Liberals jump too quickly to proclaim stimulus success

Publication Date: 02/18/2009

Liberals in Washington prescribe to various creeds, but these days, it seems like they all worship at the altar of John Maynard Keynes, who preached of attacking recessions with aggressive deficit spending to stimulate growth. The basis of this spending increase is the “Keynesian Multiplier” that justifies multiple rounds of government spending (akin to a geometric series). Output and income of the economy are supposed to increase by the initial increase in spending times the “Multiplier.”

The $787 billion American Recovery and Investment Act will give our country a thorough Keynesian dousing. The point of this stimulus is to provide a quick jump-start to the economy. While I tend to believe Hilaire Belloc’s saying that “The control of the production of wealth is the control of human life itself,” even those who believe there should be some sort of stimulus should recognize the recklessness of this Act. On the more than $100 billion of infrastructure and energy provisions which left-wing Washington lauds, economists point to Boston’s “Big Dig” as a recent lingering example of how infrastructure developments are not quick fixes to the economy. In the ’70s, simultaneous low interest rates (like right now) and huge government spending (also like right now) led to stagflation.

Liberals have forgotten the “success” of stimulus packages in other advanced countries. The eight Japanese government stimuli during the ’90s resulted in $6.3 trillion in infrastructure spending that has resulted in the greatest debt ever held by any country as a percentage of its GDP. The community organizer in the Oval Office who promised a post-partisan America collected three GOP Congressional votes for his bill. Our completely untested President must succeed, or we all pay the price (like the $2 billion this Act makes us pay to Obama’s Association of Community Organizers for Reform Now (ACORN)).

Trenton Morton

Senior, School of Nuclear Engineering