Greenspan: Stimulus package “worked far less than expected”

posted at 2:55 pm on September 15, 2010 by Ed Morrissey

This may depend on how much one expected the Porkulus package to actually work.  Many of us scoffed at the Keynesian notion that government spending had a 50% multiplier effect on long-term economic growth, so the stimulus bill demanded and received by Barack Obama actually performed to expectations — an expectation of failure.  Alan Greenspan undoubtedly meant that Porkulus “worked far less” than the Obama administration expected in remarks today to the Council of Foreign Relations:

The former head of the Federal Reserve said fiscal stimulus efforts have fallen far short of expectations, and the government now needs to get out of the way and allow businesses and markets to power the recovery.

“We have to find a way to simmer down the extent of activism that is going on” with government stimulus spending “and allow the economy to heal” itself, former Fed Chairman Alan Greenspan told a gathering held at the Council on Foreign Relations in New York on Wednesday.

At this point, “we’d probably be better off doing less than more” because “you’d be far better off to allow the normal market forces to operate here,” Greenspan said. That’s largely because stimulus spending is not proving as effective as many had hoped. “To the extent the evidence suggests very large deficits concurrently crowd out capital investment, there is a debit to the stimulus program that is somewhere between a third and a half of what the gross stimulus is,” he said.

Greenspan isn’t the only person speaking out on the failure of the stimulus package.  Paul Otellini, who runs a little business called Intel, says that the main problem in the economy are the massive uncertainties introduced by the Obama administration is acting as a drag on investment. Furthermore, long-term economic growth does not come from building swimming pools in Mississippi:

“The decisions so far have not resulted in either job growth or increased confidence. When what you’re doing isn’t working you rethink it and I think we need to rethink some plans,” he said at the Intel Developers Forum in San Francisco. …

But Otellini said the $787 billion economic stimulus package passed last year has not done enough to solve problems in the job market. He argued that money not yet spent from that program might be better off allocated elsewhere and took the administration to task for focusing on short-term projects.

“It doesn’t seem to be working the way it is. Swimming pools in Mississippi are not going to create lasting jobs.”

Otellini says that the results from the Democratic Congress and the Obama administration still don’t get it. They’re sinking billions of dollars into 19th-century infrastructure like trains while ignoring what really gets investors interested in the US. Otellini also rejects the new proposal from Obama on the second stimulus, scoffing at a one-year R&D investment credit. The R&D cycle last for years, and a single-year tax credit will not incentivize businesses to start multi-year projects. It will only inject more uncertainty into the business environment.

Be sure to listen to all of Otellini’s advice. Unfortunately, if you do, you’ll be far ahead of this White House.


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Another day, another confirmed Obama Administration failure.

Ho-hum.

RedNewEnglander on September 15, 2010 at 2:58 PM

if you do, you’ll be far ahead of this White House.

That is about 100% of the people on HA already!

upinak on September 15, 2010 at 2:59 PM

How may light-years ahead of this White House can you get?

Lily on September 15, 2010 at 3:00 PM

Captain Renault Award® of the Day.

MassVictim on September 15, 2010 at 3:02 PM

That is about 100% of the people on HA already!

upinak on September 15, 2010 at 2:59 PM

methinks you give crr6 and various other dimwits too much credit

Kelligan on September 15, 2010 at 3:02 PM

I would like to add a small analogy:
The farm to market roads here ni ND are in deplorable condition.
ND as far as I’m aware is the largest durum wheat grower in the US (for your pasta, bread etc.).
Bcs of the crappy roads, trucks cannot be loaded as much & so the hauling of grain is more expensive than it needs to be.
Now if you are going to invest govt $$ into a public works project, better roads in this instance would allow better market access to wheat & create more wealth for those involved, & so forth on down the line to the customer buying a loaf of bread in the store.
This is about the only way govt $$ can do some economic good IMHO from what I’ve seen.
So why is it being spent on roads that are JUST FINE? And for SIGNS?
I’ve seen a lot of this stimulus $$ being wasted.
If you’re gonna do it,at least put it towards stuff that will give some kind of economic long lasting results.
TARDS!
All of them.

