Federal Spending: Killing the Economy with Government Stimulus | Doug Bandow | Cato Institute: Commentary

Federal Spending: Killing the Economy with Government Stimulus | Doug Bandow | Cato Institute: Commentary: "If government could spend America to prosperity, good times would have arrived long ago."

"Economic growth requires good spending, not more spending. After all, Washington could pay every American $10,000 to dig a hole in his or her neighbor's yard and then another $10,000 to fill it in. It would be a ludicrous policy, yet Keynes argued that the unemployed would be better off if paid by the government to "dig holes in the ground."

Most jobs bills are little different than paying people to dig holes."

"Robert Barro reviewed the experience of World War I, World War II, the Korean War, and the Vietnam War, and came up with a multiplier of 0.8, which means that government outlays actually "lowered components of GDP aside from military purchases." "

"roughly $900 billion in federal "stimulus" spending from ARRA probably resulted in only $600 billion in increased growth"

"it appears that a rise in government spending does not stimulate private spending; most estimates suggest that it significantly lowers private spending."

"it was the end of this wartime "stimulus spending"—which Herman figured at $3 trillion in today's dollars—which led to economic growth. At the time people feared that Washington slashing arms production and demobilizing military personnel would lead to another depression. However, he observed, "private investment came roaring back, triggering steady economic growth that pushed the U.S. into a new ear, as the most prosperous society in history." "

"The CBO figured that the president's program would increase GDP through 2012, but there would be no effect in 2013 and 2014 and then the impact would be negative. Last November the agency concluded that ARRA's impact peaked in 2010, while the accumulated debt would "reduce output slightly in the long run—by between 0 and 0.2 percent after 2016." "