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Unemployment and the Stimulus

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On Friday, February 13, 2009, the Democrat controlled Congress passed the $787 billion American Recovery and Reinvestment Act (ARRA), the “stimulus bill.” No filibuster, just passage. The Congressional Budget Office said that the cost was going to be $821 billion. Under a procedural deal between the parties (not a Republican filibuster), the bill needed 60 votes to pass. The vote in the Senate was 60 – 38. The House vote was 246 – 183. “The president made clear when we started this process that this was about jobs,” said John Boehner (R-OH) after the vote. “Jobs. Jobs. Jobs.”

In fact, the act had three immediate goals:

  1. Create new jobs and save existing ones
  2. Spur economic activity and invest in long-term growth
  3. Foster unprecedented levels of accountability and transparency in government spending

We’ll leave goals 2 and 3 and their attainment for other posts. Let’s focus our attention on the first goal: jobs.

Three years after the passage of ARRA/stimulus, we find that the unemployment rate set a new record, staying above 8% for three years, the longest period since the end of World War II. The U-3 “official” unemployment rate, currently 8.3%, is exactly where it was when Obama signed the ARRA. Let’s see… three years after the passage of ARRA, … unemployment staying above 8% for three years. Coincidence? You decide.

We can now turn our attention to the unemployment rate that the MSM breathlessly reports and the Bureau of Labor Statistics (BLS) massages.

The BLS publishes Table A-15 each month with a variety of unemployment figures. The unemployment rate for January, 2012 of 8.3%, was U-3 seasonally adjusted. How was that rate achieved? Well, in January the BLS actually reduced the size of the labor force by 1.2 million people, yielding a labor force size that is the smallest in 30 years. (See the two graphs provided) Smaller labor force = lower unemployment rate. But those 1.2 million people are STILL unemployed! From Table A-15, we get this: “U-3 Total unemployed, as a percent of the civilian labor force.” So by dropping the size of the labor force, the number of unemployed is compared to a smaller universe, therefore the unemployment rate drops.

If the BLS used the labor force size that existed when Obama was inaugurated, the U-3 unemployment rate would be above 9%. He can’t get reelected with that figure, so the BLS had to go to work and get the rate down.

But why the U-3 rate? Why not the U-6 rate? The U-6 rate accounts for people who have stopped looking for work or who can’t find full-time jobs. The (U-3) 8.3% unemployment rate is calculated based on people who are without jobs, who are available to work, and who have actively sought work in the prior four weeks. The key phrase is “who are available to work,” and it is that figure that the BLS keeps dropping.

The short and simple answer is that Obama can’t get reelected on the U-6 rate, so the MSM ignores it in favor of the U-3 rate.

And what can we expect in February, 2012? While the future can only be predicted, it doesn’t look to good. Gallup, the polling company, says that the mid-February unemployment rate is 9.0%. Is the unemployment record going to be continued?
Glenn Kessler, fact checker for the Washington Post (not an anti-Obama source) said, “Unless the economy turns around in the next 18 months, Obama is on track to have the worst jobs record of any president in the modern era.” While he did inherit an economic mess, he has had three years, got the stimulus passed, and still unemployment remains high.

Former Secretary of Labor in the George W. Bush administration Elaine Chao said of the current employment situation, “Taxes are too high, there are too many regulations and we’re spending beyond our means. That is putting a dampening effect on job creation.” The following is said with as much sarcasm as I can muster. But what does she know? Anything she says can be ignored since she served under a Republican. And the source cited, because it is conservative, can also be ignored. Sarcasm off. But damned if unemployment figures don’t bear her out.

So much for attaining the first goal. It is a pity that most of the sheeple in this country look to the MSM for propaganda disguised as information, but that’s what our current public education produces. Feeling good is more important than actually thinking.

Henry Morganthau, Treasury Secretary under FDR, said, “We have tried spending money. We are spending more than we have ever spent before and it does not work. … After eight years of this administration we have just as much unemployment as when we started … and an enormous debt to boot!” Isn’t it amazing how history tends to repeat itself, and how liberals and the MSM cannot/will not learn from history. Now we have a $787 billion (or $821 billion) debt and the unemployment rate has been above 8% for three years. Why was the stimulus passed?

But that’s just my opinion.

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  • http://loftypremise.blogspot.com/ Tommy Mack

    Your opinion is a question. The insufficient stimulus was passed because it could be. The unemployment rate is closing on 8%.

