt. Most of the $787 billion stimulus bill should have been a broad-based tax cut (including tax rebates) considering that the consumer is the single most important source of demand: about 70% of the demand for the American economy. If the private consumer is still overextended and struggling with debt load after all this public sector spending --- big government spending stimulus will fail as economic policy, which I consider to be quite likely because it doesn't address the financial dysfunction (Japanese experience). And then of course, the big government political class will call for even more ineffective big government spending. This is how the US could experience its "lost decade." The first argument for economic conservatives; the private sector should be allowed to keep its own earnings to pay down debt rather than a $787 billion "stimulus" program that is little more than a payoff to the constituencies of the big government political class: an execrable waste of stimulus money. Second point: a large but temporary reduction in payroll taxes and rebates would eventually expire --- something we could certainly depend upon. Big government public sector stimulus spending will be extremely difficult, if not impossible, to stop its transformation into a permanent enlargement of government. The third point for such a program; to the degree that demand-side tax cuts and rebates is used to pay down debt means that the increase of public debt is offset by decreased in private debt: thus no net increase of debt for the American economy, unlike public sector spending. We need conservative leadership of Reaganesque optimism that America's best days are still ahead if we invest in the private economy through tax cuts rather than ineffective big government spending.

- Jake Peachey

June 26, 2009 at 7:22am

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Unemployment will going down before the first (an hopefully only) stimulas bill's money has been spent. Calling for a second stimulas package now is just plain silly. Of course, that's better than an admission that stimulas packages never work.

- JohnB

June 29, 2009 at 7:34am

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Hey lets spend another $700 billion on liberal pet projects. I mean we have only lost about 2 million jobs since the first boondoggle was passed.

- retired military

June 29, 2009 at 8:04am

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A second stimulus? Why does the UAW need to be bailed out again? How about the teachers union? Does MANBLA needs some money to educate some kids? Is Air America having trouble finding a children's charity to bilk to pay bills again? Did the NY Times, LA TIMES, and Chicago Tribune finally ask for a bailout? Does ABC, NBC, CBS, MSNBC, and CNN need more money to try to compete with Fox?

- retired military

June 29, 2009 at 8:06am

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To John B. Judis: Despite the tone of some of these comments, it really would help if you addressed why so much of the first "stimulus" was still unspent. If Congress crafts a 2nd stimulus and it isn't spent any faster than the first one, why would that help when this one has not? Would a 2nd stimulus building bridges starting in 2013 really help things today? That's the equivalent of what you are arguing for. I have trouble imagining how you can't see that. 90% of the first stimulus is unspent. Before deciding a 2nd one is needed, wouldn't it have been better to make a stimulus that had been spent much faster than it was?

- Jim

June 29, 2009 at 8:43am

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We need more stimulus like we need to enlarge the hole in our head that too much federal debt and too much federal involvement in our affairs have already created. Recessions are difficult. They are the market's way of getting rid of excess in everything (consumption, productive capacity, debt, etc.). If we back off and leave the economy to itself, it will come back. Congress' desire to look like they are doing something about it reminds me of the rooster who thinks he makes the sun rise by crowing. All these stimulus projects are doing is increasing our structural disadvantage versus the rest of the world. Oh, and paying off the ruling party's political allies.

- Bob in Texas

June 29, 2009 at 8:46am

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Here's the fix, in two parts: 1. Eliminate all payroll taxes, which are regressive taxes on work and productivity. Replace them with a national VAT tax (exempting basic food, clothing and shelter) that is revenue-neutral. Shift the basis of this taxation from work to consumption. That alone will put more people to work and create savings incentives necessary to finance this monster deficit our leaders of both parties have run up on us. 2. Institute a two tiered tax system: first, a 15% flat tax, no deductions, across the board on everyone; second, a 20% increment on incomes above $150,000 per family --- but allow taxpayers to CREDIT against this layer all domestic charitable contributions. Let the taxpayer, not professional politicians, decide where and how the social safety net will be constructed. My guess is, the social sector will see an enormous boom while the government sector is basically put out of business, except for the necessary functions of government, that should easily be paid for out of 15% of GDP. Seems simple to me.

