Monday, June 8, 2009

Obama: "A Long Way to Go to Recovery"

I've been trying to track stimulus related projects and what impact they are going to have on the economy. In doing some digging at recovery.gov, and other various sites, the stimulus money allocated so far has been in 3 areas:

1) Increased Medicaid Funding

2) Highway Infrastructure Investment

3) State Fiscal Stabilization Fund

Today we got a little more commentary by the President on the employment situation:

  • President Barack Obama said on Monday he expected to create or save 600,000 jobs over the next 100 days by expediting 10 major projects funded by a huge stimulus package that Congress passed in February.
  • "We have a long way to go on our road to recovery, but we are going the right way," Obama said. His statement came three days after a Labor Department report showed the U.S. unemployment rate rose to 9.4 percent in May, even though the pace of monthly job losses slowed to 345,000.
The concept of "create of save" xx amount of jobs is an abstract concept. There is no way to measure saved jobs, but it gives the government an out in a difficult job market. When I look at the major investments the stimulus has made so far, only highway infrastructure investment carries the potential to create jobs. The other funds are allocated to social programs and play more into that "saved jobs" grey area.

Don't get me wrong, many states are in serious trouble. The lack of fiscal discipline has been a problem on the national, state, and individual level. I'm just skeptical in sweeping, federal government programs and their potential to address the problem. There are states that have avoided crisis by being more conservative. Fund My Mutual Fund picked up this story today.

In my opinion, the only way to fix these fiscal problems is to face some tough realities. We need to take our medicine and cut expenditures so we can be functional again in the future. If we don't do this, we will have a society completely at the mercy of a ever-increasing federal government which is only printing money for a short-term fix. This trend will only escalate without an shift in policy.

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