COMMENTARY | The good news is that the massive $800 billion stimulus package did provide a short term boost to the economy, according to a recent report by the Congressional Budget Office. The bad news is that in the long term, it will drag the economy down.
“The CBO said it’s been successful at that, helping sustain between 700,000 and 3.6 million jobs at its peak in 2010. But the scorekeepers had always warned that borrowing all of that money would eventually catch up with the economy and, over the long run, leave it slightly worse-off than if no stimulus had ever passed, and that is about to come true.
“‘In contrast to its positive near-term macroeconomic effects, ARRA will reduce output slightly in the long run, CBO estimates – by between zero and 0.2 percent after 2016,’ the analysts said in their new report.
“They said the cause is all of the borrowing for the $830 billion program, which dramatically boosted the federal debt.”
Spending ones way to prosperity is always a foolish proposition. FDR tried it during the Great Depression and while a lot of infrastructure got built, by and large the economic stimulus of the New Deal did not work. Obama’s version, originally touted as a funding mechanism for “shovel ready projects” which turned out, as the president later admitted, to be not so shovel ready after all, by and large went to pet projects favored by congressional Democrats.
In other words, the stimulus package, passed five years ago, stimulated very little in the long run but massive government debt. It was like giving the economy a hit of crystal meth, fun for a little while, but very debilitating afterwards.
When the history of the Obama administration is written, its greatest failure will be, of course, Obamacare. But it looks like that its second greatest failure will be the stimulus package, ill-conceived and badly managed. Indeed at the end of 2013, $40 billion of the package had yet to be spent. Perhaps Congress could consider returning that money to the treasury to help pay down the debt that the president has so enthusiastically incurred.