Stimulus Impact: Zero, or Less Than Zero?

In The Wall Street Journal, economists John F. Cogan and John B. Taylor argue that the impact of the $800 billion “Obama stimulus” was “zero” in terms of increasing economic growth.

I think its impact was less than zero — that it actually shrank the economy in several ways. One way was its use of “green jobs” subsidies to send American jobs overseas79 percent of the subsidies went to foreign firms, such as an Australian firm that imported Japanese wind turbines. Another was how it wiped out jobs in America’s export sector.

But it’s good to see more economists demonstrating that Obama was wrong when he claimed that economists support his stimulus package. In 2009, 200 economists signed a statement publicly opposing the stimulus package in an ad published in The Washington Post and New York Times. The “‘stimulus’ is not the road to economic recovery. It’s the problem, not the solution, wrote Nobel laureate economist Vernon L. Smith.”

Even the Congressional Budget Office admitted that the stimulus package would shrink the economy in the “long run” by driving up the national debt and thus crowding out private investment through increased debt-service costs.