U. S. Economy Grows: Well Sorta’

The Commerce Department reports that the U. S. economy grew at a 3.5% annual rate in the third quarter pushed along by the taxpayer financed economic stimulus package (ESP) – 43% of it financed with borrowing. A big chunk of that “growth” was spending related to city, county, state and federal governments and things like “cash for clunkers.”

An AP investigation found that a quarter of the supposed 30,000 jobs reportedly saved or created by the ESP are bogus prompting the White House to promise to correct the “error.” The White House says the inflated report is a result of over enthusiastic reporting by recipient of taxpayer money, for instance:

·         Colorado-based Teletech Government Solutions had worked with the Federal Communications Commission to come up with a job count for its $28.3 million contract for call centers fielding consumer questions about conversion of televisions to receive digital signals. The company reported creating 4,231 jobs - the highest number listed in the first stimulus accounting - even though 3,000 of those workers received a paycheck for five weeks or less and were laid off.

·         A child care center in Florida reported it saved 129 jobs with the help of stimulus money. Instead, it gave pay raises to its existing employees.

Elsewhere in the U.S., some jobs credited to the stimulus program were counted two, three, four or even more times.

 “Cash for clunkers” sparked the purchase of new cars. But, as soon as that money ran out GM and Chrysler back slid and GM has already got its hand out for billions more just to be able to operate.

According to Edmunds, the folks that track things automotive, the net increase of new cars sold due to “cash for clunkers” was 22,000 cars and assuming everyone qualified for $4,500 that averages $45,354 for each net new car sold that otherwise would not have been sold.

If this seems somehow familiar it should. Henry Morgenthau, Jr. FDR’s Secretary of the Treasury from 1934-1945 said, “We have tried spending money. We are spending more money than we have ever spent before and it does not work. And I have just none interest, and if I am wrong . . . somebody else can have my job. I want to see this country prosperous. I want to see people get a job; I want to see people get enough to eat. We have never made good on our promises. . . . I say after eight years of this administration we have just as much unemployment as when we started . . . . And an enormous debt to boot! “

Despite this history and the inevitable fiduciary fornication the Commerce Department’s report is better than a sharp stick in the eye even if it won’t be sustained.