Badger40 on September 15, 2010 at 3:02 PM

what an old nat Greenspan is. We done told them that it would not work.

hawkman on September 15, 2010 at 3:03 PM

“Unexpected”

SeattleJohn on September 15, 2010 at 3:03 PM

methinks you give crr6 and various other dimwits too much credit

Kelligan on September 15, 2010 at 3:02 PM

LOL true. Okay 94.5%

upinak on September 15, 2010 at 3:03 PM

Listening to the administration now, they seem to think 10%+ unemployment is a victory attributable to the Porkulus. Ha.

theCork on September 15, 2010 at 3:04 PM

Yes, but was the stimulus really designed to help the larger economy or was it leftover liberal spending plans designed to reward favored groups and constituencies?

Yeah, like I had to write that question…..

SteveMG on September 15, 2010 at 3:04 PM

Criticizing the Obama administration? I’m sure they’ll figure out a way to retaliate against him. It’s the Chicago Way.

Ward Cleaver on September 15, 2010 at 3:04 PM

‘worked less than expected’, NO stinken kidding greenspan!
L

letget on September 15, 2010 at 3:05 PM

Badger40 on September 15, 2010 at 3:02 PM

Wait, are you saying the ND didn’t take stimulus money to fix the roads!!!!

I know I am being a total sarc butt right now. But you and I both know it is true. Money (stimulus) for the roads went to the wrong roads.

upinak on September 15, 2010 at 3:05 PM

America doesn’t need trains… we need a national monorail!

mankai on September 15, 2010 at 3:06 PM

“Expected” by whom?

mankai on September 15, 2010 at 3:06 PM

Well, duh. Most of it went to government and unions, who can’t dig themselves out of the holes they’re in no matter how much money you give them. The rest of the country got stiffed.

Felonious Monk on September 15, 2010 at 3:08 PM

Greenpeace also said that the Bush tax cuts should be allowed to expire and he supports raising taxes.

txag92 on September 15, 2010 at 3:11 PM

Apparently we’re all smarter than Greenspan. Elites are overrated.

SirGawain on September 15, 2010 at 3:11 PM

methinks you give crr6 and various other dimwits too much credit

Kelligan on September 15, 2010 at 3:02 PM

crrap6 is nothing but a twit.
I am made fun of bcs it has no reply to my arguments on the breyer burning the koran thread.
These trolls believe they are so superior to the rest of us that they cannot prove a point or make an argument for their case & so they respond by taunts.
It’s ridciulous.

Badger40 on September 15, 2010 at 3:12 PM

Yes,

FHFA estimates GSEs final cost to taxpayers could reach $400 billion

Fannie Mae and Freddie Mac were taken into conservatorship by the FHFA in September 2008. Since the end of 2007, the GSEs have lost $226 billion with 73% of that stemming from the single-family credit guarantee business. The Treasury has recorded losses of $148 billion attributable to its bailout of Fannie and Freddie.

Here

Also, I’ve seen estimates up to $1 trillion

Oil Can on September 15, 2010 at 3:12 PM

It’s almost like the Democrats passed a $787 billion bill, without reading it, and no one who wrote it had a single days experience in the private sector…

Oh, wait!

Seven Percent Solution on September 15, 2010 at 3:12 PM

WH needs to take a few remedial courses just to catch up

cmsinaz on September 15, 2010 at 3:14 PM

upinak on September 15, 2010 at 3:05 PM

I think a lot of it has to do with county management.
Hettinger county (mine) has much better roads than the one I live right next to (a mile)-Grant county.
So instead of the state looking at the most bang for their buck with that $$, they’re putting it toward pet projects.
It’s such crap.