- Libertarian in Exile

June 29, 2009 at 8:55am

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Wait a minute! Hasn't Obama repeatedly explained that the reason the economy is still lagging is that the bulk of the $850B Stimulus Bill doesn't get spent until 2010? If that's the case, then why doesn't the author acknowledge that we need to wait until the end of 2010 for a full economic recovery? Could it be that the radicals on the Left are looking for any pretext at all to increase borrowing/spending? IMO that's what it is; this faction wants BIG socialism and the way to get it is to borrow/spend until the cows come home.

- JohnR

June 29, 2009 at 9:39am

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Here’s the result of the stimulus and bailouts so far: • As government spending becomes even more reckless, I feel the need to become more conservative with my spending. There is no way they can keep their pre-existing commitments such as social security and Medicare with all of this extra debt so I’m preparing to fend for myself. • Since the government cheated the Chrysler bondholders to pay off the unions, I am less likely to buy any bonds from a company with unions. This will raise the cost of hiring union workers. • With massive spending and quantitative easing raising the risk of inflation in the long run, I don’t want to own long term bonds from any source. This will raise the cost of capital for governments and businesses alike. • Since USA Today wrote that my household share of the US debt and unfunded liabilities is up to about $550,000 I feel the need to pay off all of my other debt as quickly as possible, because one way or another, the bill will come due for the $550,000. I could pay cash for a new car, but I’m using my money to pay off my mortgage early. • Since current and future deficits, as well as inflation fears, will continue to reduce the value of the dollar in the long run, I am moving more of my investments to foreign stock funds. I am not alone in my concern about these government actions. How is all of this helping the economy? It’s not.

- Do no harm

June 29, 2009 at 9:59am

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From what I can gather reading the enlightened comments on this thread, the obvious unspoken solution to our poor economic state (aka the reasonable conservative plan that's been drowned out by the corporate socialist media) is twofold: blanket immigration raids and further tax cuts for the rich. Great ideas, guys. Now write your representatives, because they could never come up with such brilliance on their own.

- Coffee

June 29, 2009 at 10:25am

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Sorry, but there's no easy way out of this one. We're basically deleveraging from 50+ years of Keynesianism/Neo-Keynesianism where consumption was stimulated and saving was disincentivized. We're buying stuff and going into debt, rather than buying stuff by selling our stuff, which is how the economy is supposed to work. Now, I'll be frank - if we let the deleveraging go on without intervention, there would be a world-historic economic collapse...but it would have been just ending at this point, or just about to end. The market fixes stuff pretty quickly actually! However, not only are we NOT deleveraging, we're doubling down on our debt load (at least in the public sector - the market's gotten the message, which is why we're NOT seeing hyperinflation - they're saving now). This will only lead to disaster.

- Daeran

June 29, 2009 at 10:25am

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you certainly don't expect to be taken seriously. more bloated gov't... more debt... more mandates and regulations that are crammed down on the citizens... your Rx for a healthy economy? what about a business-friendly (specifically, private sector)admin? gov't jobs/spending cannot and will not grow the economy... build a bridge then the bridgeworkers are unemployed after completion... no recurring income for the worker and the bridgeworkers sign-up for unemployment - not a healthy pattern. keep heading in the direction you suggest and the GOP will be resurrected sooner than you anticipate... a nation 'on the dole' and suffocating in debt is in the cards!

- patsy

June 29, 2009 at 11:05am

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Just print some $$$ to pay for a 2nd Porkulous bill,... & the 1st one, health care "reform", cap & tax etc., etc. Sheesh, we won't survive 4 years ,much less 8 of this nonsense!

- indydoug

June 29, 2009 at 11:17am

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The Democrats method: after the stimulus bill idea is a failure the best solution is to have a stimulus bill. Smart!

- KevinBob

June 29, 2009 at 11:54am

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From the cap and trade tax bill revenue and whatever else the Democrats can scrounge up from the citizens!

- KevinBob

June 29, 2009 at 11:59am

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You are basing an econometric argument on ONE EXAMPLE. That is RIDICULOUS.

