“If government spending for public works is financed by taxing the citizens or borrowing from them, the citizens’ power to spend and invest is curtailed to the same extent as that of the public treasury expands. No additional jobs are created.”

-Ludwig von Mises, Human Action, 4th ed., (Irvington-on-Hudson New York: Foundation for Economic Education, 1996 [1949], p. 776.

Our political system is only now perhaps emerging from a foolish policy of lowering credit standards to encourage universal home ownership.  We’re now about to lower credit standards for health and energy investments.  In effect, the problems of subprime mortgages are now being universalized.  But, as in the subprime case, we’re assured that these moves will actually lower the national debt! Does reality have any relevancy?

More cash/Fewer Clunkers

Via the Von Mises blog:  According to the consumer pricing index report released by the Bureau of Labor Statistics report, the price of used cars rose 3.4% in October thanks to the government’s cash-for-clunkers that spirited away a large portion of the used-car inventory. So, for those of us who chose not to buy a new “greener” car last month, and who want to purchase a dirty old used car, we have a smaller pool from which to select. Fewer goods results in increased demand and increased prices. Thanks a lot Big Government. You helped rich folks knock off a few grand on their brand new cars that cost tens of thousands of dollars and left those working on a much smaller budget potentially priced out of the used-car market, with no car to get to work or shuttle around kids, and left without a bailout to stand on.

“[A] government can spend or invest only what it takes away from its citizens… its additional spending and investment curtails the citizens’ spending and investment to the full extent of its quantity.”

-Ludwig von Mises, Human Action, 4th ed., (Irvington-on-Hudson New York: Foundation for Economic Education, 1996 [1949], p. 744.

Billions from the stimulus are being spent on creating tens of thousands of imaginary jobs in 440 phantom Congressional districts, according to the government’s own web site:

Just how big is the stimulus package? Well for one, it has doubled the size of the House of Representatives, according to recovery.gov, which says that funds were distributed to 440 congressional districts that do not exist. . . . The web site operates on an $84 million budget and is tasked with monitoring the distribution of the $787 billion stimulus package passed by Congress–which, for the record, counts 435 members–in early 2009.

The site’s monitors, however, are not too savvy about America’s political or geographic landscape. More than $2 million was given to the 99th District of North Dakota, a state which has only one congressional district. In order to qualify for 99 districts, North Dakota would have to have a population of about 60 million people, almost 24 million more people than California.

From ABC News:

Here’s a stimulus success story: In Arizona’s 15th Congressional District, 30 jobs have been saved or created with just $761,420 in federal stimulus spending. At least that’s what the website set up by the Obama Administration to track the $787 billion stimulus says.

There’s one problem, though: There is no 15th Congressional District in Arizona; the state has only eight Congressional Districts.

There’s no 86th Congressional District in Arizona either, but the government’s recovery.gov Web site says $34 million in stimulus money has been spent there.

In fact, Recovery.gov lists hundreds of millions spent and hundreds of jobs created in Congressional districts that don’t exist.

The Washington Examiner says that “75,000 jobs” Obama has claimed credit for are “clearly imaginary” or “highly doubtful.” Readers can view its interactive map of “Inflated Jobs by State.”

As the Examiner notes, “If his stimulus program was approved, Obama promised, unemployment would not go above 8 percent this year. The reality is that it passed 10.3 percent in October. So now the stimulus books are being cooked to mollify an anxious public worried that real-world jobs continue to disappear and angry that Obama has thrown almost $1 trillion down the stimulus rathole.”

The stimulus package actually destroyed thousands of real world jobs by triggering trade wars with Canada and Mexico that killed jobs in America’s export sector (the stimulus package barred a measley 97 Mexican truckers from U.S. roads, a minor NAFTA violation that led to massive Mexican retaliation against U.S. exports of 40 farm products and kitchen goods worth $2.4 billion).  It also is wiping out jobs by inflicting costly mandates on state governments (such as repealing welfare reform, and imposing costly “prevailing wage” regulations and expensive racial set-asides).

