Can any Representative or Senator (or President) defend this plan? Congress's own budget office -- whose current Director was selected by Democrats, and whose former Director now heads up OMB for President Obama -- says that each of the 'stimulus' plans being debated in Congress would reduce economic growth over the next ten years. After increasing jobs and GDP slightly over the next three years, CBO notes the longer-term problems it creates:
In contrast to its positive near-term macroeconomic effects, the Senate legislation would reduce output slightly in the long run, CBO estimates, as would other similar proposals. The principal channel for this effect is that the legislation would result in an increase in government debt. To the extent that people hold their wealth in the form of government bonds rather than in a form that can be used to finance private investment, the increased government debt would tend to "crowd out" private investment-thus reducing the stock of private capital and the long-term potential output of the economy.
If Congressional Democrats believe this finding is wrong, they ought to fire the staffers who prepared it, and never use CBO figures again. If Obama believes it's wrong, he ought to refute it. In either case, Democrats should not rush to pass a bill that -- on the best evidence available -- destroys jobs instead of creating them.
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