The Stimulus Package Huge Boost For Government

 The first anniversary of the American Recovery and Reinvestment Act, popularly known as the Obama stimulus package was last week. The Barack Hussein Obama administration put on a full-court press, releasing a report that claimed the stimulus saved the country from having a recession degenerate into a full-blown depression.

Depending on the day of the week and how bad things look at the time Obama and his minions claim "saving or creating" some 2 million jobs and building a foundation for a new economic foundation built on clean energy and revitalizing America's infrastructure.
To put it kindly these estimates are politically inflated.  There are no exact figures but enough data is available that we know there have not been anywhere near 2 million jobs saved or created.  The jobs that have been saved or created are government jobs which don’t help the economy.

The philosophy behind massive government spending during a recession is that such spending will have a Keynesian "multiplier effect" as money circulates from one hand to another to another.  Harvard economist Robert Barros, for example, has done studies of spending during the Great Depression and other economic downturns that permit him to estimate the multiplier effect at about 0.6. In other words, for every $100 in government spending the economy gets a jolt worth about $60.

That's hardly an impressive return on investment.  The infusion may provide some lift, but the evidence that it leads to a magical doubling or tripling of economic ripple effects is nonexistent. The reason is for the government to spend money it first has to take it from the private wealth-producing, job-creating sector of the economy, whether through taxation or borrowing. What is stimulated by such spending is not economic growth but government growth.

The stimulus has not stimulated the economy.  Government has grown as they hire more people.  This in the long run hurts the economy because government employees take from the economy they don’t build the economy.

Most economic forecasters believe that the recession began about December 2007, was exacerbated by the financial crisis of fall 2008, and was likely to have started turning up toward the end of 2009, with or without a massive government stimulus.Bottom line $800 billion plus and it hasn’t and won’t help the economy.  Obama and his administration could have done nothing and the economy now would probably be better than it is.

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