Research Briefing

Three Years Later, Obama’s Stimulus Promises Turned Out To Be As Empty As The Lofty Rhetoric Used To Sell It

BROKEN PROMISE #1: OBAMA’S STIMULUS FAILED TO KEEP UNEMPLOYMENT BELOW EIGHT PERCENT

PROMISE: Obama’s Economic Advisors Crafted A Stimulus Bill They Predicted Would Keep Unemployment Below Eight Percent. (Christina Romer and Jared Bernstein, “The Job Impact Of The American Recovery And Reinvestment Plan,” 1/9/09)

• Obama Released A Graph So “The American People Can See Exactly What This Plan Will Mean For Their Families, Their Communities, And Our Economy.” OBAMA: “I asked my nominee for Chair of the Council of Economic Advisers, Dr. Christina Romer, and the Vice President-Elect’s Chief Economic Adviser, Dr. Jared Bernstein, to conduct a rigorous analysis of this plan and come up with projections of how many jobs it will create – and what kind of jobs they will be. Today, I am releasing a report of their findings so that the American people can see exactly what this plan will mean for their families, their communities, and our economy.” (President-Elect Barack Obama, The President Elect’s Radio Address, 1/10/09)

BROKEN: Obama’s $825 Billion Stimulus Failed To Keep The Unemployment Rate Below The 8 Percent Level He Promised It Would. (Bureau Of Labor Statistics, Accessed 2/6/12; Christina Romer and Jared Bernstein, “The Job Impact Of The American Recovery And Reinvestment Plan,”1/9/09; Congressional Budget Office, 5/25/11)

• The Unemployment Rate Has Remained Above Eight Percent For A Record 36 Straight Months Since The Stimulus Was Passed. (Bureau Of Labor Statistics, Accessed 2/6/12)

• The Unemployment Rate Peaked At 10.1 Percent In October 2009. (Bureau Of Labor Statistics, Accessed 1/19/12)

The Economy Remains In “By Far The Worst Jobs Recovery Since The Great Depression.” “Even  with the recent gains, this is also by far the worst jobs recovery since the Great Depression, and the U.S. still has about 5.5 million fewer jobs than it did before the recession began in December 2007.” (Editorial, “The January Jobs Thaw,” The Wall Street Journal, 2/4/12)

• “Our Economy Remains Deeply Depressed… Even At January’s Pace Of Job Creation It Would Take Us Until 2019 To Return To Full Employment.” “That said, our economy remains deeply depressed. As the Economic Policy Institute points out, we started 2012 with fewer workers employed than in January 2001 — zero growth after 11 years, even as the population, and therefore the number of jobs we needed, grew steadily. The institute estimates that even at January’s pace of job creation it would take us until 2019 to return to full employment.” (Paul Krugman, Op-Ed, “Things Are Not O.K.,” The New York Times, 2/5/12)

To Richard Wolffe, Obama “Also Admitted That The Enormous Sums Of Money” In The Stimulus “Had Fallen Short.” “Yet he also admitted that the enormous sums of money had fallen short. ‘If we’re honest, part of the controversy also is that despite the extraordinary work that has been done through the Recovery Act, millions of Americans are still without jobs. Millions more are struggling to make ends meet. So it doesn’t yet feel like much of a recovery. And I understand that. It’s why we’re going to continue to do everything in our power to turn this economy around.’” (Richard Wolffe, Revival: The Struggle For Survival Inside The Obama White House, 2010, p. 155)

• FactCheck.org: “It’s Accurate To Say The Stimulus Has Failed To Live Up To Initial Expectations.” “CBO's high estimate is still short of the 3.5 million jobs that Obama had said would be created by the end of 2010, so it's accurate to say the stimulus has failed to live up to initial expectations. White House advisers wrongly estimated that the stimulus would bring the unemployment rate down to 7 percent — though they also thought the rate without the stimulus would be lower than it actually is, and they made clear that ‘substantial uncertainty’ surrounded those estimates.” (Lori Robertson, “Dueling Economic Ads,” Fact Check, 6/30/11)

