As he campaigns for re-election, U.S. President Barack Obama wants voters to believe his 2009 stimulus package played a key role in the economic recovery.
But while the American Reinvestment and Recovery Act (ARRA) did indeed help many people by spreading more than $787 billion around the country, it fell short of its goal of stimulating an economic recovery.
That's because about two-thirds of the stimulus package either went to debt reduction or into people's savings accounts. Neither boosts the economy.
That's the perspective - with some exaggeration for effect - you'll hear from Republicans during the presidential campaign.
"At the signing of the 'stimulus' three years ago, President Obama said he wanted to be held accountable for the results of his spending binge," House Speaker John Boehner said last week. "Today, there's no denying the fact that his 'stimulus' policies not only failed, they made things worse."
President Obama will need to shift the focus to ARRA's benefits. It did put a lot of money into the hands of millions of people through the tax rebates and extra entitlement spending on Medicare and unemployment benefits. And he can fall back on his mantra that the stimulus package kept the crisis from getting worse.
"Most economists - almost every economist - will tell you that had we not put [ARRA] in place we could've tipped into a great depression," President Obama recently told ABC News.
And yet that's not quite the same thing as jumpstarting the economy.
"Ultimately the stimulus did not live up to the promise of what the American public expected it to do, and that's bring about a strong, sustainable recovery," Michael Grabell, author of a new book on ARRA, "Money Well Spent?" told The Daily Ticker.
A Massive Stimulus PackageOne would think the sheer size of the stimulus package would have done more than just keep things from getting worse.
"In raw dollars, inflation adjusted, the stimulus comes out as the biggest - bigger than the moon race, the [Works Progress Administration], the Louisiana Purchase, the Manhattan Project," Grabell told The Fiscal Times.
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Money Morning's Fitz-Gerald Debates the Corporate Tax Break Proposal
Lawmakers in Washington are mulling a one-time corporate tax break on foreign earnings that could provide a bonanza to many U.S. multinational corporations.
If enacted, the holiday would allow U.S. corporations to bring home profits they stashed overseas at a much lower rate - about 5% as compared to the usual 35%.
Corporate Tax Holiday Could Put $1.2 Trillion in Shareholders' Pockets
Lawmakers in Washington are mulling a one-time corporate tax holiday on foreign earnings that could provide a bonanza to many U.S. multinational corporations.
If enacted, the holiday would allow U.S. corporations to bring home $1.2 trillion in profits they have stashed overseas at a much lower rate - about 5% as compared to the usual 35%.
Many large multinationals, particularly those in the health and tech sectors, say the tax holiday would be the equivalent of a "free" stimulus package: the government would recover tax revenue while the companies would have more money to invest in job creation, factories, equipment, and research and development.
Of course, corporations fed most of the booty from a 2004 tax holiday back to shareholders in the form of dividends and stock buybacks.
But that's not what the multinationals want Washington to hear. They've formed a coalition to lobby the job creation/investment angle on Capitol Hill while using the weak economy as an ally.
Investing in Canada: The World's Safest Economy
I've said it once, and I'll doubtless say it a few dozen more times before the U.S. economy returns to health: Just because you have to endure recessionary conditions doesn't mean that your money has to.
That's the argument I make when I urge Americans to search for investments outside U.S. borders. Ironically, your money doesn't have to travel all that far: What's arguably the world's "safest economy" is actually located just north of the border.
I'm talking, of course, about investing in Canada.
For the five ways to profit from Canada, please read on...
Obama Stimulus More About Politics Than Jobs
U.S. President Barack Obama yesterday (Wednesday) finished unveiling of a $350 billion stimulus package that the White House hopes will assuage the fears of troubled homeowners and create jobs. But with midterm elections looming and Congressional Democrats expected to sustain heavy losses, it's unlikely the plan will even get passed - much less generate any meaningful economic growth.
Indeed, the true aim of Obama's new stimulus is to put Republicans in a difficult position.