- James

June 29, 2009 at 12:08pm

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This article is appalling. As of the end of May, the Feds had spent $44B out of $787B in the program. It was a stimulus program that didn't stimulate. With the stimulus, Obama promised that unemployment would peak at 8%; it is 9.4% now, and certain to rise above 10%. There are lots of reasons why the stimulus program didn't work. But the answer is not to do it again. A good starting point is to spend the money that has already been allocated! Most of the money is due to be spent in 2010, 2011, and 2012 - just in time for elections. If you want to fix the stimulus program, a better choice is to cancel it. The money will be spent when it is not needed, run up the debt, and raise interest rates. In future years, interest payments on the debt will squeeze out other important programs. To the writer, stimulus spending is like a bottle of booze to a drunk. The solution to all problems is to drink some more. If America indulges in this fantasy, it will end up in the gutter, just like that drunk.

- Ernie Banks

June 29, 2009 at 12:36pm

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Another stimulus package would be the THIRD, not the second. Let's not forget that Bush signed a $150 billion stimulus bill in 2008.

- John

June 29, 2009 at 12:50pm

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You mean that $300k Michigan spent on road signs that say "Stimulus $ at work" or the $200k assigned to remove tattoos from street gangs did not turn the country around? Double Jeopardy Round: Question: "What are the qualifications to become a write at TNR?" Trick question as there are two answers: An f'ing retard or a blind Obama follower.

- Silenceisgolden

June 29, 2009 at 12:54pm

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So much for public opinion when it comes to what the left believes it best for 'us'. More than 60% say they aren't for it or it hasn't worked. To all of you this genius says he knows better.

- jj

June 29, 2009 at 1:46pm

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The first bill was not a stimulus bill but a "grow government" bill. It was never designed to stimulate the economy. And the 787 billion cost was bigger than Bill Clinton's 30 billion porkulus/stimulus bill. Sorry, we had our chance. There is no more money to be spent on anything now that we have decided to spend a trillion dollars (including interest) in fattening the government. Interest in buying American debt to finance the White House suger daddy is waning.

- gstefan

June 29, 2009 at 1:48pm

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Who says we had a first stimulus bill? The so called "Stimulus Bill" passed in February was just payback to campaign donors, unions and ACORN. Then it let enough money for Obama to buy his re-election in 2012. Why do you think most of the spending happens in his re-election year? Wake people and see reality with this corrupt President we have in the White House!

- obiewan

June 29, 2009 at 2:22pm

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If you took 1/3 of the present stimulas and just divided it equally among the people of America and let them spend it at will the economy and tax base would be coming back strong and people would think that 0bama really is the chosen one. Not that I would ever recommend it and ofcourse this would allow people to spend money of their own free will and not directed by 0bama's big goverment. But the purpose is not to stimlate the economy, that's why barely any of the money gets spent until 2010. The purpose is to drive the economy so far down that people will cry for the goverment to save them and make them completely dependent on big goverment. Then when the stimulas money is dumped in just before the elections it'll look like the democrats are doing something and people will have their votes bought off.

- MIKE

June 29, 2009 at 3:04pm

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Unemployment should not be a consideration in economic decisions. Firms that are healthy and growing hire/continue to employee workers. When there is a down-turn in the economy, firms lay off employees in order to remain profitable. High unemployment is a natural part of a recovering economy. The firms that offer the best/most relevant/useful goods and services will rebound soonest. The sectors of the market with less than ideal goods and services will recover more slowly. The worst thing the government could do is to "inject" money into a recovering economy, this only delays the natural restructuring of the economy and diverts capital, investment and cheap labor from productive sectors of the economy. The economy must completely tank before it can recover- leave it alone.

- Joe

June 29, 2009 at 3:08pm

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Silenceisgolden, You forgot the third class of idiots that write for this rag: fabulists. * Marty excepted.

- Scott Thomas Beauchamp

June 29, 2009 at 3:44pm

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All I can say to all the respondents here is that they seem to live on another planet. Where I live in New Jersey I see that my friends and neighbors in business have no business going on and that the under thirty population (including Ivy League educated young professionals) are either unemployed already or waiting for the axe to fall. I can easily visualize by next year that there will be marches of vast unemployed armies on Washington demanding that the government provide them jobs. As for the inflationists, they don't seem to see that the price of everything has to fall when people are either unemployed or the relatives of the unemployed.

- henry frisch

June 29, 2009 at 3:48pm

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Who knew so many nutcases and illiterate idiots read NPR. Wow, the comments on here are so off base and ill informed. It must be from watching the "liberal media" on TV. About 2/3rds of the comments come straight from Rush's daily screeds. "For every complex problem there is a simple and elegant solution- and it is wrong" H.E. Meniken.

