Stimulus Spending Always Fails : History is Proof

The progressive liberal always has a fall back position when it comes to their agenda failures, 'we didn't have enough time to solve the problem' and ' the problem is worse then we thought' and 'ignorance on the part of the public to our policies'.

There are many more, of course, too many to list here but the porgressive always will find an excuse to blame others for their failures.

Stimulus Spending Keeps Failing
Source: Robert J. Barro, "Robert Barro: Stimulus Spending Keeps Failing," Wall Street Journal, May 9, 2012.

The weak economic recovery in the United States and the even weaker performance in much of Europe have renewed calls for ending budget austerity and returning to larger fiscal deficits. However, in the American context, no evidence is offered that past U.S. budget deficits helped to promote the economic recovery, says Robert J. Barro, a professor of economics at Harvard and a senior fellow at the Hoover Institution.

While it is easy to criticize the disappointing economic results of austerity in several beleaguered European countries, to do so ignores exemplary cases like those of Germany and Sweden.

•Both countries moved toward rough budget balance between 2009 and 2011 while sustaining comparatively strong growth.
•The average growth rate per year of real gross domestic product (GDP) for 2010 and 2011 was 3.6 percent for Germany and 4.9 percent for Sweden.
•These growth rates, which are atypically strong given the down economy, are almost certainly at least a partial function of sensible and efficient government budgetary decisions.

Advocates of gross increases in government spending look past the excellent performance of austerity-embracing nations, focusing instead on countries where the policy hasn't been a silver bullet for economic woes. Their natural response is a Keynesian approach to macroeconomics: spend your way out of a recession via large government deficits. However, this argument ignores evidence to the contrary.

•The OECD countries most clearly in or near renewed recession -- Greece, Portugal, Italy, Spain, and perhaps Ireland and the Netherlands -- are among those with relatively large fiscal deficits.
•The median of fiscal deficits for these six countries for 2010 and 2011 was 7.9 percent of GDP.
•Once a comparatively low public-debt nation, Japan opted for a Keynesian approach to spending years ago, resulting in a ratio of government debt to GDP around 210 percent (the largest in the world).

Unfortunately, Keynesians maintain an easily defended position: when budget deficits fail to skyrocket an economy out of recession, Leftists simply respond that the stimulus needed to be larger. This line of reasoning is unfailing in its circularity, yet it is the exact argument that the Democratic Party relies upon in prescribing solutions for the current economy.