Badger40 on September 15, 2010 at 3:14 PM

Badger40 on September 15, 2010 at 3:14 PM

Oh I completely understand!

upinak on September 15, 2010 at 3:15 PM

The stimulus worked pretty well for the union pensions though.

trs on September 15, 2010 at 3:15 PM

Greenspan: Stimulus package “worked far less than expected”

Really, Alan? And you first clue was what, exactly?

Schmuck.

GrannyDee on September 15, 2010 at 3:16 PM

Yes…conservatives have it all wrong and plus that they cannot win elections/

NJ Red on September 15, 2010 at 3:17 PM

Does anyone else expect a policy statement from Katherine Sibellius’ office about how any chip company hoping to sell their product to manufacturers within the medical industry, will be frozen out if they publicly express doubts about the Administrations’ programs?

Welcome to the New America.

davisbr on September 15, 2010 at 3:19 PM

I always figured they was racis

joeindc44 on September 15, 2010 at 3:21 PM

I keep hearing that the stimulus was supposed to go for shovel ready jobs. At the same time I hear that funding to build a wall on the Mexico border doesn’t have fnding and cannot be completed.

1. A wall to keep out illegal aliens is a shovel ready job! Build it and keep foreign law breakers from taking American jobs and American handouts!

2. China built a wall bigger than what we want with huge stones and no cranes or trucks. How exactly can a 10-12 foot brick wall with barbed wire not be possible?

jeffn21 on September 15, 2010 at 3:23 PM

One of the commenters at WSJ quoted Greenspan, 1967:

” The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.”

http://www.usagold.com/gildedopinion/greenspan.html

marinetbryant on September 15, 2010 at 3:25 PM

OT: did we ever find out what kaine was going to unveil?

cmsinaz on September 15, 2010 at 3:26 PM

2. China built a wall bigger than what we want with huge stones and no cranes or trucks. How exactly can a 10-12 foot brick wall with barbed wire not be possible?

jeffn21 on September 15, 2010 at 3:23 PM

It’s UNAMERICAN foo!

NJ Red on September 15, 2010 at 3:26 PM

America doesn’t need trains… we need a national monorail!

mankai on September 15, 2010 at 3:06 PM

Hey, it put Ogdenville, North Haverbrook, and Brockway on the map!

John Deaux on September 15, 2010 at 3:31 PM

Trains?

Good lord.

We are ruled by absolute morons.

They know nothing.

They do nothing.

They learn nothing.

Yet we are lectured about how “brilliant” they all are.

Worthless scum.

NoDonkey on September 15, 2010 at 3:33 PM

Greenpeace also said that the Bush tax cuts should be allowed to expire and he supports raising taxes.

txag92 on September 15, 2010 at 3:11 PM

I thought I saw that somewhere. Do you have a link? I just went looking for it and couldn’t find it.

Vince on September 15, 2010 at 3:34 PM

Greenspin looked in the other direction when the housing bubble was getting ready to blow up, much like the old fart is looking away from the current federal bond bubble that is about to explode. Someone needs to explain to me why Greenspin’s opinion matters.

David in ATL on September 15, 2010 at 3:34 PM

America doesn’t need trains… we need a national monorail!

mankai on September 15, 2010 at 3:06 PM

Pfft!
Ok. I’m don’t see your sarc tag. But I know you must mean it!
BTW-it’s funny aobut RR’s.
We need them badly in ND & yet they are scarce.
Hmmm…..

Badger40 on September 15, 2010 at 3:35 PM

Real economists never expected this knee jerk stimulus to work.

Wade on September 15, 2010 at 3:36 PM

What’s that you say? Gold hit a new record high yesterday as the dollar continues to decline?

Obama’s fiscal policy has done about as good a job stimulating growth as Greenspan’s (and Bernanke’s) monetary policy has done protecting the value of our dollars! All forms of central economic planning are doomed to fail, but the Washington crowd just keeps dumping gasoline on the fire and asking ‘did that put it out?’

