Negative Returns

Amity Shlaes:

Private-sector jobs will be created. That’s the argument President Barack Obama will present tonight in his State of the Union address to justify his plan for any federal spending increases.

The president will pay lip service to the idea that the era of throwing cash at the economy is over. Yet either because strapped state governors and unions are pressuring him or because he believes it, Obama is likely to insist that domestic outlays are investments, not waste.

Shlaes cites a mounting pile of research that indicates the opposite, however. Huge government outlays will likely stifle job growth. Digging the hole we are in deeper is not a winning strategy for getting out of the hole. Go read the whole thing. Coming on the heels of an analysis that shows that the last two attempts at “stimulating” the economy were complete wastes of borrowed money, any further stimulus spending plans should be turned down.

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