Printer-friendly versionSend to friend

July 3, 2009 (LPAC)—Both of President Barack Obama's big "behavioral economics" experiments were launched at the same time: the Recovery and Reinvestment Act of 2009—known as "the stimulus bill" signed on Feb. 17; and the mortgage foreclosure relief program announced by Obama on Feb. 19. Both incompetent policies have already flopped; along with Obama's policy of starving the state governments of any protection, they are bankrupting the U.S. economy.

With the announcement of June jobs figures by the Bureau of Labor Statistics (BLS) today, the Obama "stimulus" act is a very unstimulating failure. Through June, 2.4 million jobs have officially been lost, net, in the U.S. economy since Obama signed his "stimulus," and 3 million lost since he took office. The 467,000 reported net loss in June was worse than in May, and "much worse than expected" by pundits who were buying the White House/Federal Reserve "green shoots of recovery" propaganda.

Another 79,000 construction jobs disappeared in June, making -360,000 since the "stimulus" was signed and was supposedly going to create new construction/public works jobs; public and private construction investment has actually dropped since then. Another 136,000 were eliminated in manufacturing, making -610,000 jobs under behavioral Obamanomics. And the auto sector, Obama's most targetted industry, lost 27,000 in June, making -101,000 in four months. The total real unemployment figure—including forced part-time and discouraged labor force dropouts—rose in June to at least 26 million, and if long-term discouraged workers are counted, 30.5 million. Average weekly wages fell for the second month, and second-quarter wages fell from first quarter. New unemployment claims continued unabated in the latest week, 614,000.

The Obama mortgage-relief program, based on behaviorist "nudges" to lenders and borrowers to "incentivize" refinancing, is a flop. Fannie Mae has estimated that 20,000 mortgage holders had refinanced under the program by late June (during that same period about 1.3 million households got foreclosure notices). Back on Feb. 19 Obama said it "could help 4-5 million borrowers." So, today, HUD Secretary Shaun Donavan expanded the program to homeowners who are up to 25% underwater (their home is worth 25% less than their mortgage loan), a move he publicly rejected two months ago. This won't work either, but it will expand Fannie Mae's and Freddie Mac's financial losses.