“As an exercise, pretend for a moment that they spend with honorable motives. Pretend that they somehow are unaware of the economic history of the world and the overwhelmning evidence in the US that spending never blunts economic downturns.”
How about pretend for a moment that a president facing a major recession inherits increased federal spending as a % of GDP from his predecessor and then raises spending as a % of GDP in his first two budget years. Spending goes up so high that it sets a post World War II record as a % of GDP. Eventually, in the president’s third year in office the economy starts to recover and add private sector jobs after shedding jobs in his second year. What would you say about a big spending president like that? Note that the big spending did blunt the economic downturn in that case. Who was that big spender? Why President Reagan of course.
On the other hand, President Obama has managed to have private sector job growth in the first seven months of his second year, in spite of Congress not allowing him to increase spending to further support the recovery.
Homework for the author and everyone on this page:
1. Find the private sector jobs added/lost by month since January 2007. Graph them versus the timing of TARP and the ARRA stimulus and then try to make a case that they didn’t reverse the loss of over 500,000 private sector jobs per month.