Obama’s Grandiose Ideas For The Stimulus Were Deemed By His Advisors As “Not Feasible.” “Obama, still thinking that he could be a director of change, was looking for something bold and iconic—his version of the Hoover Dam—but Romer and others finally had a ‘frank’ conversation with him, explaining that big initiatives for the stimulus were not feasible. They would cost too much, and not do enough good in the short term. The most effective ideas were less sexy, such as sending hundreds of millions of dollars to the dozens of states that were struggling with budget crises of their own.” (Ryan Lizza, “The Obama Memos,” The New Yorker, 1/30/12)

• The Stimulus Was About Implementing “As Many Campaign Promises” As Possible. “The short-run economic imperative was to identify as many campaign promises or high priority items that would spend out quickly and be inherently temporary… The stimulus package is  a key tool for advancing clean energy goals and fulfilling a number of campaign commitments.” (Larry Summers, Memo From National Economic Council Chair Designee Larry Summers To President-Elect Barack Obama, December 2008)

Obama Thought “Even The Worst Kind Of Boondoggle” Was Stimulative. “For the Obama transition teams and their allies on the Hill, three questions loomed large in designing the package. The first was whether the proposed spending was economically stimulative: Did it save or create jobs, and thereby put money in people’s pockets? It turned out that economists believed almost any spending met this criterion. In a recession even the worst kind of boondoggle is stimulative, a fact that critics had a hard time comprehending.” (Jonathan Alter, The Promise, Simon & Shuster, 2010, p. 84)

• In A Rush To Put Together A Stimulus Package, The White House Sacrificed Impact, Creativity And Competence. “With precious little time for innovative policymaking, it became a trade-off of speed over impact, speed over creativity, and, no doubt, speed over competence. Obama believed there was a steep cost to delay; if talks on the stimulus dragged into the spring or summer the recession would get much worse.” (Jonathan Alter, The Promise, Simon & Shuster, 2010, p. 85)

BROKEN PROMISE #2: OBAMA WAS CONFIDENT THAT INFRASTRUCTURE WOULD LEAD THE RECOVERY BECAUSE THERE WERE SO MANY SHOVEL-READY JOBS

PROMISE: President-Elect Obama Was Confident That Shovel-Ready Infrastructure Projects Would Lead Recovery And Create Jobs Immediately. OBAMA: "Now, here's what I'm confident about, that our economic recovery plan, our 21st-century investments will create jobs immediately that would not otherwise be created. We've got shovel-ready projects all across the country that governors and mayors are pleading to fund. And the minute we can get those investments to the state level, jobs are going to be created." (President-Elect Barack Obama, Remarks Announcing Energy And Environment Team, Chicago, IL, 12/15/08)

• Obama Said “14 Days After I Signed Our Recovery Act Into Law, We Are Seeing Shovels Hit The Ground.” OBAMA: “Because of Joe, and because of all the governors and mayors, county and city officials who are helping implement this plan, I can say that 14 days after I signed our Recovery Act into law, we are seeing shovels hit the ground.” (President Barack Obama, Remarks By The President On Transportation Infrastructure, Washington, D.C., 3/3/09)

BROKEN: Despite His Rhetoric, Obama Was Warned Before He Took Office That There Is No Such Things As Shovel-Ready Projects. “Much of the infrastructure spending, meanwhile, was destined to languish unused, as it was made clear, even during the transition, that there were limits to how quickly money could be spent. Obama would own up to these concerns a year and a half later, admitting that he had learned ‘there’s no such thing as ‘shovel-ready’ projects’ Actually, he’d been warned of this well ahead of the bill’s unveiling.” (Ron Suskind, Confidence Men: Wall Street, Washington, And The Education Of A President, Harper, 2011)

Obama “Realized Too Late That ‘There’s No Such Thing As Shovel-Ready Projects.’” “He let himself look too much like ‘the same old tax-and-spend liberal Democrat.’ He realized too late that ‘there’s no such thing as shovel-ready projects’ when it comes to public works.” (Peter Baker, “The Education Of A President," The New York Times, 10/12/10)

• President Obama: “Shovel-Ready Was Not As Shovel-Ready As We Expected.” (President Barack Obama, Remarks , Durham, NC, 6/13/11)

