Next time he should read the report

Ron Johnson hasn’t said much about where he stands on the issues, but at the illustrious illusory tenant notes, Johnson is finally starting to articulate his positions on the issues. During an appearance on Up Front With Mike Gousha this weekend, Johnson gave credit to Sen. Russ Feingold for voting against the Troubled Asset Relief Program (TARP):

Mike Gousha: Does Russ Feingold get any credit for voting against TARP, in your opinion?

Ron Johnson: Sure. Yeah, I’ll give him credit for that. He was right on that issue.

However, as quick as Ron Johnson was to give Sen. Feingold credit for voting against TARP, he was just as quick to attack Sen. Feingold over the federal stimulus package (ARRA), implying it hadn’t created as many jobs as it was supposed to create. Johnson noted, “As a matter of fact, three days before [Feingold] voted for the [federal stimulus package], he issued a press release saying that in the first year, there’d be 2.4 million jobs created.” Mike Gousha was quick to point out that the most recent study by the non-partisan Congressional Budget Office indicated that in the first quarter of 2010 the stimulus bill created between 1.3 and 2.8 million jobs, seemingly proving that the stimulus had worked. As if he thought the Congressional Budget Office was wrong in their estimate of between 1.3 and 2.8 million jobs created, Johnson note he hadn’t even seen the study.

For the record, here’s the CBO study Ron Johnson says he hasn’t bothered to read, and I’d encourage him to take a quick look at it, whenever he can pull himself away from all those Republican talking points he’s surely reading up on.


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1 thought on “Next time he should read the report

  1. From the CBO report:

    “CBO estimates that in the first quarter of calendar year 2010, ARRA’s policies:

    -Raised the level of real (inflation-adjusted) gross domestic product (GDP) by between 1.7 percent and 4.2 percent,

    -Lowered the unemployment rate by between 0.7 percentage points and 1.5 percentage points

    Data on actual output and employment during the period since ARRA’s enactment are not as helpful in determining ARRA’s economic effects as might be supposed, because isolating those effects would require knowing what path the economy would have taken in the absence of the law. Because that path cannot be observed, there is no way to be certain about how the economy would have performed if the legislation had not been enacted, and data on its actual performance add only limited information about ARRA’s impact.”

    A few points about the validity of this report…

    1) By their own admission, you can’t take this CBO report at face value because it’s a poor estimate of the bill’s effect. These rebounds in various macroeconomic stats may have happened regardless of the legislation (and likely would have after this much time). Also, the Fed’s monetary policy is likely the real impetus here. When your interest rate has been effectively 0% for over a year, inventories are likely to stock up eventually.

    2) That brings me this is… most of this growth is from restocking inventories. That type of effect is a poor demand indicator. Until demand (consumption) picks up, the “stimulus” is effectively failing.

    3) Considering the amount spent in this bill, the GDP expansion isn’t exactly jaw dropping either. Effectively, for every dollar you spend, you might get 50 cents of response. Considering this entire monster was financed with debt, much private investment is crowded out of loanable funds markets, and therefore while GDP grows, private enterprise lurches forward slowly.

    4) The unemployment rate drop is very small. Any jobs cited as being created or saved are by no means structural, and will dry up when the money from the bill is fully spent. Infrastructure jobs end once the project is finished, and there is a finite number of projects to be had. (Projects that likely won’t have any lasting positive economic effects…)

    In conclusion, I would simply like to put the dagger in the heart of Neo-Keynesian fanaticism by pointing out what Japan did in the 1990’s. Their government attempted to spend itself out of a recession with large fiscal measures (in addition to monetary policies) and found that it did nothing to bolster the “real” economy. Private business remained stagnate throughout the period. They now have beautiful roads in the middle of no where, but that’s all that fiscal stimulus policy led to… beautiful roads that no one will benefit from.

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