A Good Argument Against “Stimulus”

Normally I hate to pass along others’ thoughts without commentary, but this one strikes right to the heart of an issue in a way that requires no further thought. Regarding the question of whether massive government spending will stimulate the economy, Tad DeHaven over at Cato@Liberty has this response:

But isn’t spending tons of money exactly what government at all levels has been doing in recent years? According to U.S. Bureau of Economic Analysis numbers, combined federal, state, and local expenditures in 2000 were an already unhealthy 30% of GDP. Eight years and two recessions later, government spending now sucks up 35% of the nation’s economy and is trending higher. During that time we have witnessed the first $2 trillion federal budget and the first $3 trillion dollar budget.

With all the money federal, state, and local governments have been spending shouldn’t we be experiencing a boom? It would seem to me that proponents of government spending as a cure for our economic cold have it backward.

The feds have increased spending by over 50% since Bush took office, and my home state of California increased spending by about 44%. Why, then, is the only solution to this mess to increase spending even further?

  • http://www.mirajpatel.com Miraj Patel

    That is a great point and it is exactly this kind of thing that needs to be spread. Some of the opposition will claim that the spending wasn’t done in the right way, but a statement like this is bound to turn some heads.

  • http://www.persnicketycurmudgeon.com/blog Persnickety Curmudgeon

    EXAMPLES for a case against stimulous:

    GMAC gets money – uses it to loan money to riskier people to buy over priced and depreciating assets – cars

    Chrysler gets money – spends it on full page ads in newspapers to thank taxpayers for giving them the money

    UAW gets money – uses it to pay lawyers to appeal the taxes on their multimillion dollar golf course

    Bad banks get money – they use it to subsidize more bad loans which put good banks and credit unions out of business

    States get money – they use it by spending $50,000 for each $30,000 job they create.

    Anyone gets money – those who don’t sue over violation of constitutioanl guarantees of equal protection – siphoning still more money from prodcutive pursuits.

    I’m not onu of examples just out of time to post more…

  • SC

    Anyone have an idea of how much of that went to other countries? Just curious how much of that funding went to Iraq, for example, rather than spent at home.

  • http://www.persnicketycurmudgeon.com/blog Persnickety Curmudgeon

    Careful there SC. Considet that that alot of what we sell is bought by those overseas who can only afford to do so becasue we give them the money.

    Is this not the very essence of “Stimulous”? Creating artificial demand with artificial money then caving in to a lobby to prevent the loss of jobs which wouldn’t have even existed in a free market in the first place.

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