Obama claimed the stimulus package was needed to prevent the economy from suffering from “irreversible decline,” but the Congressional Budget Office admitted that the stimulus package actually would shrink the economy “in the long run.”  Unemployment has skyrocketed past European levels, as big-spending countries have fared worse than thrifty ones.

The stimulus package has since spawned countless examples of government waste and corruption.  Recently, Obama fired an inspector general, Gerald Walpin, who uncovered millions of dollars of waste and fraud in the AmeriCorps program, including by a prominent Obama supporter, endangering the Obama supporter’s ability to administer federal stimulus spending in Sacramento.  Obama’s alleged justification for firing the inspector general turned out to be false.

In one example, the stimulus tracking website reported that 30 jobs have been “created or saved” in Arizona’s 15th congressional district. Arizona only has eight congressional districts.

Late Monday, officials with the Recovery Board created to track the stimulus spending, said the mistakes in crediting nonexistent congressional districts were caused by human error.

“We report what the recipients submit to us,” said Ed Pound, Communications Director for the Board.

Pound told ABC News the board receives declarations from the recipients - state governments, federal agencies and universities - of stimulus money about what program is being funded.

Has the government ever heard of research assistants? Fresh college grads willing to do menial tasks (like research and fact-checking) for a small pittance are in no short supply in Washington DC. Hiring a small staff of people to double-check the validity of reported numbers would be a minor cost for the Recovery Board, but it would save them the embarrassment of looking either shady and deceptive or downright incompetent.

Between January and mid-September, over 1.4 million claims for the tax credit were made.  Those 1.4 million are spread over 8.5 months, which means that about 165,000 claims were made monthly.   Over the same period, total home sales averaged roughly 450,000.  Those monthly tax credit claims subtracted from 450,000 results in a number below the 300,000 monthly foreclosures.  Given the number of variables in play, it would be extremely difficult to determine how many of those sales would not have taken place in lack of the credit, but it is safe to assume that some significant portion would not have occurred.  With this assumption in mind, it seems clear that foreclosures would at least come close to negating total home sales were it not for the tax credit.  In any case, this is not a promising sign for the health of the economy.

Even with the $8,000 first time home buyer tax credit, which has just been extended and broadened in scope, foreclosure filings continue to outstrip home sales by nearly a factor of ten.  Recent data pegs foreclosure filings at above 300,000 for the eighth straight month.  By contrast, monthly home sales hobble in at an average of roughly 33,000 since January of this year.

The administration has been quite eager to tout recent GDP growth as an indication that a recovery has begun.  There are myriad other reasons to doubt that recent GDP growth is a sign that economic recovery is on the way, but these foreclosure numbers demonstrate just how meaningless claims of recovery really are.  The GDP is easily manipulated, as we have seen, by way of targeted government spending such as the housing tax credit.  But people are the real economy, not the GDP.  It is a profane notion that artificially created GDP growth should be should be taken as a sign of recovery, even as hundreds of thousands continue to receive pink slips and eviction notices.

We will have cause to celebrate when employment numbers begin to rise and inflation-adjusted, post-tax, average household incomes undergo a period of sustained growth, and not before.

Matt Lasar at Ars Technica outlines some of the overly-ambitious - and unbelievably expensive - grant requests that can be found on the BroadbandUSA Applications Database. Among the bank-breaking proposals include a $240 million request to build an under-the-sea fiber network to connect the most remote parts of Alaska, and a request for $35 million to provide gigabit-speed (yes, gigabit!) connectivity in Hawaii.

