Federal Spending: Killing the Economy With Government Stimulus
Economic growth requires good spending, not more spending. After all, Washington could pay every American $10,000 to dig a hole in his or her neighbor's yard and then another $10,000 to fill it in. It would be a ludicrous policy, yet Keynes argued that the unemployed would be better off if paid by the government to "dig holes in the ground."
Most jobs bills are little different than paying people to dig holes. Politics, not economics, dominates. University of Chicago economist Raghuram Rajan admitted "When people say austerity is not the answer, fine, if you have great things to spend on, let us know what they are." The ARRA ignited a lobbying frenzy, turning the measure into a Christmas tree for legislators to hang long desired projects and favored social spending. By one estimate the bill "created" jobs at an average cost of $278,000. The cost of some individual jobs exceeded a million dollars each.
Tom Evslin, who coordinated Vermont's federal "stimulus" money, concluded that "much of the money ended up continuing bloated programs rather than providing a transition to a sustainable future." He pointed to broadband and energy programs, where private investment "dried up as companies waited to see if they could build with taxpayer money. Entrepreneurial effort turned from innovation to grant-grabbing." Last September the New York Times reported that critics "say the money has gone to areas where it is not needed, to promote broadband where it already exists and for industrial parks designed to attract business and jobs that may never materialize."
Posted by: Beavis