The whole idea of the stimulus is that when the government builds roads and bridges, it puts money into the economy, which generates growth. But Stanford economist John Taylor, speaking Monday at a Hoover Institution conference, pointed out something that stimulus supporters have overlooked: Over the past three years, there is no relationship between the amount of government purchases of non-military items and the rate of economic growth. Oops.
The other theory was that putting more money into the hands of consumers would cause them to go out and buy things. The administration pursued this objective with a tax credit that reduced withholding and thus fattened paychecks.
But the evidence for this approach was also badly lacking. In 2008, President Bush tried to strengthen the economy by sending out rebates of up to $600 per taxpayer. As Taylor documents, the amount of cash Americans had at their disposal jumped. But their spending didn't.
He is not the only leading macroeconomist who doubts the efficacy of such measures. But even if you accept the theory behind the Obama plan, you have to wonder about its usefulness in the real world. Timing is everything, and by the time Washington can pass and implement a stimulus, it's usually too late to help.
You want to stimulate the economy when it's in a recession. But only a quarter of the money in the package was spent in the first seven months. Most of it was scheduled for this year and next -- which turns out to be long after the economy resumed growing last summer. In the fourth quarter, gross domestic product expanded at a sizzling 5.7 percent rate.
Applying fiscal stimulus at this point is like using a cattle prod on Usain Bolt. Even with the encouragement, he's not likely to go any faster.
The administration could claim that the recent boost proves that its effort worked to get the economy back on track. But in that case, why do we need to spend $135 billion in 2011??
All that funding probably won't make the economy stronger. But for those who want to portray Obama as leading the nation off a cliff, it should mean lasting prosperity.