Tuesday, January 27, 2009

Stimulus won't work - top Obama economist

Larry Summers says Nancy Pelosi' proposal would be worse than the disease. Summers v. Summers - Andy McCarthy - The Corner on National Review Online: Who says a stimulus plan of the type contemplated by the Obama Dems won't work? Why, the head of Obama's Council of Economic Advisers, that's who. At Heritage, Conn Carroll points out that, not so long ago, Larry Summers had this to say about stimulus plans: Poorly provided fiscal stimulus can have worse side effects than the disease that is to be cured.... [F]iscal stimulus, to be maximally effective, must be clearly and credibly temporary – with no significant adverse impact on the deficit for more than a year or so after implementation. Otherwise it risks being counterproductive by raising the spectre of enlarged future deficits pushing up longer-term interest rates and undermining confidence and longer-term growth prospects. As Carroll elsewhere points out (citing, for example, the Medicaid bailout, Medicaid expansion, family planning loophole, education bailout, and education shopping spree), the Democrats' proposed package is anything but temporary . . . and a Thomas Barthold, Deputy Chief of the Joint Committee on Taxation's staff has conceded (notwithstanding rosy predictions by President Obama and Speaker Pelosi) that the Committee has no estimates indicating any meaningful amount of jobs or economic growth would actually result.

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