Why Big Government Stimulus Fails

Conn Carroll / December 03, 2009

Today the White House will host a Forum on Jobs and Economic Growth featuring such leftist luminaries as Joseph Stiglitz and Paul Krugman. Yesterday The Heritage Foundation hosted House Minority Whip Eric Cantor (R-VA) for a presentation on his common-sense job creation plan. After Cantor spoke, Heritage fellow Brian Riedl explained why President Obama’s $787 billion stimulus, and all the other government stimulus ideas of Stiglitz and Krugman,  failed:

I’m going to examine why the stimulus failed, and why Congress should instead keep tax rates low and spending restrained in order to allow the economy to create jobs and grow.

In a January report, White House economists predicted the stimulus bill would create (not merely save) 3.3 million net jobs. Since then, 3.4 million more net jobs have been lost, pushing the unemployment rate above 10 percent.

This failure of government to spend its way to prosperity is not an isolated incident: (more…)