I’ve perused the BroadbandUSA database myself, and I found plenty more requests for astronomical amounts of taxpayer money. Some of the more excessive proposals:

• $70 million to bring last-mile Fiber-to-the-home connections to residents of southeast Iowa.
• $56 million for “world-class” fiber gigabit service plus wireless for Vermont residents.
• $125 million for “state-of-the-art” access for rural Mississippi counties.
• $60 million to increase the speeds of available internet in the dense urban landscape known as “western Texas” (the same desert that served as the setting for No Country for Old Men, a region with a population density of about 10 people per square mile).
• $500 million for Echostar and ViaSat to bring satellite internet to 20 targeted states. It seems that if your next business venture requires a $500 million government handout in order to become profitable, the project probably wasn’t going to create much value in the first place.
• $275,000 to create several youth-oriented public internet radio stations for public housing communities in Pennsylvania.

While the dollar amount of the last one on this list is dwarfed by most of the other proposals, the request illustrates the wishful thinking of public broadcasting aficionados. Youth-oriented children’s radio programming may have a positive impact on youngsters growing up in public housing, I don’t know. But public radio only serves the public interest insofar as there are people who actually tune in. If National Public Radio and their frequent pleas for money pledge drives are any indication, the demand for public radio is pretty weak. Unless the government wants to sit children down and force them to listen, this sounds like $275k will be going straight down the drain.

Just as there are trade-offs involved in all policy decisions, there are also trade-offs to consider when determining where to live. High-speed internet access is best-suited for communities with large enough populations such that high demand makes the large capital investments of building new networks an attractive investment. Smaller, outstate communities generally have to wait for the price of technology to come down before next-generation connections arrive in their locale. This is neither some kind of strange phenomenon, nor ploy by capitalists to keep the good life away from rural populations; it’s just the economics of the high-tech sector. Government cannot turn Mason City, Iowa into San Jose, California without causing a huge dead-weight loss to the taxpayers.

Unemployment is at 10 percent in France, which refused to adopt a U.S.-style stimulus package, and only 7.6 percent in Germany, which adopted a stimulus package that was smaller relative to its economy than ours was.  (Countries that refused to adopt big stimulus packages have fared better than those that imitated President Obama. And the biggest-spending countries have suffered worst in the recession.)

A “broader measure of U.S. unemployment,” including discouraged workers, puts U.S. unemployment at 17.5 percent, reports the New York Times.

As the Post notes, “For many on the left, the lament for years has been: Why can’t America be more like Europe? Why can’t rustic Americans be more like sophisticated Europeans? The sentiment has resurfaced in recent months as the health-care debate has raged on — why can’t the American health-care system be more like Europe’s?”

Well, America is now more like Europe when it comes to unemployment.  But not when it comes to social benefits and protections.  The American Left knows how to import Europe’s failures, but not its successes.

The massive health-care bill passed by the House on Saturday is a classic example.  It would expand health care coverage somewhat, but not to European levels, and it would vastly increase the costs of our health care system, rather than reducing it to European levels.   It would also increase taxes to “European levels of taxation.”  The health care bill contains politically-correct provisions that Europeans would never put up with, like pork for trial lawyers and racial preferences.  And restrictions on national competition in health insurance, which do not exist in Europe.

In France, doctors don’t need to be paid as much, because competing professions, like lawyers, are paid less.  French law is much more conservative than American law when it comes to lawsuits, including lawsuits against doctors.  There are NO punitive damages, and France discourages lawsuits by making unsuccessful plaintiffs pay the other side’s legal bills.  (Other European countries have specialized health courts, rather than American-style jury trials, to cut lawyers’ bills, speedily compensate the injured, and prevent American-style baseless lawsuits against doctors.)  There are no racial preferences — even my Marxist father-in-law, a French trade unionist who likes Michael Moore’s book Stupid White Men, thinks that racial preferences are evil.  French people do not let political correctness shackle their minds the way American leftists do.

Europe is not as far to the left of America as people think, and America’s business climate is already not much more favorable than Europe’s.  For every three ways in which Europe is more socialistic than America, there are two ways in which it is less socialistic than America.  The Obama administration is getting rid of our advantages, but not our disadvantages.