    Just saying.

    Tommy

  • Glenn Contrarian

    Here goes Warren on yet another of his diatribes without the least attempt to acknowledge any success at all by those he doesn’t like. In Warren World, if you don’t think like he does and do what he thinks you ought to do, then thou art to be banished to the outer darkness where there is gnashing of gums.

    Warren:

    (1) As Tommy pointed out, the insufficient stimulus was passed because it could be passed. In order to get it passed at all, we had to agree to one-third of the stimulus to be tax cuts – which are NOT stimulative in nature. If Obama had not agreed to the tax cuts and a much-smaller stimulus, then he could not have gotten it passed at all.

    (2) The stimulus was put together on the assumption that we were facing only a 4 percent decline…but instead our economy shrank nine percent – the Great Recession was more than twice as bad as we initially thought it was…but of course in your eyes that’s no excuse, and that Obama should have been able to wave his magic wand and make it all better within a few weeks.

    (3) That reminds me, Warren – you never did mention why it is that the largest taxpayer-funded economic stimulus in American history – World War II – helped America to boom rather than consigning us to the lower economic depths of the Depression. Of course you will acknowledge that our economy boomed because of WWII because of near-universal employment and a huge upswing in our manufacturing…but you refuse to acknowledge that as far as America was concerned, WWII was in economic terms the largest taxpayer-funded economic stimulus in our history. If your anti-stimulus rhetoric – and Morganthau’s – held any water, America should have gone much deeper into the Depression as a result of WWII, rather than us being brought out of it!

    Why, Warren, do you think that during the ’82-’83 recession it was commonly said that “we just need a good war!” They were only half joking. And btw – why weren’t Bush’s wars stimulative in nature? Because they were the very first wars that were NOT paid for by tax increases – we’re going to be paying China for a long time thanks to Bush’s military adventurism!

    (4) And let us not forget that Obama faced the most obstructionist Congress since the Civil War because the Republicans filibustered nearly every single bill in the Senate – even routine bills that would NEVER have faced any opposition in other administrations – and forced Harry Reid to come up with exactly sixty votes out of a sixty-non-Republican majority that included independents like Joe Lieberman and blue-dog Democrats who were strongly-conservative DINO’s.

    You KNOW all this, but of course in Warren World none of this matters. All that matters to you is that there’s a Democrat in the White House and you just can’t stand it – especially given that he’s got a really different name (which you MUST admit is better than “Santorum”) and that he, um, looks different from what you’re used to.

  • Glenn Contrarian

    And I think it’s particularly fitting that I post in this thread that Barack Hussein Obama is the Coolest. President. Ever!

  • troll

    Warren – the centerpiece of your analysis is the claim that government employees at the BLS ‘massaged’ unemployment data to Obama’s advantage. In particular you accuse them of somehow shrinking the measured size of the US labor force rather than describing it. What evidence do you have of this and how was it accomplished? (BTW note that an individual is dropped from the labor force only after a full year of not seeking employment.)

  • kurt brigliadora

    …Troll.. answer me this; how can anyone really gather evidence from the gov’t.. as it pertains to the numbers.. when it comes to jobs, labor,housing, etc. {Ball parked at best!}

  • Igor

    Kurt,

    That depends on getting honest reports. And that depends on defending whistleblowers.

    For example, during the Bush administration there was a crook named Philip Cooney, appointed by Bush, who CHANGED scientific reports after the scientists had completed their studies and signed the reports. Palpable and flagrant FRAUD. Fortunately, the frauds were exposed by whistleblowers.

  • troll

    so Kurt – in the absence of evidence any accusation (such as Warren’s) is legitimate?

  • Igor

    Thanks to Obamas Stimulus plan, the Port Of Oakland was able to dredge their channel to accommodate the largest cargo ships in the world.

    MSC Fabiola Becomes Largest Ship Ever To Enter SF Bay

    March 21, 2012 5:20 PM

    SAN FRANCISCO (CBS/AP) — A cargo ship that maritime officials are calling the largest ever to enter San Francisco Bay passed beneath the Golden Gate Bridge on Wednesday afternoon.

    The MSC Fabiola is nearly as long as the Empire State Building is tall and can carry more than 12,000 shipping containers. Those containers placed end-to-end would stretch more than 47 miles.