Stimulus delayed is just government spending

To paraphrase Jim Lowell: Washington, we have a problem.

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With the economy floundering in January 2009, many people are following Keynesian model asking the government to spend money to jump start the economy. The $700 billion TARP plan didn’t work, so President Obama has been pushing for a new plan during his transition.

His Democratic cohorts in Congress have put together a plan: $825 billion more.

But there is a snag: it seems most of the money, the portion designed for infrastructure improvement, will not take effect for years. YEARS.
According to the Associated Press, the Congressional Budget Office has issued a non-partisan report:

Less than half of the $30 billion in highway construction funds detailed by House Democrats would be released into the economy over the next four years, concludes the analysis by the Congressional Budget Office. Less than $4 billion in highway construction money would reach the economy by September 2010.

Overall, only $26 billion out of $274 billion in infrastructure spending would be delivered into the economy by the Sept. 30 end of the budget year, just 7 percent. Just one in seven dollars of a huge $18.5 billion investment in energy efficiency and renewable energy programs would be spent within a year and a half.

Most economists expect the economy to rebound in the latter half of 2009. So that means 93% of the money will be “stimulating” an economy already turning around on its own.

Now, the other $550 billion in tax cuts and assistance to states is not included in the CBO report. Those funds will have a more direct effect this year.

However, liberals should really learn from this: they cannot spend their way out of a recession. The best way to create a greater supply of money in the economy is to take less of it out of our paychecks: cut taxes and the economy can rebound.

About Jim Johnson

Editor and publisher of The State of Sunshine.
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One Response to Stimulus delayed is just government spending

  1. Jim, this post reads like an audition for David Brooks’ NY Times column. I look forward to your post on Red Lobster.

    Side note: the bailout is not a stimulus. The stimulus was to keep lending institutions from going under. Stimulus is $200 million for new sod for the National Mall. David Brooks wouldn’t have made that factual error.

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