…the President assertions that:
1) The stimulus didn’t work because it wasn’t big enough
2) What we need is more spending
3) And higher taxes
1) Wrong, 2) Wrong and 3) Wrong.
economic theory, history and statistical studies reveal that more taxes and spending are more likely to harm than help the economy. Those who demand spending control and oppose tax hikes hold the intellectual high ground.
Which tickles just a bit as surely President Obama has staked out the intellectual high ground, right?
Using powerful statistical methods to separate these effects in U.S. data, Andrew Mountford of the University of London and Harald Uhlig of the University of Chicago conclude that the small initial spending multiplier turns negative by the start of the second year.
government purchases have a GDP impact far smaller in New Keynesian than Old Keynesian models and quickly crowd out the private sector. They estimate the effect of the February 2009 stimulus at a puny 0.2% of GDP by now.
That’s two tenths of a percent.
By contrast, the last two major tax cuts—President Reagan’s in 1981-83 and President George W. Bush’s in 2003—boosted growth. They lowered marginal tax rates and were longer lasting…tax cuts have been far more likely to increase growth than has more spending.
Read it. It’s a bit technical, but it serves to reveal a President whose recently and soundly rejected policies are founded not in economic efficacy rather at best, in ignorance and at worst, and most likely, in an arrogant, transparent and desperate attempt to further his extreme liberal ideology.