Obama’s Plan To Spur Job Creation With Infrastructure Projects Had “Middling Results.” “When they passed the $787 billion stimulus bill in February 2009, they promised an historic investment in roads, bridges and rail. It would put Americans to work quickly and raise productivity in the long term, a Keynesian kick with benefits for years to come. But this ambitious plan has had middling results. Infrastructure is still in need of investment; unemployment in the construction sector was 17.2% in September. Barack Obama is touting a new $50 billion infrastructure proposal, but as the mid-terms loom, it is probably too late.”  (“Infrastructure Spending: False Expectations,” The Economist, 10/21/10)

• “Hopes For An Immediate Jolt Of Activity” From Shovel-Ready Projects Were Misplaced. “Second, hopes for an immediate jolt of activity were misplaced. The bill prioritized ‘shovel-ready’ plans. States did have a backlog of maintenance projects, such as repaving dilapidated roads. Nevertheless, work moved more slowly than some Democrats expected. By October 2009 even the fastest programmes—those under the highway and transit headings—had seen work begin on just $14.3 billion-worth of projects.” (“Infrastructure Spending: False Expectations,” The Economist, 10/21/10)

The Energy Department’s Inspector General Found That “Few Actual 'Shovel Ready' Projects Existed.”  “The activity is partially due to the fact that few ‘shovel ready’ projects existed in 2009, Friedman said. ‘The concept of 'shovel ready' projects became a Recovery Act symbol of expeditiously stimulating the economy and creating jobs. In reality, few actual 'shovel ready' projects existed,’ he said.” (Darius Dixon, “DOE IG: 100+ Stimulus-Related Criminal Probes,” Politico, 11/2/11)

• The Energy Department’s Efforts To Spend Stimulus Funds Quickly Was “More Challenging Than Many Had Originally Envisioned.” “The federal watchdog who first raised concerns over the federal loan program used for the now-defunct solar company Solyndra is scheduled to testify on Capitol Hill Wednesday--his first appearance since the story broke. Gregory H. Friedman is slated to tell lawmakers that the Energy Department‘s efforts to quickly distribute $35.2 billion in economic stimulus funding ‘was more challenging than many had originally envisioned.’” (Ed O’Keefe, “Energy Department Couldn’t Manage Stimulus Money, Watchdog Says,” The Washington Post's "Federal Eye,", 11/2/11)

CBO: “As A Practical Matter, The Experience With ARRA Suggests That The Spending Of Infrastructure Funds Is Slow” “As a practical matter, the experience with ARRA suggests that the spending of infrastructure funds is slow: By the end of fiscal year 2009, seven and a half months after the legislation was enacted, less than 10 percent of the infrastructure funds provided by ARRA had been spent. Thus, most of the increases in output and employment from the option analyzed here would probably occur after 2012.” (Douglas Elmendorf, “Policies For Increasing Economic Growth And Employment In 2012 And 2013,” Congressional Budget Office, 11/15/11)

BROKEN PROMISE #3: OBAMA’S STIMULUS HAS FAILED TO JUMPSTART A GREEN ECONOMY LIKE HE PROMISED

PROMISE: In 2008, Then-Senator Obama Claimed His Investments In Green Energy Would Create 5 Million New Jobs. OBAMA: “And I'll invest $150 billion over the next decade in affordable, renewable sources of energy -- wind power, and solar power, and the next generation of biofuels -- an investment that will lead to new industries and 5 million new jobs that pay well and can't be outsourced.” (Sen. Barack Obama, Acceptance Speech Remarks At The Democratic National Convention, Denver, CO, 8/28/08)

BROKEN: “The Green Economy Is Not Proving To Be The Job-Creation Engine That Many Politicians Envisioned.” “In the Bay Area as in much of the country, the green economy is not proving to be the job-creation engine that many politicians envisioned. President Obama once pledged to create five million green jobs over 10 years. Gov. Jerry Brown promised 500,000 clean-technology jobs statewide by the end of the decade. But the results so far suggest such numbers are a pipe dream.” (Aaron Glantz, “Number Of Green Jobs Fails To Live Up To Promises,” The New York Times, 8/18/11)

