The new jobs bill that is being talked about in the Senate really is nothing more than Stimulus 2.0. The House already passed a $154 billion jobs bill, and now the Senate is looking at a new stimulus worth between $80 and $140 billion.
Of course this time around it won’t be called a stimulus. That word has become beyond loaded over the past year. In fact, the president hasn’t even mentioned the word stimulus since October. Neither has Bob Gibbs, except for a quickly corrected occasional slip of the tongue here and there. This is because for all the rhetoric from the White House when the stimulus debate was being raged, the economic recovery has not offered the promised results. Instead, banks are perceived to be well on their way to full health and unemployment is tanking.
In reality, the banks are still in deep water, but the TARP supported profits have allowed them to create a facade of security which has helped their stock and access to credit. A sign that they aren’t really healthy is the lack of credit flowing throughout the market. Both interbank lending and credit for manufacturing, businesses large and small, and individuals is still limited. And that is why the economy is still sluggish.
But all of this begs the question: if the stimulus has become so unpopular because of its lack of success, why are we doing another round?
According to Congress Daily the proposal “spells out $29 billion for spending on highways, transit, high-speed and intercity passenger rail, airports and schools.” But what is this going to do to help after spending $48 billion in last February’s stimulus, which has already been shown to be a failure. Unless the goal was to create a handful of unsustainable, part-time, short-term construction jobs.
Another $40 billion is said to be to create a pool of cash to lend to small businesses. This money would essentially by pass the banks all together and have the government lend directly small businesses (which the SBA already does to a limited degree). The problem is that for every dollar the government lends directly to the market is a dollar not being demanded from the private sector. This puts the government in unfair competition with private sector lenders, forcing them to lend at depressed prices that do not reflect the real cost of credit.
For more see the Taxpayer’s Guide to the Stimulus.