Writing for Real Clear Markets, Louis Woodhill of the Club for Growth gives a good word picture of the futility of stimulus packages in generating economic recovery:
Like the Bush administration before it, the Obama team is pinning its hope for economic recovery on “stimulus”. Despite the fact that Bush’s $168 billion stimulus package in early 2008 had no impact at all, Obama rammed a $787 billion stimulus bill through Congress in January. Now the administration is waiting anxiously for the “stimulus” to take effect. It should not hold its (collective) breath.
“Stimulus” is based upon the superstition that government borrowing and spending creates “demand”. In reality, it does no such thing. “Stimulus” is like trying to raise the level of the Hudson River by dipping out a bucket of water, walking five feet downstream, and pouring it back in. The only difference between the Bush and Obama plans is that Obama’s bucket is bigger (and will create more debt). Ironically, the July 2 jobs report prompted calls from leftist economists for Obama to go back to the river with an even bigger bucket.
Since the first stimulus package in early 2008, the unemployment rate has almost doubled and the Dow has dropped from 12,000 on Jan. 4, 2008, to 8,200 on July 2, 2009 (and it’s dipped as low as 6,500).
Of course, Obama and company argue that things would be far worse if we hadn’t stimulated the economy by taking on massive amounts of debt. But that’s an unverifiable argument because it’s based on a hypothetical situation. All we have to work with is the brute numbers, and those show a continued, consistent decline.