American tort law and family law are much more burdensome, anti-business, and bent on redistribution of wealth, than Europe’s.

Confronted with the specter of new burdens under the health-care bills and global-warming bills backed by the Obama administration, many businesses with the money to do so are afraid to hire people and create jobs lest they be stuck with a large tab for things like health care benefits for newly-hired, less-skilled employees.

The Congressional Budget Office has repeatedly admitted that Obama’s stimulus package will shrink the economy “in the long run.”  It contained welfare and repealed welfare reform.  Unemployment is higher now than if Congress had voted it down.

Of course, as the economist, Herbert Klein, often noted:  When something can’t go on forever, it will stop! It did and von Mises warned us of that many years ago.

Buffet, according to the Wall Street Journal weekend edition is “betting on good old fashioned stuff - such as grain, coal for power plants and consumer goods imported from Asia - and the need to move it.”  Let’s hope he knows something we don’t - perhaps, Obama is about to do a “Clinton” reversal.  That would be good for America, for affordable energy and (ironically) also good for the Democratic party.  We can hope.

The broken promises include his pledge to enact a “net spending cut,” his promise not to raise taxes on anyone making less than $250,000 a year, and his promise not to sign bills without first giving the public five days of notice.

The Congressional Budget Office says that Obama’s proposed budgets will explode the national debt through massive spending increases, increasing the already large deficits left behind by the Bush administration from $4.4 trillion to $9.3 trillion. His record-setting budgets flagrantly violate his promise to propose a “net spending cut.”

Obama broke his campaign promise not to raise taxes on anyone making less than $250,000 a year by signing into law a regressive excise tax increase to expand the SCHIP program, and by proposing a cap-and-trade energy tax that could charge up to $2 trillion, a massive cost that Obama himself has said will be passed “on to consumers,” as well as homeowners and motorists. (In 2008, Obama privately admitted to the San Francisco Chronicle that if he was elected, electricity bills would “skyrocket” under his administration, but it didn’t report that.)

He also broke his promise not to raise taxes by backing health-care bills that would impose a laundry list of new taxes on the middle class, including a tax on uninsured people.  Americans for Tax Reform earlier summarized the tax increases in ObamaCare: an individual mandate tax of $900 per individual or $3800 per family (if you don’t have health insurance); an employer mandate tax of $400 per employee if health coverage is not offered; an “excise tax on high-cost health plans”; a “medicine cabinet tax”; capping Flexible-Spending Accounts (FSA’s); abolishing most HSAs; and increasing tax penalties for HSAs.

The costly cap-and-trade energy bill supported by Obama would lead to big tax increases, administration officials privately have conceded, even though they publicly claim otherwise.  “Officials at the Treasury Department think cap-and-trade legislation would cost taxpayers hundreds of billion in taxes, according to internal documents circulated within the agency and provided to The Washington Times” by CEI.  It could raise household taxes by $1761 per year, equivalent to a 15 percent tax increase.   It would also result in “loss of steel, paper, aluminum, chemical, and cement manufacturing jobs.”  (Obama earlier admitted that “under my plan of a cap and trade system, electricity rates would necessarily skyrocket.”)

Although cap-and-trade backers claim it will cut greenhouse gas emissions, it may perversely increase them and also result in dirtier air, as well as harming forests and water supplies.   It would enrich politically-connected corporations, and result in massive destruction of the world’s forests.   By expanding ethanol subsidies and mandates, it would cause enormous “damage to water supplies, soil health and air quality.” Ethanol subsidies have already resulted in forests being destroyed in the Third World, and by diverting cropland to fuel production away from food production, they have already caused famines that have killed countless people in the world’s poorest countries.

Over and over again, Obama has broken his campaign promise to give the public five days of notice before signing bills into law, including his very first law, the trial-lawyer backed Lilly Ledbetter Fair Pay Act. Obama also repeatedly made false claims about the Supreme Court decision that the Ledbetter law overruled, misstating the facts of that case and how long it gives employees to sue over pay discrimination (the Court did NOT say that employees have to sue even before discovering discrimination).