- Johnny Appleseed

June 29, 2009 at 4:01pm

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Obama said it himself: "We're out of money." What about that do you not understand, Mr. Judis? Stimulus? It certainly stimulated Goldman Sachs, didn't it? When will hacks such as yourself ever realize that the rape and pillage of the citizenry is the only true bipartisan game in DC? Try to get this in your head: Obama and Reid and Pelosi do not give the faintest damn about us, any more than do the swine on the other side of the aisle. If you want to stimulate something, spend your own damn money and leave my kids and grandchildren alone, grifter.

- Scott Walker

June 29, 2009 at 4:14pm

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All I can say to all the respondents here is that they seem to live on another planet. Where I live in New Jersey I see that my friends and neighbors in business have no business going on and that the under thirty population (including Ivy League educated young professionals) are either unemployed already or waiting for the axe to fall. I can easily visualize by next year that there will be marches of vast unemployed armies on Washington demanding that the government provide them jobs. As for the inflationists, they don't seem to see that the price of everything has to fall when people are either unemployed or the relatives of the unemployed.

- henry frisch

June 29, 2009 at 4:25pm

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Okay, so a second stimulus would be a good idea, and why not a third? Why do people like this spend so much time talking about why it's a good idea without even touching on where the money will come from as the credit limit approaches - there is a limit, believe it or not - or how it will be paid back? Or are those irrelevant questions to the liberal mind?

- hudson duster

June 29, 2009 at 4:41pm

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Mr. Judis accepts when in doubt spend some more....a lot more! He and his co religonist (Paul Krugman) always felt the recent simulus package was too timid. Note Mr. Judis didn't quibble about the content of the stimulus which was a larded up bill of pork directed by the DEM Congress to their favored constituencies and causes. In recent week even the VP has been trouted out to state that the administration intends to get the bacon out of the smokehouse faster to try to create or save(whatever that means) some unspecified millions of jobs. The recovery will be slower than anyone wants. it will be interesting if Mr. Judis and his cohorts castigate this administration for a "jobless recover" as they did in the Reagan and bush recoveries.

- bmarks56

June 29, 2009 at 4:48pm

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I feel like the vast majority of these comments are a joke. Many seem to think the New Republic is a liberal leaning agency. Take a look at the top left, "Self-Parody Watch, Liberal Fascism Edition!" This is embarrassing for the conservatives of America, who cannot even recognize who stands on their ideological side. You have an article that castigates the very mechanism that the Obama administration set up to determine economic recovery. And even if this one article is "liberal leaning" it is an extremely asinine connection to claim that TNR is liberal. Aside from this circus of rhetoric, there exists the continued ignorance of half of these readers on the basic thesis of Mr. Judis's article: the difference between unemployment rate and the numbers of those employed. It is as if everyone who read this article read with mental blinders on, ideological stallions of the conservative political machine trudging along with the same party rhetoric that propagated the last eight abysmal years. I also enjoy reading how the vast majority of these educated commentators simply ignore the couched criticism of "tax cuts" Mr. Judis included. Some have discussed how there was a lacking acknowledgment of the financial institution in this article, or some xenophobic knee jerk, or how the stimulus is better called the "porkulus." These are all very interesting and enlightened claims. 1) Some of you seem to ask for an entire history of the recent recession. Financial institutions were not discussed because Mr. Judis seeks to discuss one indicator of literally hundreds. Do you really want to read a hundred page manual on all the differing indicators and their importance? Mr. Judis thesis is that these stress tests weren't enough, because there isn't an increase in employment that is empirically connected with economic recovery. This recession is no longer localized around Wall Street, esteemed commentators. To use allegorical evidence, ask GM and Ford. They aren't sitting too pretty. 2) I don't understand how people continue to speak without any substance, namely on this taxes issue. Mr. Judis already defeated these laughable criticism: empirically, consumers don't spend the tax refunds/rebates when in difficult financial positions. Why? They don't have any guarantee for more money because they are unemployed or given less hours of work. This is why the Bush tax cuts failed. In fact, a huge chunk of the Obama stimulus bill were tax cuts, not to stimulate the economy but to create relief. Considering the CONSTANT spending by the consumer fuels are economy, one time tax refunds will do little to stymie the tide of the recession. 3) The xenophobic rants I've read are strange. Someone called the California Central Valley a locus of slave labor and the solution was brilliant, to deport them to a virtual war zone. Interesting method of liberation and progressive politics there. The problem with the immigration situation is not that they suck the life blood from the economy (California's agricultural sector would dwindle if it didn't have cheap labor, more machinery isn't all that great especially when you are foreclosing any potential displacement of labor after these hilarious deportation schemes), but to legitimize them within the economy. Those of the central valley do have jobs, thanks to the government subsidies of the farm industry (oh, sorry, I guess this aspect of the private sector would survive without public sector support) and they do spend within the consumer economy called the USA. Maybe, less "tey tok ur jerbs" and more "I will accept your weak and..." from the Statue of Liberty. But I guess as conservatives, you pick and choice your "American" ideals for the situations. I like it, situational ethics are good. 5) These pork charges are just ludicrous. Considering a minuscule amount of the stimulus bill qualifies as "pork" just fills me with embarrassment. Too bad I'm overly empathic. Next time, update your blind banter and make some sense. I will say this though, I have no answer to the fact that the stimulus is largely unspent. This is probably a problem and should forestall calls for more stimulus. End. P.S. After 1930, FDR saw a continual drop in unemployment except for the minor recession in 1938.

