Why Government Spending Does Not Stimulate Economic Growth

Why Government Spending Does Not Stimulate Economic Growth
by Brian M. Riedl
Backgrounder #2208

In a throwback to the 1930s and 1970s, Demo?cratic lawmakers are betting that America's economic ills can be cured by an extraordinary expansion of government. This tired approach has already failed repeatedly in the past year, in which Congress and the President:

1. Increased total federal spending by 11 percent to nearly $3 trillion;

2. Enacted $333 billion in "emergency" spending;

3. Enacted $105 billion in tax rebates; and

4. Pushed the budget deficit to $455 billion in the name of "stimulus."

Every one of these policies failed to increase eco?nomic growth. Now, in addition to passing a $700 bil?lion financial sector rescue package, lawmakers have decided to double down on these failed spending pol?icies by proposing a $300 billion economic stimulus bill. Even though the last $455 billion in Keynesian deficit spending failed to help the economy, lawmak?ers seem to have convinced themselves that the next $300 billion will succeed.

https://www.heritage.org/research/budget/bg2208.cfm

Basically the government, both Repubs and Dems are freaking clueless on how to cure the economic ills of present so they're starting to do everything they can to try and fix it.

click on <https://www.askheritage.org/> and guess who pops up?

The $455 billion in "Keynesian" economic spending was not Keynesian economic spending.

As for the $105 billion tax "rebate". I learned in economics 101 that a one off rebate like that isn't going to do jack s*** as far as stimulating the economy.

And as for the $350 billion bailout, that was not intended to be a stimulus package. It was intended to keep the banking system from collapsing altogether, and it looks like it's worked so far.