Great news, guys! President Obama is celebrating the five-year anniversary of the American Recovery and Reinvestment Act of 2009! His administration claims, on the White House blog, that the stimulus “[H]elped to avert a second Great Depression” and “will pay dividends long after the Act has fully phased out.”
But that isn’t how the economic recovery has played out. Indeed, even economist Paul Krugman notes, “[T]he rich have come roaring back, to such an extent that 95 percent of the gains from economic recovery since 2009 have gone to the famous 1 percent. In fact, more than 60 percent of the gains went to the top 0.1 percent, people with annual incomes of more than $1.9 million.” And while the explanation for the surge in the upper crust’s earnings have been extensively debated, one thing’s certain: the rest of America hasn’t recovered.
So if the rest of America has hardly felt “stimulated,” what explains the Obama Administration’s claims to success? Have jobs really been created to decrease unemployment? Is the average American worker really better off?
First, let’s look at some facts. Between 2009 and 2014, the unemployment rate fell from 8.3% to 6.6%, and the number of unemployed Americans fell from 65.8 million to 10.2 million, respectively. But the number of Americans on food stamps ballooned from 32.3 million to 47 million. Worst of all, workforce participation shrunk from 65.8% to 63%.
The United States’ meager “recovery” is really a sad reflection of people working less and dropping out of the workforce.
As historian, economist, and demographer Neil Howe writes on Forbes, “[T]he sad fact is that total U.S. jobs have shrunk by 2 million and full-time jobs by 5 million since just before the Great Recession, even while our population has grown by 14 million.” What’s worse is that retirement isn’t driving this trend. Howe continues, “By delaying their retirement, Boomers are the counter trend in this story of declining labor force attachment—which is being driven almost entirely by Americans under age 55.”
The Census reported in 2013 that working-age poverty in America is at a “near-record high,” and it’s been increasing for decades. Unemployment isn’t going down because people have found work. It’s because people aren’t looking for more jobs.
The Recovery Act has only exacerbated this problem through perverse incentives. Jobless benefits have held Americans emotionally captive while in-kind benefits like food stamps discourage earning and saving. Americans are making do with having less. Years of slow recovery have introduced middle America to a new lifestyle. As with many problems, throwing other people’s money at this problem isn’t the solution. House Speaker John Boehner (R., Ohio) summed it up well Monday: “A new normal of slow growth has set in.”
Dark clouds are ahead for middle-class, middle-aged Americans. The most recent Congressional Budget Office report showed that Obamacare is projected to result in a “voluntary reduction” of 2.5 million full-time workers in the workforce. Growth will continue to stall for the foreseeable future as all the wrong incentives are put into place.
What could possibly make this worse? President Obama wants to push forward another stimulus program. The Wall Street Journal reports, “President Barack Obama is expected to call for new spending… in a budget proposal set to be released in two weeks.” And Republicans are “signal[ing] an openness” to signing this legislation.
It’s unlikely that the American people will be on board. Consider public opinion of the 2009 stimulus: Pew Research Center reported in 2012 that only 37% of Americans approved of the bailout. After such a meager recovery and with so many convinced they are still in a recession, it’s unlikely that Americans would vote for anything similar.
The American Recovery and Reinvestment Act of 2009 has inexcusably stalled economic recovery over the past five years. As economist Steve Moore told Fox News Monday: “[The stimulus] was maybe the most expensive policy mistake ever made in Washington.” And it’s middle America who’s paying for it.