Americans hoping for a big economic boost from President Obama's economic stimulus programs got a douse of cold water Thursday: The White House's top forecaster said the largest impact of the stimulus on economic growth is probably in the rear view mirror.
That's the case even though unemployment continues to rise and many of the stimulus dollars haven't been spent.
"Most analysts predict that the fiscal stimulus will have its greatest impact on growth in the second and third quarters of 2009," Christina Romer, who chairs the President's Council of Economic Advisers, said in testimony prepared for Congress. "By mid-2010, fiscal stimulus will likely be contributing little to growth."
In the long run, John Maynard Keynes is still dead. Unfortunately, his economic prescriptions will not die.
When government spends money, it is spending other peoples money. There is a natural disconnect of the value placed on the money by those who earned it when it is spent by those who merely appropriated it.
Stolen money is cheap. Earned money is dear.
Earned money is far more likely to be spent with care than looted money.
No politician and no bureaucrat can ever be as invested in the outcome of the spending of an appropriated dollar then the person that originally earned it. Whether that dollar is spent on a pleasure or invested for the future, the one who earned it is the only one that is able to truly appreciate what that dollar cost him to earn.
To a person that earned a dollar, the notion that it should be used to pay one person to dig a hole and to then pay another person to fill it, sounds like utter madness. To a Keynesian that appropriated a dollar earned by someone else, it is eminently economically sound.