Dan Mitchell discusses the effectiveness of the stimulus

Dan Mitchell discusses the effectiveness of the stimulus

Uploaded by on Nov 3, 2009


When I think of all our hard earned money that has been wasted on stimulus programs it makes me sad. It has never worked and will not in the future too. Take a look at a few thoughts from Cato Institute:

Feeling Spent

by Michael D. Tanner

This article appeared in The New York Poston September 13, 2011. 

On Thursday night, the president laid out his plan for job creation, a $447 billion stimulus proposal, most of which we have seen before. After all, if Congress passes this new round of government spending, it would be the seventh such stimulus program since the recession began. George W. Bush pushed through two of them, totaling some $200 billion, and Obama already has enacted four more, with a total price tag of roughly $1.3 trillion.

The result: Three years and $1.5 trillion of spending later, we are back to the same gallimaufry of failed ideas. Among the worst:

3. Bailing Out the Teachers Unions. The president’s plan calls for spending $35 billion in grants to states to hire or retain some 280,000 teachers. The president wants to spend another $30 billion to repair and modernize school buildings, with the catch that school districts that accept the funds are prohibited from laying off any teachers. Spending on school building and repair has already increased by 150% over the last two decades, without either improving education or generating many jobs. And the greatest threat to teacher retention is not a lack of federal aid, but burdensome labor contracts.

4. More Infrastructure Spending. Like all the stimulus bills before it, the president’s latest proposal calls for still more pork barrel spending for “infrastructure.” One begins to wonder why we haven’t paved over the entire country by now. No doubt there are roads and bridges in need of repair, but the ability of the federal government to sort out good projects from bad is debatable at best. And the president is once again planning to plow money into such dubious projects as high-speed rail.

5. More Tax Hikes. Worst of all, the president plans to pay for all this new spending by — you guessed it — raising taxes on businesses and high-income Americans. The president, once again, referred to “millionaires and billionaires” in his speech, but his actual proposal calls for raising taxes on families earning as little as $250,000 per year. In places like New York, that’s not the “super rich.” In addition, many of these tax hikes would fall on small businesses. The president’s jobs plan, then, is to tax exactly those people and businesses that create jobs. And all this is on top of the new taxes and regulations that the Obama administration has already pushed through.

Michael D. Tanner is a Cato Institute senior fellow.


More by Michael D. Tanner

It’s not just the details of the president’s proposal that are wrongheaded, it’s the basic concept. The real drags on our economy have nothing to do with the failure of government to spend enough. The federal government is now spending roughly 24% of GDP. State and local governments are spending another 10% to 15%, meaning government at all levels is spending roughly 40 cents out of every dollar produced in this country. If government spending brought about prosperity, we should be experiencing a golden age.

The president’s plan is a bit like having someone break your leg then give you a crutch and call it a stimulus. Might it not be better to avoid breaking your leg in the first place? It’s time to stop spending, cut taxes, reduce our debt, and rollback burdensome regulation. That will generate far more jobs than any government jobs program.

When it comes to stimulus, the seventh time is not the charm.

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