What stimulus?

You can stop wondering whether Obama's economic strategy was a success

Did President Obama's stimulus actually work? It depends on which numbers you're looking at.

The number you need to look at is the spending multiplier. And the multiplier shows that the stimulus isn't working.

In estimating the impact of the American Recovery and Reinvestment Act of 2009, ciphers in the Obama administration came up with a high-end multiplier of 1.5 -- that is, $1.50 of growth for every $1 of government money spent. That's good, right?

Only if it were true. Historically, the multiplier is more like .7 -- a figure agreed upon by the International Monetary Fund and other distinguished economists.

"That means," writes National Review's Veronique de Rugy, "that in the best-case scenario, the government spends a dollar and we get less than a dollar in growth (and we will have to pay the bill later through our taxes)."

Does that sound like it's working?

The back-and-forth debate about whether Obama's stimulus package actually worked could be described as a tennis match, but it wouldn't be accurate. At least tennis can be fun to watch.

Watching this debate is more like seeing contortionists perform. A new set of statistics or indicators provide the boundaries, and bureaucrats and pundits try their best to fit into the remaining space allowed. Fascinating to watch, perhaps, but it could turn your stomach.

From the Turn-Your-Stomach Department: Two leading economists actually called the game back in July, publishing a paper provocatively titled "How the Great Recession Was Brought to an End." No, we didn't realize it was over then, either.

Part of their argument is that the hundreds of billions in allocated government spending has managed to nudge down a few economic indicators. It just doesn't look as dramatic, some say, because of initial estimates on the state of the economy -- if there wasn't a stimulus, things would be a lot worse.

A similar argument would be to proclaim how great it is to be standing in two feet of manure, because hey, you could be standing in four feet of it!

And now the government is trying to grow economic roses with it.

Spare us. That glass-half-full approach to economic analysis hasn't been selling among rank-and-file Americans whose glasses have been empty for some time.


Mon, 01/16/2017 - 22:11

Editorial: A great leap backward

Mon, 01/16/2017 - 22:13

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