Obama broke seven campaign promises dealing with transparency and clean government in signing the $800 billion stimulus package, much of whose contents were secret until shortly before Congress voted on it, and whose 1400 pages went unread by most Congressmen who voted on it.  (It repealed welfare reform and contained loads of welfare, pork, and waste, while wiping out jobs in the export sector.)

Obama’s broken promises are part of a larger pattern of dishonesty. Obama claimed his $800 billion stimulus package was needed to avert “irreversible decline.” But the Congressional Budget Office concluded before and after its passage that the stimulus package will actually cut the size of the economy in the long run. Obama’s budgets don’t add up, either, piling up $9.3 trillion in red ink, according to the Congressional Budget Office, a staggering $2.3 trillion more than Obama claimed.

Between 1934 and 1937—during the heart of the Great Depression—GDP grew at by an average of 9.5 percent annually.  In 1934, GDP grew by nearly 11 percent, but it would be six more years until the depression finally ended.  Clearly, GDP growth alone cannot be taken as an indicator that the economy is on the upswing.

It is also disheartening that the two major contributors to GDP growth in the third quarter were housing construction and auto sales, both of which were propped up by government subsidies.  Auto sales were boosted by the Cash for Clunkers program, and housing construction was driven by the $8,000 first time home buyer tax credit.

Combine this with other spurious accounting maneuvers used to calculate third quarter GDP, and it begins to appear that GDP might actually have decreased during this period.

In addition to phony GDP growth, there are other signs that the recession is not yet over.  Employment during the third quarter fell by over 750,000, and it is expected to fall further still.  Employment has been called a lagging indicator of economic health, but when economic health is measured in terms of the financial well-being of the population, employment is not a lagging indicator, it is the indicator.

The recent bankruptcy of CIT Group is another sign that our economic woes are far from over.  A recipient of $2.3 billion in TARP funds—deemed likely unrecoverable—CIT Group Inc. filed for Chapter 11 today, seeking protection from $10 billion in debt.  CIT finances close to one million businesses, and conducts business with over 80 percent of all Fortune 1000 companies, so there is enormous potential for negative secondary effects stemming from the bankruptcy.

The CIT Group bankruptcy comes on the heels of nine more bank failures on Friday, which brings this year’s total to 115.  These bank failures came at a cost of $2.5 billion to the FDIC deposit insurance fund.

There is a clear political incentive for Geithner and others to make efforts to convince us that this economic slump is over.  It is unfortunate that these efforts include no actual facts.

In his latest Nation column, Greider takes those concerned about the $1.4 trillion budget deficit to task, claiming that their concerns are “grounded in ignorance and discredited nineteenth-century bromides.” Funny from a man who claims that economics is “not really a science so much as a value-laden form of prophecy,” and one who as recently as 2007 was referring negatively to the Reagan administration’s “exploding deficits” in the 1980s. He goes on to cite massive deficits during World War II as proof that spending a lot of money we don’t have necessarily produces fantastic results:

In an October 21 editorial arguing against just such additional spending, the Post warned citizens to disregard progressive commentators (like myself) who offer the example of World War II, when the government ran deficits many times larger than the current one. “In the deficit debates to come,” the Post insisted, “Mr. Obama should heed the hawks.”

Wrong. The mobilization for World War II produced one of the most remarkable success stories in US economic history. War production not only overcame lingering weaknesses from the Great Depression but transformed the economic system into the modern powerhouse that became the platform for our long-running postwar prosperity. All this was achieved by the government, largely with borrowed money. By war’s end Washington had piled up federal debt totaling around 120 percent of annual GDP (nearly double today’s debt level).

