A Third Stimulus? Repeating Mistakes Only Creates New Mistakes

Rea Hederman / July 08, 2009

Panic seems to be setting in among some Democrats as the economy continues to falter. Important political leaders, such as Majority Leader Stenny Hoyer (D-MD), and economic commentators, such as Laura D’Andrea Tyson, unofficial economic advisor the President, are calling for yet another stimulus bill. Already we have had two stimulus bills, totaling almost a trillion dollars in the last eighteen months. Both were ineffective. House Democrats especially are worried they will be held responsible in the 2010 election for the failure of the recent stimulus bill enacted during the winter to boost the economy and lower unemployment. Indeed, Vice-President Biden has already said that the Administration misread the economy and that things are not going according to their projections.

Defenders of the stimulus bill claim that that it either was not meant to take effect until later this year or that the stimulus bill will be more effective as more money is spent.

The Administration also claimed that the stimulus bill would have an immediate impact, alleviating unemployment by the end of the second quarter. This was an optimistic projection that ignored the fact that a recovery in the labor market lags the overall economic recovery, and this projection has proven to be utterly false. (more…)