President Obama has been boasting that his new $150 billion “don’t call it a stimulus” plan is completely paid for and will not add to the deficit. This is because his proposal calls for new energy taxes on oil and gas. But in fact, according to the Keynesian model, government spending will only stimulate job growth and increase GDP if it is not paid for. Check any econ 101 textbook. The whole idea is that spending not be paid for with higher taxes because the taxes will be a countervailing force on aggregate demand. While the increased spending is stimulating demand the higher taxes will depress it.