The nonpartisan Congressional Budget Office has taken a good look at the President’s stimulus plan. It does not like what it sees:
President Obama’s economic recovery package will actually hurt the economy more in the long run than if he were to do nothing, the nonpartisan Congressional Budget Office said Wednesday.
CBO, the official scorekeepers for legislation, said the House and Senate bills will help in the short term but result in so much government debt that within a few years they would crowd out private investment, actually leading to a lower Gross Domestic Product over the next 10 years than if the government had done nothing.
CBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net. [The House bill] would have similar long-run effects, CBO said in a letter to Sen. Judd Gregg, New Hampshire Republican, who was tapped by Mr. Obama on Tuesday to be Commerce Secretary.
It would, of course, behoove Senator Gregg to tell his soon-to-be-boss that the stimulus plan being pushed by the Obama Administration will have deleterious long term effects. I am surprised that CBO actually believes the plan will work in the short term, given the mountain of evidence indicating the stimulus bill to be an impending short term failure. At bottom, even if one assumes that Keynesian stimulus can work–and let us remember that historically, it hasn’t–the current legislative package is nothing more than a mini-budget that is more dedicated to funding Democratic domestic priorities than it is to stimulating the economy. Americans asked for an economic jump start. What they got instead was a Christmas tree for Democratic special interest groups.
President Obama now wants to address the country on Monday to revive support for his stimulus plan. The impending address presumes that the problem with the current legislative effort behind the stimulus plan is a public relations issue. It is not. Rather, the problem is that the legislative package the Administration is trying to sell has no intellectual credibility behind it and would constitute a massive public policy failure. No address will work unless it includes words like “we are scrapping this turkey of a bill and starting over.”