Hoovernomics, again?
While we're contemplating the new spectacle of debt ceiling negotiation, or the absence of negotiation, as the case may be, Paul Krugman looks back on the structure of the Recovery Act, i.e. the
original stimulus:
Look at the peak quarter of stimulus (pdf), which was the first quarter of 2010. I’m going to rearrange the categories a bit. Here’s how I read it: at annual rates (in other words, actual numbers in the quarter were only 1/4 as large), the total budget impact was $357 billion. Of that, we had:
Tax cuts and refundable tax credits: $151 billion
Aid to individuals (mainly unemployment insurance and food stamps): $70 billion
Aid to state and local governments: $103 billion
Everything else: $33 billion
First off, note the prominence of large tax cuts, needed to secure enough GOP votes to do anything at all. The real world job creation implicit in those are small, as has been demonstrated repeatedly. Unemployment insurance and food stamps don't directly create jobs; they're assistance to people who have already lost theirs. Aid to state and local governments allowed state and local governments to not cut quite so deeply as they otherwise would have needed to.
Each of those is probably responsible for salvaging some jobs (the tax cuts being the most minor, the direct aid to individuals most substantive) via general stimulus effect, but aside from the last one, that nebulous "everything else," they're not specifically creating jobs. And that's if we just presume "everything else" contains only direct, New-Deal-style job creation measures.
So I don't know how much of a shock it should really be to anyone that unemployment is still at 9.2%, which, you may remember, was considered a near-apocalyptic worst case scenario not all that long ago, but is now considered the new normal. Even our "stimulus" package was only really designed to shore things up from getting catastrophically worse—a fine goal, mind you—but it didn't include much that might make the jobs situation markedly better. For that, we'd need to pump much more money into direct economic stimulus, like infrastructure programs, and those things are considered anathema by one of the two parties.
None of that's on the table. Instead, both parties have fallen firmly into the "austerity now" framework, in which the only acceptable discussions center around cutting the deficit right now, during massive unemployment, and only by using (1) tax cuts, for absolutely no logical reason, and/or (2) cutting government spending. The first is just the usual mumbo jumbo that blessed us with this deficit in the first place, discredited at this point as anything but voodoo class warfare for the sake of voodoo class warfare. The second is going to directly undo the stimulus measures above, forcing government to directly trim jobs as opposed to shoring them up. The Democrats are, to their credit, countering the "more tax cuts for the rich" nonsense with talk of closing tax loopholes on the wealthy, thus raising their taxes to ever-so-slightly higher (although nowhere near historically "high") levels, which if the White House holds firm on might actually do a small bit to reduce the deficit that the Republicans claim to be so up in arms about, after a fine long decade of not noticing the deficit at all.
Jobs, though? Not on the table. You know how Democrats and Republicans have been running around telling us what is and isn't "on the table" during these debt ceiling negotiations? Creating new jobs hasn't even rated a substantive mention. That table is apparently big enough to hold tax cuts, tax increases, tweaks to Medicare, Medicaid, Social Security, trade treaties, proposed constitutional amendments and what have you, but that damn table has at no point had any robust mechanism for additional jobs on it.
Short version: everything they're talking about is going to do nothing for our current unemployment situation, or will directly make it worse. Nothing they're talking about is going to boost demand, which is necessary to boost employment numbers—but a lot of what they're talking about may shrink demand under the banner of "austerity."
As Atrios says, "we're doomed."
For more discussion see bobswern's recommended diary.