Stimulus? Still a failure.

[badlydrawnjeff.livejournal.com]

The failure of the stimulus isn't exactly news, and hasn't been for some time. Thankfully, more and more people are getting on board.

For instance, it looks like we might not have needed it to begin with. Granted, since stimulus of this nature doesn't work, we never need it, but the justification for it isn't so strong anymore:

"We had to hit the ground running and do everything we could to prevent a second Great Depression," Obama told supporters last week.

...

IBD reviewed records of economic forecasts made just before Obama signed the stimulus bill into law, as well as economic data and monthly stimulus spending data from around that time, and reviews of the stimulus bill itself.

The conclusion is that in claiming to have staved off a Depression, the White House and its supporters seem to be engaging in a bit of historical revisionism.

...

The argument is often made that the recession turned out to be far worse than anyone knew at the time. But various indicators show that the economy had pretty much hit bottom at the end of 2008 — a month before President Obama took office.

Stanford's John Taylor showed us that tax credits and directed spending was fairly worthless:

Individuals and families largely saved the transfers and tax rebates. The federal government increased purchases, but by only an immaterial amount. State and local governments used the stimulus grants to reduce their net borrowing (largely by acquiring more financial assets) rather than to increase expenditures, and they shifted expenditures away from purchases toward transfers.

Some argue that the economy would have been worse off without these stimulus packages, but the results do not support that view.

Even Harvard's Robert Barro is on board to an extent. While he has yet to come around on the fact that stimulus has not ever been shown to work, he's at least noting that the merits of spending need to be more important than the stimulating impact:

"In the long run you have got to pay for it. The medium and long-run effect is definitely negative. You can't just keep borrowing forever. Eventually taxes are going to be higher, and that has a negative effect," he said.

"The lesson is you want government spending only if the programmes are really worth it in terms of the usual rate of return calculations. The usual kind of calculation, not some Keynesian thing. The fact that it really is worth it to have highways and education. Classic public finance, that's not macroeconomics."

With murmurings that we may need a second stimulus, the question remains as to why we'd pursue such a thing given the track record of the first. At this point, if you're still a proponent of Keynesian-style stimulus, why? What will it take to convince you that it will not succeed?

Comments

[jlc20thmaine.livejournal.com]

Turn down the volume on the liberal hyperbole, where every Republican in Congress secretly wants to destroy Social Security, and it is not hard to discover the position of the Grand Old Party. Over the last forty years, the federal government has taken in about eighteen percent of GDP in taxes and spent about twenty percent of GDP in outlays, so why not just keep doing that?

The Democratic position is that the federal government should take in more and spend more – just how much more depends on how far to the left any given Democrat is.

Final point. Take a closer look at the federal outlays line in the above graph and consider that, according to the CBO, 116 percent of the increase between 2011 and 2085 comes from “Medicare, Medicaid, CHIP, and Exchange Subsidies.” Spending outside federal health entitlements will effectively be cut (as a share of GDP) over the next seventy years. It’s health spending alone that keeps us rolling on down the road to serfdom. In other words: The Democrats just enacted comprehensive reform of the health care system, and still the federal government is on pace to redistribute better than one out of every three dollars our grandchildren earn.



http://www.weeklystandard.com/blogs/morning-jay-should-gop-agree-raise-taxes_576334.html

[telemann.livejournal.com]

Thanks for making Brook's point.

[underlankers.livejournal.com]

And of those last 40 years, 28 have seen Republican Administrations attempting to revert the USA of the 20th Century to the Gilded Age. If their attempts have indeed failed so much, we must conclude that 1) Republicans are stupid and useless, and cannot make anything of controlling the Presidency whatsoever, or 2) that the Democrats are the only serious political party in the USA. Either conclusion is bad for the viability of conservatism as an ideology. :)

[xforge.livejournal.com]

Which is kinda depressing 'cuz I really don't like Democrats all that much. They're just "not as bad as the alternative."

[underlankers.livejournal.com]

I don't much like either party, and would support a fiscally conservative, socially liberal party were one to exist. Unfortunately no such party does exist. >.<

[xforge.livejournal.com]

If such a thing appeared in the US it wouldn't matter to me because I would drop dead from the shock.

[underlankers.livejournal.com]

Given the number of fundamentalist Christian libertarians I've met, I beg to differ that they are socially liberal.

[underlankers.livejournal.com]

Welcome to the Deep South. Doing it wrong is what we've been doing since the 1830s.

[kylinrouge.livejournal.com]

where every Republican in Congress secretly wants to destroy Social Security

It's no secret.

[xforge.livejournal.com]

"Secretly?" They've said it. In plain English. Multiple times. At political rallies. In front of cameras. Fox News practically has its own half-hour show every night called the Destroy Social Security Progress Report.