I hate it when I’m right.
The Congressional Budget Office is reporting that the ‘stimulus’ bill – regardless of version – will hurt the economy over the long run and not help. What a surprise.
CBO, the official scorekeepers for legislation, said the House and Senate bills will help in the short term but result in so much government debt that within a few years they would crowd out private investment, actually leading to a lower Gross Domestic Product over the next 10 years than if the government had done nothing.
CBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net. [The House bill] would have similar long-run effects, CBO said in a letter to Sen. Judd Gregg, New Hampshire Republican, who was tapped by Mr. Obama on Tuesday to be Commerce Secretary.
The House last week passed a bill totaling about $820 billion while the Senate is working on a proposal reaching about $900 billion in spending increases and tax cuts.
The reasoning is rather simple: when the government soaks up all available capital, there’s nothing for the private markets. And we’ll see a further ‘crowding out’ of the private sector. This is exactly the phenomenon discussed in my previous post on ‘Soviet Britain.’
But will the New York Times use the phrase ‘Soviet’ in connection the government’s actions as did the UK Times?
Doubtful.
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