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

[xforge.livejournal.com]

*Hopefully* voters will finally notice Democrats are willing to compromise and Republicans aren't. Democrats have been lying around in the road with Republican tire tracks over their backs for long enough.

[telemann.livejournal.com]

In May, David Frumm was chiding the press and Obama for even *just suggesting* how bad it would be if the Congressional Republicans were going to the brink over the raising the debt ceiling, now Frumm is calling the current situation another "August 1914" and can't believe we're at this point. And oddly enough, Frumm blamed President Obama in way by his willingness to compromise with the worst elements of the GOP, has made things worse.

And he's pointed out Republicans apparently clueless about the effects of what a shut-down will be: and he said there's no doubt they'll be blamed for it because the GOP has branded itself as the anti-government party and will have achieved its goal. "Shut it down" has become a chant for some Tea Party folks. You know, the flag wavers and "God Bless American" types.

[xforge.livejournal.com]

And it doesn't even occur to them what happens when government closes down. People in Minnesota couldn't celebrate Independence Day at a public park, they were all closed. They don't think. At all.

[gunslnger.livejournal.com]

They should have climbed the gate. Wimps.

[jlc20thmaine.livejournal.com]

What plan have we seen from the dems? nothing yet. They haven't even presented a budget in over 790 days. At least McConnell has called obama's bluff. I guess obama needed to go on vacation and take a break from golfing. Now that he's back let's see if he will meet with repubs.

[telemann.livejournal.com]

Pssst. It was Congress that was on recess. Ya know, just inserting facts here. Oh and speaking of facts? In his first year and a half as President, George W. Bush vacationed 96 days. Over that same time period, President Obama has taken 36 days.

[xforge.livejournal.com]

::ignores you and your idiotic "Democrats have done nothing" talking point::

Oh and after eight years of The Vacation President, who I personally saw you defending and saying "he's allowed to take some time off if he wants," for Christ's sake STFU about Obama going and having a fucking round of golf, Jesus Christ already.

[underlankers.livejournal.com]

Well, under Nixon, Ford, Reagan, both Bushes, we've seen 28 of the last 40 years under some of the most reactionary Administrations since that of Andrew Johnson. If the GOP is indeed so feckless as to have utterly and abysmally failed in shrinking government in 28 out of the last 40 years, then either the Dems are the only party to consider seriously or Republicans are useless liars. This is why this line of argument is a bad one from if nothing else the propaganda point of view. :)

Re: And screw rocks!

[underlankers.livejournal.com]

Why yes this is a false dichotomy, I've learned my Rush Limbaugh lessons well. :)

Re: And screw rocks!

[htpcl.livejournal.com]

Icon win, btw.

[badlydrawnjeff.livejournal.com]

That would require the Democrats to, uh, be willing to compromise first.

[telemann.livejournal.com]

You can pry my private jet tax loop-hole from my dead, cold body.

[mrbogey.livejournal.com]

Yea the loophole was one of the sillier democrat plans both in it's creation and repeal.

[geezer-also.livejournal.com]

He shoots, he scores!

[xforge.livejournal.com]

Fucking guffaw. Are we talking about Nancy "Impeachment Is Off The Table" Pelosi or Harry "That's Okay, What I Wanted Wasn't That Important" Reid here? All Democrats DO is give in.

[badlydrawnjeff.livejournal.com]

Sure.

[nevermind6794.livejournal.com]

The Democrats already agreed to about $1.3 trillion in spending cuts. Once the issue of tax/revenue increases came up, the Republicans walked away.

The Democrats are constantly compromising. No public option, smaller stimulus, agreed to spending cuts, renewed all Bush tax cuts, etc.

[badlydrawnjeff.livejournal.com]

The Democrats already agreed to about $1.3 trillion in spending cuts. Once the issue of tax/revenue increases came up, the Republicans walked away.

So they say.

The Democrats are constantly compromising. No public option, smaller stimulus, agreed to spending cuts, renewed all Bush tax cuts, etc.

Public option and stimulus were compromises with Democrats, not Republicans.

They have not agreed to any real spending cuts, only minor cuts in the growth of spending.

The renewal of the Bush tax cuts included a payroll tax cut that has been a Democratic push for ages, and has an estate tax increase as well.

[nevermind6794.livejournal.com]

What do you mean, "So they say?" The Republicans say that, the Democrats say that, everyone says it. Your selective skepticism is weird.

Stimulus was a compromise with Republicans. Public option was a compromise with conservative Democrats, Lieberman, and an attempt at getting Republicans.

Your dissatisfaction with spending cuts does not change my point.

[badlydrawnjeff.livejournal.com]

What do you mean, "So they say?" The Republicans say that, the Democrats say that, everyone says it. Your selective skepticism is weird.

I'm skeptical period. I don't know how true any of it is.

Stimulus was a compromise with Republicans. Public option was a compromise with conservative Democrats, Lieberman, and an attempt at getting Republicans.

I disagree.

[nevermind6794.livejournal.com]

You disagree with what? That Snowe and Collins (and Specter, at the time) are Republicans? That abandoning the public option was an attempt to get more votes?

[badlydrawnjeff.livejournal.com]

That the stimulus or health care issues had anything to do with getting Republicans on board.

[nevermind6794.livejournal.com]

For the stimulus, it wouldn't have passed without getting Republicans on board. For health care, it's a little murkier.

[dwer.livejournal.com]

you have to remember that to Jeff, the word "compromise" means "give in to everything he wants".