• Green Technology Jobs Account For Just 2 Percent Of Employment Nationwide. “A study released in July by the non-partisan Brookings Institution found clean-technology jobs accounted for just 2 percent of employment nationwide and only slightly more — 2.2 percent — in Silicon Valley. Rather than adding jobs, the study found, the sector actually lost 492 positions from 2003 to 2010 in the South Bay, where the unemployment rate in June was 10.5 percent.” (Aaron Glantz, “Number Of Green Jobs Fails To Live Up To Promises,” The New York Times, 8/18/11)

The Energy Department Has Handed Out $35.2 Billion From The Stimulus, But The Clean Energy Industry Has “Yet To Provide The Boost Many Had Hoped For.” “The Energy Department handed out $35.2 billion from the Recovery Act for energy efficiency and other initiatives. At the time, clean energy was seen as a potentially powerful industry for job creation. But the industry has yet to provide the boost many had hoped for.” (Vauhini Vara, “Red Flags For Green Energy,” The Wall Street Journal, 10/12/11)

The Failure Of Obama’s Green Jobs Programs “Gets More Embarrassing By The Day.” “The green jobs subsidy story gets more embarrassing by the day. Three years ago President Obama promised that by the end of the decade America would have five million green jobs, but so far some $90 billion in government spending has delivered very few.” (Editorial, “Green Jobs Brown Out,” The Wall Street Journal, 10/11/11)

BROKEN PROMISE #4: OBAMA PROMISED HIS STIMULUS WOULD REDUCE POVERTY, BUT IT HAS SOARED TO RECORD HIGHS

PROMISE: President Obama Said That The Stimulus Bill Would Lift Two Million Americans Out Of Poverty. OBAMA: “And it's a plan that rewards responsibility, lifting 2 million Americans from poverty by ensuring that anyone who works hard does not have to raise a child below the poverty line. So as a whole, this plan will help poor and working Americans pull themselves into the middle class in a way we haven't seen in nearly 50 years.” (President Barack Obama, Remarks At The Signing Of The American Recovery And Reinvestment Act, Denver, CO, 2/17/09)

• Click To Watch Obama Promise To Lift Two Million Americans Out Of Poverty

BROKEN: Since President Obama Took Office, 6.3 Million Americans Have Fallen Into Poverty. (Press Release, “Income, Poverty And Health Insurance Coverage In The United States: 2010,” U.S. Census Bureau, 9/13/11)

• The Number Of Americans In Poverty Rose To 46.2 Million In 2010. “The study found the number of Americans living in poverty grew to 46.2 million in 2010, up 27 percent from 36.5 million in 2006, the year before the start of the recession. During the same period, the U.S. population increased 3.3 percent.”  (Mary Wisniewski, “Poverty To Keep Rising Due To Slow Recovery: Study,” Reuters, 1/11/12)
• Poverty Is Expected To Have Increased In 2011. “The study uses 2010 U.S. Census Bureau data released last year plus other government numbers. Poverty was expected to increase again in 2011 due to the slow pace of economic recovery, the high rate of unemployment, and the long duration of spells of unemployment, the study found. The study was produced out of the university's School of Public and Environmental Affairs.” (Mary Wisniewski, “Poverty To Keep Rising Due To Slow Recovery: Study,” Reuters, 1/11/12)

“Many Of The 'New Poor' Are The Former Middle Class.” “‘Many of the 'new poor' are the former middle class,’ broadcaster Tavis Smiley, who requested the study, said in a statement.” (Mary Wisniewski, “Poverty To Keep Rising Due To Slow Recovery: Study,” Reuters, 1/11/12)

In 2010, Child Poverty Reached 21.6 Percent And The Number Of High-Child-Poverty States Grew To 25. “By 2010, the national child poverty rate had risen to 21.6 percent, and the number of high-child-poverty states had nearly doubled, to 25.” (Alexander Eichler, “Child Poverty Tops 20 Percent In Half Of U.S. States: Report,” The Huffington Post, 1/3/12)

• “It's Expected To Get Worse Before Things Get Better.” (Alexander Eichler, “Child Poverty Tops 20 Percent In Half Of U.S. States: Report,” The Huffington Post, 1/3/12)

