In their more sober moments, economists offer numerous reasons to treat fiscal stimulus as a wasteful charade. William Gale and Samara Potter of the center-left Brookings Institution noted in a 2002 study that tax changes of the sort being contemplated today have "a weak record in stimulating short-term economic activity."
Even if you believe a fiscal stimulus can work, it's unrealistic to think these plans would do the trick. Clinton and Obama envision packages worth $70 billion and $75 billion, respectively. But that amounts to just one-half of 1 percent of our annual output. It's like giving you a dollar every time you spend $200. Would that change your total economic activity? No? Then it probably won't rev up the nation's.
Another problem is that to succeed, a transfusion of federal cash has to be timed just right. That is not easy given that a) the legislative process often moves at the speed of continental drift and b) the president and Congress can't agree on whether the ocean is salty.
Peter Orszag, director of the Congressional Budget Office, told The Wall Street Journal, "Most of the stimulus options under consideration would be difficult to actually get out the door in the first half of 2008." By the time a program spreads its healing balm, we may find the recession has died a natural death -- or was never born.
So we don't know that these efforts to stimulate the economy will have the helpful impact that has been promised. We do know, however, that they will have one regrettable consequence: putting the government -- and thus the taxpaying public -- deeper in debt.
We may never reap the benefits of a fiscal stimulus, if it comes to pass. But rest assured, we'll be paying the price for years to come.
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