There was never doubt that whenever the economy began turning around the Obama administration, and especially the $787 billion stimulus package, would get the credit. “Absolutely” the stimulus package was working, Christina D. Romer, Chair of President Obama’s Council of Economic Advisers, insisted in an August 6 address to the Economic Club of Washington D.C.
Yet she accompanied that talk with contradictory evidence – which is about par considering that since joined the administration Ms. Romer has herself become a contradiction.
Along with her speech, Ms. Romer presented a table with calculations of the percentage of 2009 GDP “discretionary fiscal stimulus”spending in various countries. It showed the U.K. spent 1.5 percent of its GDP on stimulus, the same as Germany and more than twice that of France at 0.6 percent. Yet even as the German and French economies grew by 0.3 percent in the second quarter according to new Eurostate data, the British economy plumeted 0.8 percent. Sweden spent 1.4 percent of its GDP on stimulus, yet had no growth.
And the U.S.? It outspent everybody, Romer boasted. Her table shows we spent 2.0 percent of GDP. In her talk she said “roughly 5 percent of GDP,” which represents the entire $787 billion as a portion of the projected GDP for this year, though it will actually be paid out over several years.
Choose whichever figure tickles your fancy; it remains that for all Pres. Obama’s personal back-slapping and media crowing of “disproved” stimulus skeptics, the U.S. economy shrank one-percent in the second quarter. It was remarkable only its improvement from the previous quarter.
Of course, a mere measurement of overall stimulus spending allocations versus growth in one quarter is grossly simplistic. But certainly it’s no more so than declaring “We’re spending stimulus funds, the economy improved last quarter, ergo stimulus funds caused the improvement.”
But what could be reviving economies if not stimulus spending?
Michael Fumento is a, journalist, and attorney specializing in science and health issues as well as author of BioEvolution: How Biotechnology is Changing Our World .
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