Will We Tell a New Story? (Part One)

by Burt on August 30, 2010

Let’s tell a story. Once upon a time we had a president who very recently announced the need for an economic stimulus package, a “booster shot,” as he called it, for the struggling economy. Our storybook president called his bill the “Economic Stimulus Act.” When he signed it, he proudly proclaimed, “The bill I’m signing today is large enough to have an impact.”

Then something sad happened. The stimulus package, instead of rescuing the economy, seemed to depress it. Unemployment went up and more layoffs occurred.

Of course, we don’t have to imagine such a story. It actually happened–to President George W. Bush. Remember? In February, 2008, President Bush promoted a $152 billion stimulus package that yielded not more jobs, but fewer jobs as national unemployment rose from 4.8 percent in February to 5.8 percent in July to 6.9 percent in November, the month when Barack Obama was elected.

Oddly, the new President Obama decided to repeat the Bush story. The new president proposed yet another stimulus package, this one to be almost $800 billion–much larger than the one Bush put forth the previous year. The bigger the better, we were told. What happened? The same thing. Unemployment went up after the Obama stimulus became law — from under eight percent to about ten percent.

A year and a half after the second stimulus flop, President Obama says we need yet more government spending–a business aid package that he asks Americans to support. On Monday, August 30, he said, “My economic team is hard at work identifying additional measures that could make a difference.” But why, we should ask, should we keep repeating the same story and expecting the elusive recovery? Isn’t the classic definition of insanity the notion of doing the same thing over and over and expecting different results?

(Look for the answer to this question in the next blog post.)

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