The Economic Stimulus That Wasn't

by IBD Editorials

Economy: Did the hundreds of billions spent to stimulate the economy do the job? And where did all that money go, anyway? A new report crunches the data and finds answers that are devastating for stimulus backers.

Done by Stanford University economists John Cogan and John Taylor and published in Commentary Magazine, the report is blunt in its assessment of President Obama's Keynesian stimulus package: "There was little if any net stimulus."

Worse, say the authors, the White House with its bevy of hip Keynesian-leaning economists should have known it wouldn't work. "The irony," they write, "is that basic economic theory and practical experience predicted this would happen." In other words, the Obama camp should have known better.

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Democratic Socialists of America

Frances Fox Piven: The Tea Party

Is All About Sex - She Prefers Violence

by Trevor Loudon

Democratic Socialists of America honorary chair  Frances Fox Piven is great! If you are unsure what position to take on an issue, listen to what Fran says -  then do the opposite.

A Critique Of The "Fox News Viewers Are Misinformed" Study

New Rules: You and the IRS this January

Why the Spending Stimulus Failed

by Michael J. Boskin

President Obama and congressional leaders meeting yesterday confronted calls for four key fiscal decisions: short-run fiscal stimulus, medium-term fiscal consolidation, and long-run tax and entitlement reform. Mr. Obama wants more spending, especially on infrastructure, and higher tax rates on income, capital gains and dividends (by allowing the lower Bush rates to expire). The intellectual and political left argues that the failed $814 billion stimulus in 2009 wasn't big enough, and that spending control any time soon will derail the economy.

But economic theory, history and statistical studies reveal that more taxes and spending are more likely to harm than help the economy. Those who demand spending control and oppose tax hikes hold the intellectual high ground.

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Stimulus: Still Not Working!

Unbelievably, the administration and its allies

keep insisting that a failed policy was a success.

by Veronique de Rugy

Imagine that I break my arm, but instead of getting a cast I take a big shot of morphine. The drug will make me feel better, but it won’t fix my arm. When the effect wears off, the pain will come back. And instead of being restored to their proper position, my bones will remain out of place, perhaps solidifying there, which will surely mean chronic pain in the long run.

Stimulus spending is like morphine. It might feel good in the short term for the beneficiaries of the money, but it doesn’t help repair the economy. And it causes more damage if it gets in the way of a proper recovery.

The stimulus isn’t working because it is based on faulty economics. Using historical spending data, the Harvard economist Robert Barro and recent Harvard graduate Charles Redlick have shown that in the best case scenario, a dollar of government spending produces much less than a dollar in economic growth—between 40 and 70 cents. They also found that if the government spends $1 and raises taxes to pay for it, the economy will shrink by $1.10. In other words, greater spending financed by tax increases hurts the economy. Even if the tax is applied in the future, taxpayers today adjust their consumption and business owners refrain from hiring based on the expectation of future tax increases, which worsen the economy today.

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