Posts Tagged ‘$1.79’

Says Nancy Pelosi: ‘The More Americans On Unemployment And Food Stamps, The Better For The Economy.’

October 8, 2010

On the unemployment situation and food stamps, Nancy Pelosi said this:

“It is the biggest bang for the buck when you do food stamps and unemployment insurance. The biggest bang for the buck,” she said

Pelosi said that for every dollar a person receives in food stamps, $1.79 is put back into the economy.

Apparently, according to the leading Democrat in Congress, if every single American lost their job, and went on unemployment and food stamps, our economy would nearly double overnight, obviously resulting in an immediate recovery.

Which is to say, Obama, Pelosi and Reid should destroy even MORE jobs so that even MORE Americans are on unemployment and food stamps.  The more Americans getting food stamps, the bigger the bang.  And if Democrats get the chance to destroy a few more million jobs, all those millions of people receiving unemployment and food stamps will have our economy raring back in no time due to that zany multiplier effect.

But the problem is, Nancy Pelosi, the Obama administration and the entire Democrat Party are abject fools.  That big bang Nancy thinks she hears is our economy IMPLODING.   As an IBD article points out, even EUROPE now realizes this sort of government spending is counter-productive:

This is the big reason why they’ve made such a mess of the economy. They actually believe the more the government spends, the better off we all are — contrary to all evidence that suggests, in fact, cutting spending would push up economic growth.

The mistakes began as soon as the new administration entered office. Then, two of its main economic advisers, Christina Romer and Jared Bernstein, estimated a multiplier effect from government spending of up to 1.55. That is, for every $1 the government spent, the economy would grow by as much as $1.55.

But a study by the International Monetary Fund debunks the idea. As noted by Stanford University economist John Taylor, the IMF study shows a multiplier of just 0.70 — that is, for every $1 the government spends, the economy sees just 70 cents in activity.

This means that government spending crowds out other components of GDP (investment, consumption, net exports) immediately and by a large amount,” wrote Taylor (see chart).

In short, two years of massive government bailouts and the projected surge in spending-driven deficits of as much as $12 trillion over the next decade have done nothing to make our economy healthier.

Instead, we are 3.8 million jobs in the red since President Obama took over. Unemployment remains stubbornly close to 10%, even as the White House touts its “Recovery Summer.”

The International Monetary Fund – which has been a great friend of liberals – utterly contradicts the ridiculous multiplier effect cited by the White House and now by Nancy Pelosi.  A picture is worth a thousand words, in this case:

Democrats are mocking Christine O’Donnell as a witch; but Nancy Pelosi is the real witch, in that she believes she can magically transform a dollar into a dollar seventy-nine – just by blessing it with bureaucratic magic.

And note: “Democrats,” as in Demonic Bureaucrats.

Newt Gingrich rightly wants to contrast Democrats and Republicans as the difference between “the Democratic party of food stamps and the Republican party of paychecks.”  And, as incredible as it might seem, Nancy Pelosi basically agreed with Newt Gingrich.

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