Inkblots on September 15, 2010 at 3:36 PM

50% multiplier effect on long-term economic growth,

I believe the estimates were actually 150% (typical BS), but the actuality was more in the 50% range or less.

karl9000 on September 15, 2010 at 3:38 PM

Did I just hear him say he’s against agriculture subsidies because he should be getting the subsidies?

…aghr.

ebrawer on September 15, 2010 at 3:39 PM

Poppy Harlow is quite hot.

Oh yeah, as far as the Intel guy goes: what he said.

pain train on September 15, 2010 at 3:40 PM

Otellini – although I agree with most of what he says – appears really to be saying that the gov’t should be spending its stimulus money on IT stuff rather than old fashioned stuff like RRs. In other words, he wants his portion of the stimulus.

Monkeytoe on September 15, 2010 at 3:41 PM

That’s largely because stimulus spending is not proving as effective as many had hoped.

Hope can be very euphoric. You don’t bet the rent money, on it, though.

Count too much on Hope, and you’ll be lucky to have any Change left in your pocket.

malclave on September 15, 2010 at 3:43 PM

Greenspan: Stimulus package “worked far less than expected”

Is this senile bag of bones discussing the little blue pills that Andrea Mitchell gave him to stimulate his package ?
No way this man is even aware that the topic of discussion is economics….

macncheez on September 15, 2010 at 3:47 PM

Did I just hear him say he’s against agriculture subsidies because he should be getting the subsidies?

ebrawer on September 15, 2010 at 3:39 PM

Come now, the fellow is merely playing his part in a proud American tradition:
“Major Major’s father was an outspoken champion of economy in government, provided it did not interfere with the sacred duty of government to pay farmers as much as they could get for all the alfalfa they produced that no one else wanted or for not producing any alfalfa at all.”

Inkblots on September 15, 2010 at 3:47 PM

Greenpeace also said that the Bush tax cuts should be allowed to expire and he supports raising taxes.

txag92 on September 15, 2010 at 3:11 PM

I thought I saw that somewhere. Do you have a link? I just went looking for it and couldn’t find it.

Vince on September 15, 2010 at 3:34 PM

Never mind. I found it. He said cut spending and raise taxes.
Then he said, “where am I”? Then he started muttering and smacking himself in the forehead.

Vince on September 15, 2010 at 3:50 PM

That’s largely because stimulus spending is not proving as effective as many had hoped.

Gee, no kidding. A lot of us knew it wouldn’t work because stimulus spending HAS NEVER WORKED as advertised and mostly makes things worse. There are countless historical examples that prove this to anyone who bothers to look at them honestly.

But the statists will continue to attempt these crackpot Keynsian schemes as long as they’re given cover by the corrupt fools who call themselves intellectuals.

RadClown on September 15, 2010 at 3:51 PM

How was it supposed to work?

Was it to revive the economy or was it to nosedive the economy?

Chip on September 15, 2010 at 3:58 PM

yeah, but it is the fairness that counts, don’t you see? everyone will be taken care of…the jobless will have a permanent stipend, the homeless will be housed

it works great in the EU…yeah, they have a 25% less standard of living…but it is much fairer

and the elites will continue their dynasties…it is all very fair

r keller on September 15, 2010 at 3:59 PM

“Major Major’s father was an outspoken champion of economy in government, provided it did not interfere with the sacred duty of government to pay farmers as much as they could get for all the alfalfa they produced that no one else wanted or for not producing any alfalfa at all.”

Inkblots on September 15, 2010 at 3:47 PM

Lots of farmers that live where I do act this way.
But to be fair, the govt has so taken over the farming industry that if you want to farm your family’s land, you almost have tot ake subsidies to compete with those that do.
It’s nasty stuff.

Badger40 on September 15, 2010 at 3:59 PM

Greenspan: Stimulus package “worked far less than expected”

wow how brilliant is this guy? maybe he’s been around his wife a little too long?

jbh45 on September 15, 2010 at 4:01 PM

Inkblots on September 15, 2010 at 3:47 PM

Catch-22?

