More Stimulus: Insanity?

Warren Buffett says the economy is not recovering and we might need a second stimulus package to turn things around. In other words, what we did before isn’t working, so let’s do it again. Insanity has sometimes been described as doing the same thing over and over and expecting different results.

When George W. Bush was elected, the federal budget was in surplus. During the Bush administration federal expenditures increased by 46% and he left office with a deficit of $459 billion. If increasing government spending and running big budget deficits really stimulated the economy, by the end of the Bush administration we would have been in nirvana, not in the worst recession in a quarter of a century.

Government spending is a burden the rest of the economy has to carry. The “stimulus” programs we already have will slow the recovery, and more “stimulus” will slow the recovery even more. During normal times Congress is very good at spending money without the need for outside encouragement. To encourage more spending now, when we are looking at annual deficits in excess of $1 trillion as far out as projections are made is just irresponsible. And insane.

Randall G. Holcombe is a Research Fellow at the Independent Institute and DeVoe Moore Professor of Economics at Florida State University. His Independent books include Housing America (edited with Benjamin Powell); and Writing Off Ideas.
Posts by Randall G. Holcombe | Full Biography and Publications
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