Even though I have never said a word about my wife spending money on herself (which she rarely does anyway), she still likes to come up with transparent excuses for spending. One of my favorites is when she buys an outfit and then brings it back. Say the outfit cost $100, and my wife returns it but comes home with a new dress that cost $150, she will say it was a $50 outfit.
The only reason I bring this up is that it perfectly explains the President’s plan for using the TARP dollars to create jobs. Its nothing but a bookkeeping magic: an opportunity to pay down the deficit while also spending more—thereby adding to it. He is putting some money in one pocket and taking it out of the other.
Under law, any paybacks to the bailout known as the Troubled Asset Relief Program (TARP)must be used to reduce the deficit. But in an economic speech on Tuesday, the president sought to have it both ways. Increased repayments from banks to the Treasury will reduce the deficit all right, but it will give Congress the budgetary room to spend more—and the president encouraged just that.
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“There are those who claim we have to choose between paying down our deficits on the one hand, and investing in job creation and economic growth on the other,” Obama said. “But this is a false choice.”
To be sure, governments spend money during recessions to prime the economy, and they must be wary not to pull back too soon or to spend too long. But TARPdeficit reduction. Yet if banks can help lower the deficit through one program, Congress can bump it up elsewhere.
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But here is the fun part under Obama’s plan the $700 billion TARP would still add $141 billion to the deficit. Its just like my wife’s $150 dollar dress.
Oh but there were more funky facts in the Potus’ Job Speech:
OBAMA: “We were forced to take those steps largely without the help of an opposition party which, unfortunately, after having presided over the decision-making that led to the crisis, decided to hand it over to others to solve,” he said, describing his administration’s infusions of money to banks and the auto industry.
Later, however, he conceded that the TARP program was “launched hastily under the last administration,” and argued the policy was flawed.
So the GOP came up with a solution, and Obama continued it. Maybe they did turn over all of the problems for others to fix.
THE FACTS: Obama’s partisan swipe glosses over some of the circumstances before he took office. First, he and his fellow Democrats presided over some of the decision-making that led up to the crisis, because they controlled Congress for two years before Obama became president. Obama’s Treasury Secretary Tim Geithner also had a hand, as chief of the Federal Reserve Bank of New York under the Bush administration. Moreover, the $700 bailout fund was initiated under the Bush administration by then Treasury Secretary Henry Paulson. It was endorsed at the time by Federal Reserve Chairman Ben Bernanke and by Geithner. As Illinois senator during the presidential campaign, Obama backed that package.
The President also exaggerated the Jobs and economic reported over recent weeks:
OBAMA: “Finally, we are no longer seeing the severe deterioration in the job market we once were; in fact we learned on Friday that the unemployment rate fell slightly last month. This is welcome news, and news made possible in part by the up to 1.6 million jobs that the Recovery Act has already created and saved, according to the Congressional Budget Office.”
THE FACTS: How many jobs were created or saved by the $787 billion economic stimulus that Congress approved in February has been one of the most contentious questions facing the Obama administration. Recipients of direct assistance from the government say they have created or saved about 650,000 jobs, though some of those calculations have been questioned. The Congressional Budget Office was much more circumspect than Obama’s characterization. The stimulus policies, CBO said last month, “raised real GDP by between 1.2 percent and 3.2 percent, lowered the unemployment rate by between 0.3 and 0.9 percentage points, and increased the number of people employed by between 600,000 and 1.6 million compared with what those values would have been otherwise.”
And CBO offered numerous caveats about its numbers, noting “it is impossible to determine how many of the reported jobs would have existed in the absence of the stimulus package.”
Here is a better number, reported by Andrew Malcom of the LA Times in his Top of the Ticket Blog:
…According to its own shovel-ready recovery numbers, the nearly 11-month-old Democratic administration claims to have created 640,329 good ol’ American jobs so far this year by spending $157.8 billion of that stimulus money.Now, that works out to a cost of $246,436 per job created according to figures dug up by the eagle-eyed James Pethokoukis over at Reuters
Total compensation earned by the average American payroll employee during the month of October was $59,867 on an annualized basis, Pethokoukis reports. That’s only 24% of the nearly quarter-million dollars it costs the federal government to create that spot.
Had Obama and Biden simply handed out to unemployed individuals $60,000 as a year’s salary, they could have paid for 2.6 million jobs — four times as many jobs that have been created. That’s the kind of disastrous return on investment that could cost a banker his bonus.
Of course that’s unless Barney Frank already took the bonus away. The President also took the opportunity to trash the United States with a falsehood.
OBAMA: “We cannot continue to accept an education system in which our students trail their peers in other countries.”
THE FACTS: The long-held perception that U.S. pupils lag those in other countries has been based on misleading comparisons, and is getting outdated in any event. Developed Asian countries do tend to be ahead, but the U.S. has been gaining for many years, making bigger strides on international tests than Singapore and Japan in math, and more progress than Japan in science. The U.S. is highly competitive with Europe, including Britain, Russia and Germany. Global assessments do not account for the fact that U.S. is growing ever more diverse, with a large share of children who are learning English.
During the Great Depression, FDR tried to level with the people, and restore the confidence of the country. Our POTUS and his partner the SCHMOTUS have decided to take a different approach, lie to the people and put us down.