Chip on September 15, 2010 at 4:04 PM

They’re sinking billions of dollars into 19th-century infrastructure like trains while ignoring what really gets investors interested in the US.

Up next: modernize the Erie Canal to accommodate supertankers!

ya2daup on September 15, 2010 at 4:05 PM

Greenspan = Suuuuuuuuuuuuuuuuu-per Genius…

Khun Joe on September 15, 2010 at 4:06 PM

So why is it being spent on roads that are JUST FINE? And for SIGNS?

Badger40 on September 15, 2010 at 3:02 PM

Probably b/c the Obama administration thinks that ND is a province of Canada.

VibrioCocci on September 15, 2010 at 4:07 PM

Greenspan: Stimulus package “worked far less than expected …”

” … but worked extraordinarily well at making many not work at all. Let’s declare victory and move on.”
– Barack Hoover Obama

ya2daup on September 15, 2010 at 4:07 PM

OT: Isn`t this Obama`s BIG ANNOUNCEMENT DAY? When do we get the bad news?

ThePrez on September 15, 2010 at 4:09 PM

Badger40 on September 15, 2010 at 3:02 PM

I hear what you are saying but, your extra costs are not being passed on to the middleman and the consumer. Here is why. I don’t know of any other self-employed businesses, such as farmers/ranchers, whose prices are set by someone else.

Mirimichi on September 15, 2010 at 4:14 PM

Pfft!
Ok. I’m don’t see your sarc tag. But I know you must mean it!
BTW-it’s funny aobut RR’s.
We need them badly in ND & yet they are scarce.
Hmmm…..

Badger40 on September 15, 2010 at 3:35 PM

It was a Simpsons reference… because the Stimulus was sold to us like the monorail to Springfield.

To wit:

Hey, it put Ogdenville, North Haverbrook, and Brockway on the map!

John Deaux on September 15, 2010 at 3:31 PM

And as for trains in ND… if the demand was such that somebody could make money from them… you’d have rails in ND. Perhaps the need is not as great as thought.

mankai on September 15, 2010 at 4:16 PM

Hey here is an idea let’s have STIMULUS II
This time lets take 787 billion and divide by the number of LEGAL citizens who are registered to vote before July 4th 2010 and split it equally between them and exempt it from income tax

ELMO Q on September 15, 2010 at 4:28 PM

The R&D cycle last for years, and a single-year tax credit will not incentivize businesses to start multi-year projects. It will only inject more uncertainty into the business environment.

Bingo. Without multi-year R&D incentives, high tech companies are not going to do it, at least in this country. I have a very good friend who works for Intel in Penang, Malaysia doing just such R&D. There’s a few reasons Intel is there. There are fewer government regulations and taxes, salaries are lower, and there is a very well educated and motivated population who want a piece of the pie.

simkeith on September 15, 2010 at 4:40 PM

Mr One Trick Pony won’t even bother to listen. There is no way but the Socialist Way.

GarandFan on September 15, 2010 at 4:40 PM

Unfortunately, if you do, you’ll be far ahead of this White House.

No kidding. There’s no way in hell this administration would admit they took a wrong turn, even if 25% unemployment was smacking them in the face. They’ll continue to say this dog will hunt no matter the consequences. Same with their insistence that health care will lower our costs.

scalleywag on September 15, 2010 at 4:46 PM

ya2daup on September 15, 2010 at 4:05 PM

Don’t give them any ideas. We are talking Northeast UNION jobs!

BTW, a genius poster hereabouts pointed out the WH emphasis on union and blue collar people. Watch and learn.

IlikedAUH2O on September 15, 2010 at 4:47 PM

Greenspan: Stimulus package “worked far less than expected”

Another broken crystal ball. Funny, I know a lot of people whose predictions about the stimulus were right on.

