(Recycling an old post with new data and a new link.)
Back in January, shortly before the inauguration, the incoming Obama economic team issued a (PDF) report "The Job Impact of the American Recovery and Reinvestment Plan" advocating passage of the legislation before Congress. Central to the argument was Figure 1, showing their prediction of the unemployment rate with and without the plan (click for original size):
But "they won", the American Recovery and Reinvestment Plan was passed
and signed, and … now, about
nine months later, some bright
person ("Geoff" at Innocent Bystanders)
has overlaid the actual unemployment
data points on the original graph. The result (click for big version):
So: Does stimulus spending work? Find out by reading a column by Robert J. Barro and Charles J. Redlick in yesterday's WSJ, helpfully headlined "Stimulus Spending Doesn't Work". The assumption behind the "stimulus" was that government spending "multiplies" through the economy, expanding GDP by more than the amount of spending. But, Barro and Redlick conclude:
The problem, of course, is that tax rate reductions allow normal people to make their own private decisions on how/where to spend their own money. That's completely contrary to the underlying ideology of the current folks in charge. For one thing, it doesn't involve putting up lots of signs with politicians' names on them next to "stimulus" projects.
So you wind up with… well, with what we have now. Enjoy, Obama voters.