"The president has changed the conversation from whether to renew or terminate President Bush's tax cuts to his own tax-cut agenda, and is promoting a couple of business-friendly proposals that Republicans have previously promoted," David Wessel wrote in The Wall Street Journal. "So Republicans either oppose them, and look hypocritical, or back him: a win-win for Democrats."
Obama's new proposals employ a front-loaded approach with tax cuts to spur business spending and infrastructure projects to promote job creation.
Obama Floats $350 Billion Stimulus Package to Re-Ignite Economy
Faced with pre-election polls showing strong Republican support leading up to the mid-term elections in November, President Barack Obama is floating a $350 billion stimulus package designed to assuage the fears of troubled homeowners and create jobs.
In another move aimed at stabilizing a shaky economic recovery, the president today (Wednesday) will officially unveil a new $200 billion tax cut that gives businesses across the country incentives to buy new equipment, an anonymous administration official told CNN.
The proposal would be in addition to a $100 billion permanent extension of the business tax credit for research and development, as well as a $50 billion six-year program to fix roads, railways and runways and modernize the air-traffic control system.
We Want to Hear From You: Should the U.S. Government Offer More Incentives to Help the Housing Market?
Experts fear that the already-battered U.S. housing market is getting ready to stall again, leaving the Obama administration to decide what - if anything - it should do next.
Standard & Poor's Case-Shiller Home Price Indices yesterday (Tuesday) reported that home prices rose 3.6% in the second quarter from a year earlier - but the boost came from the homebuyer tax credit that expired in April. And that doesn't bode well for the housing market's near-term outlook.
"The numbers were inflated by the homebuyer tax credit," David Sloan, a senior economist at 4Cast Inc. in New York, told Bloomberg. "The numbers will be going down in the coming months. We could see some significant declines."
Can the Obama Administration's New Stimulus Plan Revive the Housing Market?
Worries about the sorry state of the U.S. economy have officials from the Obama administration digging deep into their bag of tricks to stop the skid before it slips into a double-dip recession.
Their latest move was announced Sunday when Housing and Urban Development Secretary Shaun Donovan said the White House plans in the next few weeks to set up an emergency loan program for the unemployed and a government mortgage refinancing effort.
Despite all the monetary and fiscal firepower the U.S. Federal Reserve and the Treasury have deployed, economic growth has slowed to an agonizing pace. The slowdown has hit the housing market particularly hard, as evidenced by home sales that dropped to record lows in July.
Japan Stimulus Not Enough to Ensure Economic Recovery
Japan yesterday (Monday) attempted to halt the surging yen by outlining stimulus measures and easing its monetary policy, but markets failed to respond.
Prime Minister Naoto Kan detailed a plan to implement a new stimulus program by the end of September, and the Bank of Japan announced after an emergency meeting that it would introduce new loan programs to encourage bank lending to consumers.
The yen has climbed more than 10% against the dollar since May, last week hitting a 15-year high of 83.60 per dollar and threatening Japan's export-driven economic recovery. Analysts were skeptical that the moves would do anything to change the currency value or stimulate the stagnant recovery, and said the measures are largely a political attempt to pacify Japanese consumers instead of actually halting the yen's rise.
Can High-Speed Rail Stay On Track in the United States?
President Barack Obama last year outlined an ambitious initiative to get high-speed rail on track in the United States. But while the government's high-speed rail initiative looked good on paper, it runs the risk of being derailed by high costs and political opposition.
"Railroads were always the pride of America, and stitched us together. Now Japan, China, all of Europe have high-speed rail systems that put ours to shame," Obama said last year announcing his plan.
While most passenger trains in the United States travel at the maximum allowable speed of 79mph, trains in Europe and Asia typically travel in excess of 125mph. In France, for example, the Train Ga Grande Vitesse (TGV) travels at an average speed of 133 mph. Another French train actually reached 357.2mph in 2007, setting a new world record.