At times I think ATR needs to set up a seperate website just to keep track of all the articles proving without doubt how President Obama’s so-called "stimulus" plan totally, utterly, and abysmally failed. It would seem that every day there is a new report or new evidence that totally decimates President Obama’s case.
In today’s Wall Street Journal, prominent economicsts John Cogan, John Taylor and Volker Weiland report on the effects of the stimulus, 6 months on. Their conclusion? "Government transfers and rebates have not stimulated consumption at all".
Looking firstly at the effects of the $250 one-time payment, they showed that while disposable personal income spiked, this had no effect on consumption whatsoever. This, they say, "is exactly what one would expect from "permanent income" or "life-cycle" theories of consumption, which argue that temporary changes in income have little effect on consumption. These theories were developed by Milton Friedman and Franco Modigliani 50 years ago, and have been empirically tested many times. They are much more accurate than simple Keynesian theories of consumption, so the lack of an impact should not be surprising"
They then consider government spending. Again, the results are identical. While the fall in GDP slowed down considerably, contrary to the claims of PResident Obama, this had no link to the stimulus whatsoever:
By far the largest positive contributor to the improvement was investment–which went from minus 9% to minus 3.2%, an improvement of 5.8% and more than enough to explain the improved GDP growth. Investment by private business firms in plant, equipment and inventories, rather than residential investment, were the major contributors to the investment improvement. In contrast, consumption was a negative contributor to the change in GDP growth, because consumption growth declined following the passage of the stimulus package.
One is hard put to see what specific items in the stimulus act could have arrested the decline in business investment by such a magnitude. When one looks at monthly investment indicators–such as new orders for nondefense capital goods–one sees a flattening out starting early in the first quarter of 2009, well before the package went into operation. The free fall of investment orders caused by the financial panic last fall stabilized substantially by January, and investment has remained relatively stable since then. This created the residue of a very large negative growth rate from the fourth quarter of 2008 to the first quarter of 2009, and then moderation from the first quarter to the second of 2009. There is no plausible role for the fiscal stimulus here"
All the data points one way: we are morgaging our future for nothing.
End this madness now.