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.