Of course, some of those people aren’t as accurate at calling Senate primaries…

hawksruleva on September 15, 2010 at 4:52 PM

You know, this whole thing is very simple. It’s kind of like, well like running a household or maybe a business, if you earn $1000 then why spend $5000? So, Mr. or Ms. Goverment, why do you spend more than ‘you earn’, oh, u do earn the money you spend don’t you??????????????????????????????????????

foxone on September 15, 2010 at 4:53 PM

Unexpectedly!!

It needed to be said.

OK, I’m not the first to say it (Curse you, SeattleJohn) but it needed to be said again!!

tom on September 15, 2010 at 4:55 PM

if the demand was such that somebody could make money from them… you’d have rails in ND. Perhaps the need is not as great as thought.

mankai on September 15, 2010 at 4:16 PM

Think again.
I cannot tell you what the machinations are behind it, but trains are always needed in ND during harvest time.
Elevators basically only have ONE RR company to go to to get railcars.
BNSF tells an elevator what they can get & that’s pretty much it.
The rest of the small elevators are SOL.
I don’t have any answers, but this super consolidation of elevators is not a good thing. Elevators are not just going out of business bcs of a lack of railcars. I would say that is bcs of insurance coverage & being refused it so they can’t do business anymore.
But there is a demand for railcars in ND & SD & that need is not being met sufficiently.
I know bcs I live here & my husbands works with elevators depending upon railcars.
It’s not the market that controls this entirely.

Badger40 on September 15, 2010 at 4:57 PM

mankai

It could be as simple as startup costs for a RR etc. + pensions etc have made it impossible to meet the demand even though there is a big one.
And it is the govt that is responsible for that.

Badger40 on September 15, 2010 at 4:59 PM

Greenspan also said that the Bush tax cuts should be allowed to expire and he supports raising taxes.

There’s a fairly solid consensus that deficit fighting has to take the front seat, at the expense of tax cuts. The reason the tax cuts were made temporary in the first place is because not everyone believed they were sustainable. (Remember that Bush’s own Treasury Secretary, Paul O’neill, was the first to object to some of the tax cuts.)

As for the stimulus, the sad truth is that no one knows how to repair this economy. Other than the Great Depression- which occurred in an era without the Fed and other institutions designed to prevent the financial system from completely failing again- we simply don’t have any experience when it comes to dealing with a crisis of this magnitude. Leading economists like Bernanke had been writing off the possibility of what occurred in 2007. As Barron’s has pointed out, only foreign crises, such as Japan’s ‘balance sheet’ recession, offer any meaningful comparison to the systemic problems faced by the US today.

bayam on September 15, 2010 at 5:00 PM

I have a very good friend who works for Intel in Penang, Malaysia doing just such R&D. There’s a few reasons Intel is there. There are fewer government regulations and taxes, salaries are lower, and there is a very well educated and motivated population who want a piece of the pie.

You’re right, and this is the general discontent feeding the Tea Party, although Tea Party members lack the intellectual framework to understand what’s going on. The world has changed dramatically and global barriers have fallen over the past two decades. Engineers in Malaysia happily earning $8 per hour are now competing head to head with far less educated Americans. Guess who’s losing in terms of opportunities and wealth.

bayam on September 15, 2010 at 5:05 PM

This is rich since so much of the real estate collapse is directly attributable to his making money so cheaply available to loans to street people, gypsies and other non-credit worthy people.

But, in any event, I hope he is having fun at the CFR.

I have heard it’s not as fun as hobnobbing at the Bilderberg Group and Trilateral Commission retreats.

I hope he left the little lady at home.

She has had more plastic surgery than Michael Jackson.

molonlabe28 on September 15, 2010 at 5:17 PM

This guy should go back and read Ayn Rand all over again.
He certainly forgot when he became chairman and must of burned
his copies when he married Andrea.

lilium on September 15, 2010 at 5:35 PM

Worked about as well as anyone here expected it to. Which is to say, not at all!

NoLeftTurn on September 15, 2010 at 6:10 PM

No SH#% Einstein.

Hummer53 on September 15, 2010 at 10:47 PM