Posted on 12/09/2010 9:17:17 AM PST by MissesBush
For the past two years, economists writing on these pages and elsewhere have debated the merits of federal stimulus programs. President Obama's compromise on the Bush tax cuts this week might be seen as at least partial recognition that keeping marginal tax rates from rising across the board is the best stimulus now, especially if the deal leads eventually to making the cuts permanent. The economic data rolling in confirm that recent temporary, targeted stimulus programs have not worked, and that their enactment was a triumph of Keynesian wishful-thinking over practical experience.
In September 2009, we reported on this page empirical research showing that the temporary tax rebates and transfer payments in the Bush and Obama administration's stimulus programs were ineffective. Here we consider new data on the impact of increases in government purchases, which were heralded as a major stimulating factor in the Obama package.
The key tenet of Keynesian economics is that government purchases of goods and services stimulate additional economic activity beyond the amount of the purchase itself. The impact on GDP of the stimulus depends both on the dollar volume of additional government purchases and on the size of the government purchases multiplier, i.e., the effect of a change in government purchases on real GDP.
Although the policy debate has mainly focused on the multiplier's size, data covering the first year and three quarters of the 2009 American Recovery and Reinvestment Act (ARRA) show that, despite the large size of the program, the dollar volume of additional government purchases that it has generated has been negligible.
(Excerpt) Read more at online.wsj.com ...
If you see a vast, tottering financial edifice, it's probably best to give it a shove -- the free market will pick up the pieces pretty efficiently. The worst thing to do is to use the power of government to try to avoid financial consequences. It cannot be done, and we simply make the end result worse when we try to prevent the inevitable.
Audit the Fed.
It is getting harder and harder to keep some faith in mankind.
Obama needs to be arrested, tried for treason and brought to justice for the harm he has done to our beautiful country. I pray that God would strike him down and replace him with a Godly leader every day.
I wish it had been that good. Besides leaving our kids with $4T in extra debt, so far, the massive waste of the stimulus killed jobs. "Every dollar of federal spending generates two dollars of economic activity" but that isn't what matters. The dirty little secret is that every dollar of federal spending displaces private spending that would have generated several times as much economic activity as the government spending did. "Zero impact" is hopelessly exaggerated in overstating the benefits from Obama's spending binge.
I would guess that the actual results of the Stimulus and the GM takeover were not just zero, but negative.
If GM had gone through normal bankruptcy, the union would have had to give up some of its perks and high pay, double what American Toyota workers get. Then maybe they could have made some saleable cars. Instead, their products are getting worse and worse, and more and more of an economic drain.
As for porkulus, it killed numerous private sector jobs and replaced them with temporary shovel jobs and all kinds of stupid things like saving the toads or building useless windmills in China. But most of it went for pork, and produced nothing at all.
And then there were the subsidies to unions, retirement funds, and state and local governments, which enabled them to continue their destructive spending for another year instead of dealing realistically with their budget problems. So they are all in worse shape than they were, after sucking up hundreds of billions.
No, the Stimulus was a job killer.
If American only knew that all of tihs is part of his agenda.
If American only knew that all of this is part of his agenda.
DITTO!!!
This will give you something to think about! It is a slow day in the small Saskatchewan town of Pumphandle and streets are deserted.
Times are tough, everybody is in debt, and everybody is living on credit.
A tourist visiting the area drives through town,stops at the motel and lays a $100 bill on the desk saying he wants to inspect the rooms upstairs to pick one for the night.
As soon as he walks upstairs, the motel owner grabs the bill and runs next door to pay his debt to the butcher.
The butcher takes the $100 and runs down the street to retire his debt to the pig farmer.
The pig farmer takes the $100 and heads off to pay his bill to his supplier, the Co-op.
The guy at the Co-op takes the $100 and runs to pay his debt to the local prostitute, who has also been facing hard times and has had to offer her “services” on credit.
The hooker rushes to the hotel and pays off her room bill with the hotel owner. The hotel proprietor then places the $100 back on the counter so the traveler will not suspect anything.
At that moment the traveler comes down the stairs, states that the rooms are not satisfactory, picks up the $100 bill and leaves.
No one produced anything.
No one earned anything.
However, the whole town is now out of debt and now looks to the future with a lot more optimism.
And that, ladies and gentlemen, is how a “stimulus package” works.
The major goal of the Obama $800 billion stimulus was not designed to grow the economy, but rather to grow the size of government, expand the welfare state and have a federal take over of the US health care system.
Nothing is more ugly in politics then Democrats engaging in more acts of liberal social engineering.
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