Why Obama's Stimulus Failed: A Case Study of Silver Spring, Maryland

High, persistent unemployment and a sluggish economy underscore what all but the most-dedicated supporters of Barack Obama know to be true: The president's 2009 stimulus program was a massively expensive bust.

Understanding why the stimulus failed is an important step in understanding how the government can—and cannot—goose economic recovery. To get a better sense of how and where the stimulus went wrong, Reason.tv focused on Silver Spring, Maryland, a suburb of Washington, D.C., that's home to a large number of government contractors and other recipients of money earmarked for the sorts of "shovel ready" projects that were going to bring the economy back to life.

President Obama's top economic advisor Larry Summers laid out ground rules for how stimulus dollars should be spent: The funds must be "targeted" at resources idled by the recession, the interventions must be "temporary," and they needed to "timely," or injected quickly into the economy.

None of that turned out to be true. "Even if you were to believe that government spending can trigger economic growth," says Veronique de Rugy, Reason columnist and senior research fellow at the Mercatus Center, "the money is never spent in a way that's consistent with the conditions laid out by the Keynesians for it to be efficient."

Reason.tv identified four basic ways in which the stimulus was doomed almost before it was put into operation. For the full discussion of those areas and links to supporting data, go to http://reason.com/blog/2011/12/08/why-obamas-stimulus-failed-a-case-study

Written and produced by Jim Epstein, who also narrates.

Approximately 8 minutes.

Go to http://Reason.tv for downloadable versions and detailed links and text. Also subscribe to Reason.tv's YouTube Channel to receive automatic updates when new material goes live.

Category:

News & Politics

Tags:

• Stimulus
• Recovery Act
• Obama
• Silver Spring
• Green Jobs
• Weatherization
• Infrastructure Spending
• Governor Martin O'Malley
• Veronique de Rugy
• Jim Epstein
• Reason.tv
• Reason Foundation
• Reason Magazine
• Libertarian
• Libertarianism

[mikeswanon8989]

And there in lies the problems with Keynesian economics, intervention never efficiently places new capital in the market.

[ImhoffInstruments]

The resources of government are by extension the resources of the people. You cannot "inject" funds into one sector of the economy without first transferring it from another. Unfortunately, Keynesians seem to view inflationary currency as actual money. The hidden tax of inflation is brought about by the expansion of the money supply through the Federal Reserve and touted as stimulus. The sooner Obama realizes that intervention and inefficient programs only rob the public the better.

[cooljj82]

@onenewshoe If it wasn't big enough, why did all the Keynsian economists say it would work, and even be so confident in it to go so far as to predict down to the 10th of a percent the level of unemployment that would not be exceded?

[ohedd]

This is fuckind ridiulous. Instead of taking our money and just wasting it, how about letting us keep the money and put it where we want to? The customer is right about what we want!

[dubified89]

@TWSceptic No, we don't need the government coming in and breaking up large companies that consumers have chosen.

[rmcdaniel423]

I'm starting to think that all of these informative libertarian-POV videos about the reality of govt and economics are really some sort of huge inter-connected conspiracy, funded by the pharmaceutical giants that produce blood pressure meds. LOL

Truth --> Anger --> Hypertension

[erkaiser000]

Ducks and geese being force fed is somehow morally distinct from any of 1001 other practices of modern animal husbandry? Radical ethical claims require, for a start, coherent ethical reasoning. Animal rights-types are too intellectually challenged to affect anyone's behavior (outside of la-la land, apparently).

[HomelessOnline]

Stupid government. They have not a cent to give away, they just take it from us in the form of...printing more cash, thus reducing the value of the cash in your pocket. Watch "How an Economy Grows and Why It Fails" on YouTube.

[onenewshoe]

The stimulous was not big enough, that's the problem. I like my new Chevy, #1 car manufacturer IN THE WORLD!

[mikeswanon8989]

@mikeswanon8989 in those government operations are looking at their own well being and want to see their operations expand just like a business. There in lies the need for strict and formal restrictions on their control and growth.

[mikeswanon8989]

@TWSceptic You have a good point, I'm not sure about Belgium but in the US anti-trust lawsuits constantly keep companies from gaining a monopoly. When they are broken up they allow the private marketplace to fill the void. I personally think the groundwork has been laid for many of the industries you mentioned such as postal service, education and transportation and the private sector is continually gaining market share but not by the choice of our government. Understandably, the individuals

[TWSceptic]

@mikeswanon8989 One exception is when there is very little competition in the market and to break a monopoly, government can start up a company and temporarily invest in it. Then immediately get out and privatize. We have such an example in Belgium where this has been beneficial. The same should happen to any other activity: schools, post offices, transportation etc. The problem of course is governments rarely do the right thing and so people should be very weary of any intervention.