Wednesday, February 17, 2010

Honesty, Failure and the Permanent Campaign

"If I could create one job in the private sector by helping to grow a business, that would be one more than Congress has created in the last six months." –Democratic U.S. Senator Evan Bayh, Feb. 16, 2010


This was a rare treat – a slice of honesty from a career politician. It's funny how the rare dissent from the administration's party line comes at the same time Bayh announced his retirement. It's almost like he thought "Well, I'm leaving anyway; I might as well go out on a high note!" Honesty is too rare in politics. It's all spin, all the time, and with very few exceptions it's all disingenuous. But let's keep the honesty train rolling, shall we?

Studies have shown that people tend to be their own harshest critics. I've seen this borne out time and again over nine years as a manager. We have an annual review at work, and each employee has to do their own assessment. As a manager I would take their assessment of their work, couple it with my own observations and assign a rating. I would often use their own phrases when I would discuss the rating with them to describe why I gave them the rating I did. In nine years, having done probably 150 of these reviews, I never had anyone go over my head to complain. Sure, at times people were disappointed, but they knew it was right. More often, people were pleasantly surprised that I had rated them better than they thought they deserved. The times where I saw people ranting about how they'd been 'screwed over' by their manager's rating of their work, they were typically people who worked really hard at doing the minimum it took to keep their job while their peers were busting their butts to get ahead. These people would fit in well in the Obama administration.

Take the stimulus bill, for example. One year ago today Obama came to Denver to sign the stimulus act into law, violating, in less than one month from taking office, his promise to fight earmarks. He and his fellow cronies on the left have repeatedly touted the success of the stimulus despite a mountain of evidence to the contrary. Being objective, the stated purpose for the stimulus was to keep unemployment in check. The President's experts said that passing the stimulus act would keep unemployment below 8% - and without it we would see the numbers crest at almost 9%. Christina Romer even put together a nifty little graph that showed how the stimulus spending would kick in and the economy would be saved. In the world of project management this is called a 'success criteria.' It's the reason the stimulus was commissioned in the first place, and the measure against which its effectiveness is determined. By any objective accounting, it has failed, and failed miserably.

There are a couple of other graphs I would share with you. The first one highlights a close up view of the projections from the Romer with a bright red line reflecting the actual unemployment rate towering over both the Romer projections for unemployment with and without the stimulus. In other words, the stimulus failed. Had we not even put the stimulus in place, we were supposed to hit 8.9% unemployment; instead we hit 10% WITH the stimulus. We were lectured to by Obama in early February 2009 that rampant recklessness had gotten us into this mess, and only the government was big enough to get us out. Spend money on make-work jobs, and people will survive the collapse, he said. If I spend it, they will come. He got his money, but the jobs never came. One argument was that we weren't spending fast enough; but we were assured that the stimulus was working as it was supposed to; that the money from the stimulus (that had to be passed immediately, remember, or society would crumble!) was meant to be spent over the course of several years. That it was working as intended could not have been farther from the truth. If the stimulus was working as it was supposed to, unemployment would have crested at just under 8% in March, not over 10% by mid-year.

Next we began hearing about jobs "saved or created" with stimulus funds. Even yesterday, 'say it ain't so' Joe Biden said that over two million jobs were 'saved or created' with stimulus funds. Though he says this with great conviction, the truth is no one can prove it (and when they try, the reports are fraught with errors, attributing saved jobs to non-existent congressional districts. Oops!). What Joe WON'T say is so is that the two million number is calculated using formulas and economic models that may or may not bear any resemblance to reality. What we do know is that three million jobs have been lost since the stimulus was enacted. In a familiar refrain, the counter argument is that the previous administration left things in much worse shape than anyone really knew. That doesn't exactly provide a ringing endorsement for the people who designed this thing, does it? If they're the experts, and they misjudged things that badly, it's no wonder we're still mired in recession.

As for the 'we're not spending fast enough argument, here's another chart that shows a different view – as spending has increased, so has unemployment. Of course, this can't be true – can it?

It can, and here's how. Much of the stimulus money has been spent keeping state workers employed. This is significant because a study by Harvard economist Robert Barro indicates there's a negative relationship to government spending – that when the government spends $1, the private sector shrinks by $.20. A University of San Diego study puts that figure at .56 – so, for every $1 spent by government, the private sector shrinks by $.44. In other words, while the state workers have kept their jobs via stimulus spending, the private sector keeps shedding jobs.

With people angry, Democrats retiring rather than face expulsion at the hands of angry voters, and plummeting approval numbers, President Obama is going back to his stand by motto: when times get tough, the tough start campaigning. Biden, Pelosi, and Reid have been dispatched to go and tout stimulus success stories. Let me see if I get this right – we gave Obama $787 BILLION dollars to go and improve the economy and the stimulus has, by its own measure, failed to work. Rather than admit it's not working, pull back the unused funds and try something else, we're going to keep spending our way to oblivion, and his solution is to waste even more money by sending our top politicians (and their security details) around the country to spout dubious numbers and – let's be honest – blow smoke up our collective arse. Even Janet "The system worked" Napolitano has been sent out on the road to crow about how successful the stimulus has been (really, she's a good choice given that she's proven she's adept at signaling success while up to her neck in failure). I just thank God these people aren't in charge of something that can kills us in a more direct fashion, like our health care…er, wait – I don't like the sounds of that!!




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