During the wartime emergency the government took charge of the economy and rapidly shifted the industrial system to armaments while suppressing domestic consumption. Deficit spending force-fed the rapid development of new technologies and new basic industries. In a few short years, economic output expanded by about 75 percent. Despite rationing and wage and price controls, Americans at large were replenished: per capita income rose by almost 70 percent (with industrial jobs opened to women and blacks), and since people could not consume much, the savings rate reached extraordinary levels–23 percent of incomes. The government borrowed these savings and spent them in the national interest. The store of personal savings fueled the pent-up consumer demand driving postwar prosperity.

What Greider can’t seem to understand–and what his dime store Keynesian worldview won’t allow–is that the post-war United States did so well because nearly every other major developed economy was literally bombed out. It is easy to do comparatively well when your international competition is a pile of rubble and/or under the thumb of a totalitarian superpower. The Bretton Woods system established in 1945 required member states, among other things, to accept the dollar as the reserve currency and the United States spent decades providing liquidity to war-torn Western Europe. Furthermore, this system–which assumed U.S. economic hegemony–coupled with the reckless fiscal policies of future American administrations, was largely responsible for the severe economic problems experienced during 1970s. Great, right?

But it gets worse. Here’s his advice for the Obama administration:

Let’s hope President Obama and the political community brush aside the deficit hysteria and do what they need to do to restore the economy: that is, spend more money–a lot more money–and run up even larger deficits for some years to come. [original emphasis, original italics bolded due to formatting limitations]

Unfortunately, Greider probably doesn’t have to worry about not getting his wish (PDF).

Answer: Way too much government!

In a new CEI paper, One Nation, Ungovernable?, Clyde Wayne Crews lays out an agenda for setting America on the path to economic recovery. From lifting burdensome regulations and restrictions on executive compensation to fostering competition and restraining federal spending, Crews calls for an end to the “bailout culture” that’s spread throughout the capitol, and a return to more responsible policies that promote growth and liberty.

As Crews notes, “If government intervention were stimulative, the nation should be overflowing with wealth and job creation already.” Obviously, the folks on Capitol Hill got it wrong. Wealth comes from policies that unleash the creativity and industriousness of private citizens and companies, not from massive regulation or wasteful government  “investment.”  Deregulation and markets encourage competition and growth and create jobs.

Calling all legislators: please take a few moments and read One Nation, Ungovernable? Fret not, at only six pages, it’s far shorter than most of the tax-and-spend bills you’ll see this year.

However, there are reasons to be optimistic. Brooklynites fighting the proposed Atlantic Yards development filed a lawsuit today challenging the legality of the Metro Transit Authority’s land handout to the private developer. In Texas, citizens will soon vote on widely-supported Proposition 11, which would amend the Texas Constitution to prevent area blight designations and condemnations, and prohibit takings for purposes of economic development. If it passes, which seems likely, Texas property owners will have some of the strongest protections against eminent domain abuse in the nation.

But there is a lot of work to do. Many in this country are still largely defenseless against development takings, so the question arises: What can property owners do to take back their rights from revenue-hungry municipalities and rent-seeking developers? The law, as it stands, is against them in most respects, but there are legislative avenues worth pursuing.

A few of the most politically-feasible are:

1. Enacting state legislation mandating the creation and maintenance of a public eminent domain database accessible via the Internet. Currently, data on development takings are difficult to obtain due to the fact that eminent domain condemnations are ordered at the local level. Right now, an empirical analysis of takings within a state would require contacting every county clerk and requesting specific filings. A central state database would allow social scientists, journalists, and the public to examine the economic effects of eminent domain use and abuse.
2. Enacting state legislation defining “public use” as “use by a government body,” which would deny municipalities the opportunity to claim that their takings deals with private developers serve the “public purpose” because they will ostensibly increase tax revenue at some future date.
3. Enacting state legislation mandating that blight be determined on a parcel-by-parcel basis.
4. Enacting state legislation mandating that Tax Increment Financing (TIF) be limited to the length of time required to complete public infrastructure improvements within a given TIF district. This would reduce the ability of rent-seeking private developers to collude with local officials to subsidize development projects.