BROKEN PROMISE #5: OBAMA PROMISED ONE MILLION ELECTRIC CARS WITH HIS STIMULUS, BUT SALES ARE DISMAL

PROMISE: Obama Promised That The Stimulus Would Put 1 Million Electric Plug-In Hybrid Vehicles On The Road By 2015. OBAMA: “And we will put 1 million plug-in hybrid vehicles on America's roads by 2015. That's where we're going to focus on. Now, because these cars of tomorrow require batteries of tomorrow, I'm announcing that the Department of Energy is launching a $2 billion competitive grant program under the Recovery Act that will spark the manufacturing of the batteries and parts that run these cars; that will allow for the upgrading of factories that will produce them, and in the process, create thousands of jobs in facilities like this one -- all across America.”  (President Barack Obama, Remarks At The Edison Electric Vehicle Technical Center, Pomona, CA, 3/19/09)

BROKEN: The Washington Post: “Evidence Is Mounting That President Obama Was Overly Optimistic To Pledge That There Would Be 1 Million EVs On The Road By 2015.” (Editorial, “Overcharged,” The Washington Post, 1/1/12)

• WaPo: “They Simply Pose Too Many Issues Of Price And Practicality To Attract A Large Segment Of The Car-Buying Public.” “They simply pose too many issues of price and practicality to attract a large segment of the car-buying public. More prosaic fuel-economy innovations such as conventional hybrids, clean-diesel cars and advanced gasoline engines all show much more promise than electrics.” (Editorial, “Overcharged,” The Washington Post, 1/1/12)
• WaPo: “Sales Of Electric Vehicles Were Disappointing In 2011 …” “Sales of electric vehicles were disappointing in 2011, with the Volt coming in below the 10,000 units forecast. In addition to its high price, the Volt brand is suffering from news that some of its batteries burst into flames after government road tests.” (Editorial, “Overcharged,” The Washington Post, 1/1/12)

GM VOLT: GM Announced That Its Volt Would Fall Roughly 38 Percent Shy Of Its Goal Of Selling 10,000 Cars This Year. “And General Motors — whose moderately priced Volt was supposed to drive Obama’s push for 1 million alternative vehicles by 2015 — revealed last week that it would fall roughly 38 percent shy of its goal of selling 10,000 Volts this year.” (Carol D. Leonnig, and Joe Stephens, “For Obama’s Green-Car Revolution, Fits And Starts,” The Washington Post, 12/7/11)

• GM Admits That The First, And Possibly Second, Generation Of The Volt Will Not Be Profitable – Even With Over $2 Billion In Government Subsidies. “The Volt, touted as an important image-changer for General Motors, is scheduled to arrive late in 2010. Company executives previously had acknowledged that the first generation of this plug-in hybrid-powered car would not be profitable.” (“Chevy Volt Is Exception To 'Pay The Rent' Rule” Automotive News, 4/7/09)

FISKER AUTOMOTIVE: Fisker, Backed By More Than A Half-Billion Dollars In Loan Guarantees, Missed Early Manufacturing Goals And Has Pushed Back Plans For U.S. Production And Creation Of Thousands Of Jobs. “An electric car company backed by more than a half-billion dollars in Department of Energy loan guarantees has missed early manufacturing goals and has gradually pushed back plans for U.S. production and the creation of thousands of jobs.” (Carol D. Leonnig and Joe Stephens, “Fisker, Electric Carmaker Backed By $529 Million U.S. Loan, Balks At Solyndra Comparison,” The Washington Post, 10/21/11)

• Fisker Automotive Received $529 Million To Build Luxury Electric Cars But Ended Up Building Them In Finland. “With the approval of the Obama administration, an electric car company that received a $529 million federal government loan guarantee is assembling its first line of cars in Finland, saying it could not find a facility in the United States capable of doing the work.” (Matthew Mosk And Brian Ross, “Car Company Gets U.S. Loan, Builds Cars In Finland,” ABC News, 10/20/11)

A123 SYSTEMS: Obama Predicted That A123 Systems, A Battery Maker That Received $380 Million, Would Create 3,000 Jobs, But Has Only 690 Employees And Has Announced Forced Layoffs. “A123 Systems, a battery maker that received $380 million in government support, announced recently that declining orders had forced layoffs. Instead of up to 3,000 new Michigan jobs as Obama and the company had predicted, it now has 690 employees.” (Carol D. Leonnig and Joe Stephens, “For Obama’s Green-Car Revolution, Fits And Starts,” The Washington Post, 12/7/11)