CBO Says Stimulus Will Increase Deficit (Letter to the Editor)
In his Commentary column, “The Recovery Act Worked,” Michael Cassidy wrongly denies that the $800 billion stimulus package “will make the federal deficit worse.”
It will indeed increase the deficit, admits the Congressional Budget Office (CBO), the same source Cassidy cites to defend the stimulus package. The stimulus will shrink the economy “in the long run,” the CBO says, since its “increase in government debt is expected to displace or ‘crowd out’ . . . private capital” used to create jobs.
In the short run, the CBO claimed the impact of the stimulus was positive. But that conclusion was based on economic theory, not real-world data. The CBO did not take into account how regulations in the stimulus package destroyed jobs in America’s export sector. Nor did it take into account how 79 percent of the stimulus package’s green jobs funding went to foreign firms.