These proposals could also be enacted through ballot initiatives, if the state allows them. As eminent domain is primarily a local issue, Congress is a less likely venue for legislative relief. However, it is possible for Congress to tie federal development and highway funding to takings behavior (as they presently do for myriad other “carrot-and-stick” purposes). For example, a bill was introduced in the previous legislative session that would cut off federal development grant money for 10 years to any state that permitted an eminent domain condemnation for the benefit of a private developer.

With the five-year anniversary of Kelo coming up next summer, a renewed interest in the harm caused by eminent domain abuse will hopefully materialize.

Most of Wall Street came to government asking for a bailout when the government-created housing bubble popped.

The Big Three automakers also went to Washington for largesse when their customers came to prefer Toyotas and Hondas.

Health insurance companies stand to make a killing if Obamacare passes.

T. Boone Pickens and Al Gore would make millions from environmental legislation.

Ludwig von Mises explained the reason for all of this corrupt behavior with a single sentence back in 1949: “It is precisely the fact that the market does not respect vested interests that makes the people concerned ask for government interference.”
-Human Action, 4th Edition, p. 337.

That’s much higher than the Obama administration predicted unemployment would rise, if Congress had refused to pass his $800 billion stimulus package.  The administration claimed unemployment would rise to 8 percent without a stimulus.

Small businesses are finding it more difficult than ever to borrow badly needed money to meet their payrolls.  New financial regulations backed by the administration are contributing to a terrible credit crunch.  Meanwhile, the wealthy Wall Street investment bank Goldman Sachs, perhaps the biggest donor to liberal politicians, received billions of dollars it didn’t even need from the taxpayers’ $170 billion bailout of AIG.

The administration claimed that the stimulus package would deliver a short-run “jolt” that would quickly lift the economy, but unemployment rose very rapidly after its passage, and the package has actually destroyed thousands of jobs in America’s export sector.

Countries that refused to adopt big stimulus packages have fared better than those that imitated Obama. And the biggest-spending countries have suffered worst in the recession.

President Obama claimed the stimulus was needed to prevent an “irreversible decline,” but the Congressional Budget Office said it would actually shrink the economy “in the long run.”  It subsidizes lots of waste, corruption, and welfare, and repeals welfare reform.   It also contains racial set-asides (which are costly) and prevailing-wage rules (which will waste $17 billion).

The administration claimed that Obama’s $800 billion stimulus package would deliver a short-run “jolt” that would quickly lift the economy, but unemployment rose rapidly after its passage, and the package has actually destroyed thousands of jobs in America’s export sector.

Countries that refused to adopt big stimulus packages have fared better than those that imitated Obama. And the biggest-spending countries have suffered worse in the recession.

Obama claimed his stimulus package was needed to prevent the economy from falling into an “irreversible decline,” but the Congressional Budget Office repeatedly admitted that the stimulus package will shrink the economy “in the long run.” The stimulus package subsidized lots of government waste and corruption.

Obama’s welfare-filled stimulus package largely repealed welfare reform.  That will result in lower employment and a smaller economy over the long run.

Earlier this year, Obama fired an inspector general, Gerald Walpin, who uncovered waste and fraud in the AmeriCorps program, including by a prominent Obama supporter, affecting his access to stimulus money.

The stimulus package imposes on state governments wasteful racial set-asides and union-backed prevailing-wage requirements. The prevailing-wage requirements will cost $17 billion. Racial set-asides are very costly.

Economies are like children: they naturally grow, unless they are subjected to especially severe abuse and neglect by the government.  So the U.S. economy will turn around by November 2010, despite Obama’s economic mismanagement and wasteful spending.

But long-run economic growth is likely to be much slower thanks to his harmful economic policies, which will massively increase the national debt even while raising taxes.