The Club for Growth recently put out a statement opposing a federal “economic stimulus” plan, like that currently being pushed by the incoming administration (and lobbied for by Governor Rendell) which would double as a bailout of state government:
No doubt, the stimulus package will create jobs, but what about all the jobs and projects lost in the private sector as a result? These jobs and projects would be far more productive than any work program dictated and managed by a government agency.
The Cato Institute list a number of reasons to oppose a stimulus plan for the state, while CEI’s Hans Bader points out that economic stimulus plans are economic failures (even if occasionally political success). The Heritage Foundation outlines pro-growth alternatives to the stimulus plan. Dan Mitchell has a good video on why government spending doesn’t stimulate the economy, and a great deal of research confirms that tax cuts have a great impact on economic growth than government spending. And we have pointed out, as has the Allegheny Institute, that state spending on so-called “economic development” does not result in greater economic growth.
Yet despite all this evidence, Joe Biden claims that not a single person doubts than an economic stimulus of $700 billion or more will work. John Boehner, on the other hand, is putting together a list of economists who are willing to voice dissent.
I will take the challenge one step further: As “economic stimulus” plans have been enacted many times before (most recently in 2001 and early 2008), I would like to challenge economist who support the plan to name any time in which additional government spending, or short-term tax “rebates”, have actually resulted in short- or long-term economic growth.