- Kevin

June 29, 2009 at 6:39pm

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You bet. We definitely need a stimulus. So why don't you take the money from the first attempt and spend it on actually stimulating the economy rather than stimulating your radical leftist agenda? Forget about an encore, you idiot. Take a mulligan, and try to get it right this time. There will be no second helpings. Americans are learning the hard way that they have to supervise the idiotic members of congress (excuse redundancy) and the idiotic president (excuse redudancy), to make sure they actually read - and let their constituents read - what they enact before they enact it. Preserve us from idiotic politicians of all stripes! TParty4USA

- TParty4USA

June 29, 2009 at 6:47pm

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this would not be the second stimulus my friend...try the fourth....since the Democrats took over Congress we had Stimulus 1 in first quarter 2008 (those rediculous checks), then the Bailout, then the Porkulus, and so...no...no more...it has not worked! We need to repeal the Porkulus, rescind the Bailout, divest of the automakers, and freeze federal spending...and cut the corporate and capital gains taxes to bring money out of savings and overseas accounts and back into domestic production.

- Paul Bainbridge

June 29, 2009 at 8:11pm

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What a complete moron this author is... a second stimulus? Seriously, are you suicidal or something? The first stimulus was heralded as needing to happen that very minute, or else... then Obama took the weekend to get back and sign it, then it was jam packed with a bunch of earmarks, then it has still to this day not even gotten out the door! What a complete pile of lies and deceit! Thus there has literally been no stimulus, and here you have a nit-wit calling for number two? Perhaps these people just want the downfall of the American nation, and they are just that much more open about it with Obama in office. I'll say it again, MORON! SHUT UP YOU IDIOT!

- DjacK Height

June 29, 2009 at 10:45pm

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"do you have any shame in your agenda? mind-boggling. the best way, which ignores the role of govt and as such is unappealing to you and your ilk," Shame? The incompetent democrat party of criminal frauds? They have no shame , no integrity and no honor. They are however proud to call themselves democrats. Why? Beats the hell out of me. Self deluded followed by perpetual lying , deceiving , smearing and molesting the minds of children is all they are about. They nothing but dope fiends and their dope is POWER.

- RobLACa

June 29, 2009 at 11:04pm

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What majority needs is not scraps from the dinner table but a seat. Stimulus is not as important as fundamental shift of power or restructuring of the government to fit the current context. This might be a rant from a nutjob, but I'm suggesting that Americans abandon their Congress as it stands. Senators and congress people are harmless middlemen at best and parasites at worst. Since they are going to speak for the corporations and financial combines anyway, there is no point of choosing them. Americans should just let major companies have direct stakes n their government using corporate representatives who will not be paid in tax dollars. Yeah it's Fascism and I don't it, but the trend is going towards it anyway. Don't worry, the so-called Conservatives / Patriots / Real Americans will love it.

- Anonymous

June 30, 2009 at 12:21am

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I'm only gong to say this once for all you crybabies...YOU PUT HIM THERE! If you are having second thoughts about the Beloved Leader, tough! You were all warned about him last year. "You have fixed the sheets and blankets. Now go take a nap."

