Stimulus Fail: when can we declare Keynesian economics dead?

Economics has various schools of thought. The Keynesian school, popular among Democrats, believes that, if the government spends money that it doesn't have, then, through a multiplier effect, the economy will grow. Thus, back in early 2009, economists working for Pres. Obama calculated that, without additional government spending, the unemployment rate would follow the light blue curve. With the stimulus spending, they calculated that it would follow the dark blue curve, never going over 8% and dropping to 5.5% by today. The stimulus passed but the actual unemployment rate is shown by the red dots (click on any figure to enlarge):

If there were as many people in the workforce today as there were when Obama took office, the unemployment rate would be 10.7%. The rate has drifted down over the past two years only because people have left the workforce: giving up, retiring, or going on disability.

How large was the actual stimulus? This chart shows deficit spending since 2000 with Obama's actual deficits shown by orange bars. The red and pink bars are, respectively, projections by CBO and the White House:

Liberals like to claim that deficits are due to Bush's war spending. This chart shows otherwise. As Pres. Bush's war spending ramped up, deficits dropped. Deficits started increasing again only after Democrats took control of both houses of Congress in 2007.

Now that Democrats have had this four year experiment with extreme deficits while the economy had the worst recovery since the Great Depression, can we declare Keynesianism dead?

Of course, we can't.  Keynesianism justifies their power.

Obama warns that excessive debt endangers jobs!

In an email today, The Barack Obama campaign explains what is wrong with "Romney economics":

On the campaign trail, Mitt Romney points to his private sector experience as his chief qualification to be president.

So we took a look at that experience, and put together a new site, RomneyEconomics.com, on it. Take a look for yourself here.

Let me sum up how Romney economics works:

Romney and his partners bought companies across the United States, often loading them up with debt in the process.

Too often, they slashed pensions, benefits, and jobs, while paying themselves and their shareholders straight from the debt they'd accumulated.

Because of that debt, several of these businesses went bankrupt, leaving workers without jobs, without pensions, and without health care -- all while Romney and his partners walked away with millions.

What other companies loaded up on debt and then went bankrupt, leaving workers without jobs, but enriching well-connected investors? Solyndra comes to mind.

What else has piled on the debt while shedding jobs? The US under Obama.

Like so many Democrat criticisms of Republicans, this one seems driven by psychological projection.

PREVIOUSLY on the subject of psychological projection:
•Liberals and their vivid imagination
•Homophobia and liberals
•More psychological projection: Democrats says those racists call them names
•The masters of astroturf claim that tea parties are astroturf
•Air America projects hate
•Air America fantasizes a right-wing hate machine
•Syria imagines that Israel does not want peace
•The New Republic says lying is 2nd nature to Republicans
•Rahm Emanuel caught projecting his strategy onto Republicans
•Alec Baldwin projects his hate onto Republicans
•Progessives and prejudice and hate
•HuffPost blogger projects enviro-hypocrisy
•Dems accuse other Dems of acting like Republicans

Obama's upside down world

At a fundraiser in Maine, Pres. Obama explained:

"We won't win the race for new jobs and new businesses and middle-class security if we cling to this same old, worn-out, tired `you're on your own' economics that the other side is peddling," Obama said.

"It was tried in the decades before the Great Depression. It didn't work then. It was tried in the last decade. It didn't work," he said. "You know, the idea you would keep on doing the same thing over and over again, even though it's been proven not to work. That's a sign of madness."

Is it really necessary to explain that the left-wing interventionist policies of the FDR were a disaster that made an economic downturn last a whole decade? Obama's similar interventionist micromanagement of the economy has made economic bad times last the whole time he has been in office.

Obama's point, if he has one, might be that the 1920s ended with a recession just as Obama's turn in office began in a recession. Recessions happen every several years and, as the Austrian school of economics teaches, human nature seems to make them unavoidable. Thus, economic success is when recessions are short or mild. By this test, Obama and FDR both fail.

Obama on cleaning up

From LMAObama:
Our President is likely referring to this mess:
Obama either doesn't understand or doesn't care that it will take generations to pay off the debt that he will have accumulated in just four years.

How much debt is Obama piling up? Following Obama's projected budget, the debt, as a fraction of GDP, is shown here in red:
For reference, a national debt of 100% of GDP or more is generally considered a danger sign. Under Obama's plan, Social Security and Medicare will soon run out of money. Rep. Ryan has proposed an alternative plan under which the deficits decline as shown in green. Democrats, of course, find his plan outrageous.

2009 Stimulus bill: the prosecutions begin

Politico reports that law enforcement is now catching up with Obama's 2009 Stimulus/Porkulus bill:

In written testimony prepared for delivery to the House Oversight and Government Reform Committee today, Inspector General Gregory Friedman said the investigations have involved "various schemes, including the submission of false information, claims for unallowable or unauthorized expenses, and other improper uses of Recovery Act funds."

So far, the investigations have led to five criminal prosecutions and brought in "over $2.3 million in monetary recoveries," Friedman said.

Why wasn't the stimulus money well-spent?  In the case of the Dept. of Energy, here is one clue:

The stimulus funding DOE received — more than $35 billion — was greater than previous annual budgets for the entire agency, most notably its $27 billion in funding for fiscal 2011.