Not Everyone Guessed Wrong About Stimulus
Economics: "Everyone guessed wrong," Vice President Joe Biden said Sunday, on the impact of stimulus legislation. Not exactly. In fact, there was no shortage of people who knew the stimulus wouldn't work.
In his appearance on NBC's "Meet The Press," Biden was asked by host David Gregory to explain why job losses have continued even after the passage of economic stimulus legislation that was supposed to keep a lid on unemployment at 8%.
Biden tried to rationalize the sad state of affairs, in which the jobless rate is now 9.4%, but finally just said that, "Everyone guessed wrong at the time the estimate was made about what the state of the economy was at the moment this was passed."
Anyone who guessed that Biden was wrong would have guessed right. On Feb. 18, we said: "The (stimulus) bill Congress hurried to pass late last week without anyone having read the entire 1,434 pages will in fact not stimulate much of anything."
We further noted that the $787 billion package would not be an economic stimulus but a spending bill filled with "pork and outright waste."
We were not alone. Some 330 economists signed a statement last winter saying that President Obama's claim — that "there is no disagreement that we need action by our government, a recovery plan that will help to jump-start the economy" — simply "is not true."
This statement, in an ad paid for by the Cato Institute, appeared on full pages in 24 major newspapers across the country, including the New York Times and Washington Post.
The economists were not crackpots but respected scholars, including Nobelists James Buchanan, Vernon Smith and Edward Prescott, as well as Reagan Office and Management of Budget Director James Miller, Walter Williams and John Lott.
Also opposed to the stimulus are the nonpartisan Congressional Budget Office and a core of U.S. representatives and senators, too small unfortunately to change the outcome, who saw through the smoke and weren't fooled by the mirrors.
The CBO, which makes analytical estimates, not guesses, believes that "in the longer run, the legislation would result in a slight decrease in gross domestic product compared with CBO's baseline economic forecast."
If the best the White House can do is guess as to how much unprecedented federal spending can affect the economy, then voters made a poor guess themselves last fall when they gave it their vote. Maybe from this we'll all learn that guessing has no place in the voting booth or the crafting of policy.