- Jeff

June 30, 2009 at 11:27am

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What do your excuses have to do with anything? Obama pushed this stimulus and said we have to pass it or unemployment will go about 9 percent, well it is around 10 now. He is a liar, stop smoking dope and you may actually be able to remember all the lies he told. But I bet you will blame Bush for Obama's lies, since he cannot take responsibility for himself, and then takes responsibility for things he did not do.

- Bay Area Patriot

June 30, 2009 at 2:03pm

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Hey Mr. Judis..you just got PWNED

- Patrick

June 30, 2009 at 2:47pm

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There is a great deal of Economics that is based upon the confidence of the consumer. Ultimately, this must go up before anything good can happen. The Govt is simply spinning it's wheels as long as it thinks that it can spend it's way out of this trouble. Even the dumbest of us dolt consumers understand that more spending equals inflation. We all know that massive debts are bad, and we can see that the silver lining that the WH is preaching is actually made of lead. OK. So how do we increase consumer confidence? Tax cuts, spending cuts, and a return to a frugal government will reassure all along the chain that our economy will recover quickly. You don't want to create fear by passing massive energy taxes! The ramp up in gas prices last year was a straw in the camel's back. I know that my budget was pinched to an extent that I purchased less. Now there's talk about new taxes to pay for the shiny new tricycle that our President bought on payments. There's not even anyone with the kahones to deny him an increase in his credit limit on the "Uncle Sam" credit card in his pocket. Now he wants to buy us all band-aids..... Lord save us!

- Medbob

June 30, 2009 at 4:19pm

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Do no harm, Thank you for the excellent post. I'm going to borrow a line from another blog that really fits here. "The definition of insanity is doing the same thing over and over and expecting different results."

- Richard - Richardson TX

June 30, 2009 at 4:24pm

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The economy is the aggregate of millions of agreements between willing buyers and sellers. If you have ever negotiated for the purchase of a car or house you know that much of the process is a subtile give and take by both buyer and seller, all the while, each evaluating their own needs in the transaction. This process is much too delicate and complicated for any third party, including the government to improve upon by barging in and deciding who should give and take. When government is involved, more inefficiencies are introduced and both buyer and seller are inevitably less satisfied with the result. When these inefficiencies are multiplied throughout the entire economy, growth is restricted and innovation is discouraged, value is syphoned from each exchange and the economic standard of living diminishes.

- Ron Alan

June 30, 2009 at 8:23pm

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The economy is the aggregate of millions of agreements between willing buyers and sellers. If you have ever negotiated for the purchase of a car or house you know that much of the process is a subtile give and take by both buyer and seller, all the while, each evaluating their own needs in the transaction. This process is much too delicate and complicated for any third party, including the government to improve upon by barging in and deciding who should give and take. When government is involved, more inefficiencies are introduced and both buyer and seller are inevitably less satisfied with the result. When these inefficiencies are multiplied throughout the entire economy, growth is restricted and innovation is discouraged, value is syphoned from each exchange and the economic standard of living diminishes.

- Ron Alan

June 30, 2009 at 8:36pm

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Not so sure about the stimulus part, but jobseekers sure need to be reading this. The media has not done a good job of telling the truth. As a result I encounter many professionals who are a lot more complacent than they should be. This is a very different economy which calls for different job search tactics and strategies.

- Dr. Daphne Houston

June 30, 2009 at 9:26pm

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Must all Liberal Leftie Dems be so freakin' STUPID?! Hey...author of this moronic article...get out of America, take your pathetic, liberal pig leader obama with you and move to an island...leave America to the real Americans! NOT the socialist moronic movement of the pig liberals.

- John

June 30, 2009 at 9:46pm

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Wow - had no idea so many readers of this liberal rag were conservative and had brains. Fascinating.

- Janie

June 30, 2009 at 11:17pm

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Yeah I'm going to blame the last administration and for the past 30 years of so-called economic policy. Only when Democrats are in power, so-called Conservative critics demand fiscal discipline. Yeah Americans put Obama there, because his opponents have committed EPIC FAIL that the they cannot spin out of. Years of tax cuts have failed to stem unemployment, which is structural. The people you see at unemployment lines, a lot of them will get jobs in the future, but careers - forget it.

