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The Big Lie at the Center of Big Spending Stimulus

Posted By Conn Carroll On January 7, 2009 @ 12:53 pm In Economics | Comments Disabled

Barack Obama is trying to convince the American people that when it comes to his economic stimulus plan, “We’re guided by what works, not by any ideology or special interests. [1]” But as the  New York Times [2] reports today, nobody has any idea “what works.” First the Times reports:

Nearly every economist who spoke here agreed that a dollar invested in, say, a new transit system or in bridge repair is spent and respent more efficiently than a dollar that comes to a household in a tax cut.

Awesome. That’s good to know. There must be tons of great research to back this belief up. But then the Times reports:

There was concern, however, that the nation lacked enough “shovel ready” projects that could be ramped up quickly, generating jobs.

Wait, what? I thought we were just told that as long as the government is doing the spending, that money  is “spent and respent more efficiently than a dollar that comes to a household in a tax cut.” Now all of a sudden, it matters whether or not the projects that government money is poured into is “shovel ready” or not? If a government project is not “shovel ready” does that mean government spending is no longer more efficient than tax cuts? The Times doesn’t tell us. But apparently that is because all these government spending loving economists have no idea what they are talking about. The Times reports:

What is more, the economists did not agree on the best projects to pursue. As Mr. Auerbach pointed out, after a generation of ignoring public spending in their research, the nation’s mainstream economists lacked the expertise to help guide the process. “We have not figured out the right course of action,” he said.

There were plenty of proposals at the three-day convention. Some argued for a big investment in broadband. Others proposed recruiting young people for two-year stints weather-stripping and upgrading privately owned and public buildings. Still others argued that government should step up subsidies for basic research and product innovation.

Got that? All the economists that Obama is listening to so that he makes sure “that the investments are made wisely and managed well [3]” are just making stuff up. There is simply no research that exists to provide “the expertise to help guide the process.”

So we’re left with Rep. Paul Ryan’s (R-WI) truth: “Those aren’t stimulus. Those are ideological accomplishments in the guise of economic stimulus. [4]


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URL to article: http://blog.heritage.org/2009/01/07/the-big-lie-at-the-center-of-big-spending-stimulus/

URLs in this post:

[1] We’re guided by what works, not by any ideology or special interests.: http://money.cnn.com/2009/01/05/news/economy/obama_stimulus/?postversion=2009010515

[2] New York Times: http://www.nytimes.com/2009/01/07/business/economy/07spend.html?ref=todayspaper

[3] that the investments are made wisely and managed well: http://www.washingtonpost.com/wp-dyn/content/article/2009/01/06/AR2009010602849.html?nav=hcmodule

[4] Those aren’t stimulus. Those are ideological accomplishments in the guise of economic stimulus.: http://online.wsj.com/article/SB123125893419357707.html

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