Stimulus Spending FAILED! : History and Rush Knew I Would!

WOW - 'the spending stimulus failed' - Who Knew! Rocket science for the liberals. Even the lamest historian will admit, well, he or she that isn't a liberal, the Roosevelt government spending agenda had only a short term effect but had no lasting answers for high unemployment. Before the war really started for us in 1942, unemployment was still over 15%. Over 10 years of stimulus spending didn't work.

Today, if anyone had the common sense to listen to talk radio or watch FoxNews, knew how the Obama madness was going to effect our economy. Hey, Rush Limbaugh was on the case as early as the summer of 2008 during the campaign or even earlier. Obama told us exactly what he was going to do. Rush saw it, told us what was going to happen and we believed him. Whoa! Rush was right, again? This kind of information just drives the liberals over the edge.

When reality confronts fantasy, the liberal is like a robot when the battery goes dead. They freeze in place, their little minds search the play book for answers but when they find none, they fall back on the default, attack the messenger with slurs of hate. Without character assassination and unbridled hate, the liberal's existence would be called into question.

Why the Spending Stimulus Failed
Source: Michael J. Boskin, "Why the Spending Stimulus Failed," Wall Street Journal, December

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, says Michael J. Boskin, a professor of economics at Stanford University and a senior fellow at the Hoover Institution.

Boskin's colleagues John Cogan and John Taylor, with Volker Wieland and Tobias Cwik, demonstrate that government purchases have a gross domestic product (GDP) impact far smaller in New Keynesian than Old Keynesian models and quickly crowd out the private sector.

They estimate the effect of the February 2009 stimulus at a puny 0.2 percent of GDP by now.
By contrast, the last two major tax cuts -- President Reagan's in 1981-1983 and President George W. Bush's in 2003 -- boosted growth. They lowered marginal tax rates and were longer lasting, both keys to success.

In a survey of fiscal policy changes among countries in the Organization for Economic Cooperation and Development (OECD) over the past four decades, Harvard's Albert Alesina and Silvia Ardagna conclude that tax cuts have been far more likely to increase growth than has more spending. Former Obama adviser Christina Romer and David Romer of the University of California, Berkeley, estimate a tax-cut multiplier of 3.0, meaning $1 of lower taxes raises short-run output by $3.

Andrew Mountford of the University of London and Harald Uhlig of the University of Chicago show that substantial tax cuts have a far larger impact on output and employment than spending increases, with a multiplier up to 5.0.

Conversely, a tax increase is very damaging. The best stimulus now is to stop the impending tax hikes, says Boskin.
1, 2010.