- Anonymous

July 1, 2009 at 3:45am

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Where the hell do you think the money for stimulus/stimuli program come from? How does creating fake jobs (digging holes and filling them in) help the economy in the long run? And how is that different from welfare, which also "stimulates" spending. The reason people are unemployed right now is expressly because their jobs are no longer needed at this time. To artificially increase that level is unsustainable.

- jwl2672

July 1, 2009 at 1:39pm

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Kevin claims the Bush tax cuts were a failure because "consumers don't spend the tax refunds/rebates when in difficult financial positions". This statement is wrong on several levels. The Bush tax cuts were neither refunds nor rebates, they were cuts. Kevin is correct that people will not change their spending habits based on a one-time refund or rebate anymore than they will because Grandma gives them a check for $50 on their birthday. Tax cuts are another story. They fundamentally change your disposable income on a long-term basis. When people know that extra money is coming in week after week, it will indeed change spending habits as well as the aggregate demand, employment, production and supply of goods and services. In other words, it boosts the economy. When it does so, tax revenues necessarily increase. How many times does this have to happen before liberals acknowledge it and stop chanting "tax cuts for the rich" like automatons with no power of reasoning? Kevin also states, "After 1930, FDR saw a continual drop in unemployment except for the minor recession in 1938". This is not only wrong, it is laughable. Unemployment went from 8.7% in 1930 to 23.6% in 1932. The rate stayed above 15% for the rest of the decade, spiking to 19% in 1938. "Minor recession"? I fear if Kevin had to live through such a horror, he may develop a new description of it. The fact is that despite the efforts of the liberal propagandists in our educational establishment to teach otherwise, FDR was an unmitigated disaster for the US and we made it through the Depression and the War not because of but in spite of him and his efforts to turn us into a socialist pit. Like all other liberals, Kevin needs to bone up on his history and economics.

- Brian

July 1, 2009 at 1:46pm

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I count five comments of 60+ that even somewhat supported the article. Seems like Judis is to the left of his audience... I agree that the current stimulus isn't going to stop unemployment from rising anytime soon. In my dreams, Congress would redo the current stimulus so that it qualifies under Summers' criteria: "targeted, timely, and temporary". The current program meets none of them. The quickest, easiest, and most obvious would be to declare a national sales tax holiyear, with the Feds replacing the revenues that state and local government would lose. That would also help with the current state budget implosion, now estimated at 100B. And it would help everyone, not just workers/employers (as a FICA cut would do.)

- Larry

July 1, 2009 at 9:41pm

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If it wasn't for FDR and his programs, America would end up like the rest of Europe in the 1930s. The establishment would not give concession to labor, they wouldn't budge on any relief and pushing the country to the brink of a real class war. And FDR was a good war time leader. Yes that war pulled the country out of Depression, as opposed to the current war that throw the country into near Depression. No, it's the so-called "Conservatives" of today who are trying to destroy the greatest American legacies - not FDR a personality, but the consensus and compromises made by the American society during his time. Today's Conservatives are a disgrace. Their repetitve chants of tax cuts make them look more like automatons. And give me one example in the current stimulus plan involve the actual digging and filling of holes.

- Anonymous

July 2, 2009 at 5:30am

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Well, in hopes that some of the readers of this article will actually read a comment that does not reinforce their view that the stimulus was somehow such a terrible idea when our government has spent eight years squandering money on excess defense spending, weapons we do not need, wars of choice and tax cuts for the wealthy and for companies, I would like to opine that a second stimulus would be great if it is effectively targeted. In my opinion, a second stimulus of direct aid to state governments, much more research and development spending, more unemployment benefits and food stamps, additional funding for energy efficiency measures, and renewable energy programs should help along with infrastructure spending and government expansion of educational efforts for renewable energy and science related jobs, research jobs, energy efficiency related jobs, and health care jobs. Hopefully with more funding for projects that will actually grow the economy in the long run, the economy should grow sufficiently over time to allow our country to pay off the increased debt. If we borrow and spend on things that do not pay off in the long run by sustainable growth in economic potential and actual output, then the money will be wasted. If money is spent to spark economic growth, provide direct relief to states and families and help provide the new jobs of the future then we should be in good shape in a few years.

- JT

July 4, 2009 at 1:27am

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