President Obama's economic recovery package will actually hurt the economy more in the long run than if he were to do nothing, the nonpartisan Congressional Budget Office said Wednesday.
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.
But Republicans and some moderate Democrats have balked at the size of the bill and at some of the spending items included in it, arguing they won't produce immediate jobs, which is the stated goal of the bill.
The budget office had previously estimated service the debt due to the new spending could add hundreds of millions of dollars to the cost of the bill -- forcing the crowd-out.
CBOs basic assumption is that, in the long run, each dollar of additional debt crowds out about a third of a dollars worth of private domestic capital, CBO said in its letter.
CBO said there is no crowding out in the short term, so the plan would succeed in boosting growth in 2009 and 2010.
The agency projected the Senate bill would produce between 1.4 percent and 4.1 percent higher growth in 2009 than if there was no action. For 2010, the plan would boost growth by 1.2 percent to 3.6 percent.
CBO did project the bill would create jobs, though by 2011 the effects would be minuscule.
Capitalism is a cancer that is killing the US economy. There won't be a long haul.
-- Modified on 2/10/2009 5:47:12 AM
And jobs are what's needed in a bill like this.
But one reason not to worry so much: I think a lot of the money, mostly toward construction, will not actually be spent.
I thought it was revealing how ignorant Obama was talking about how Japan how solved their economic problem with stimulus spending . As I said before his speech to a friend it was the opposite and no one in the press called him on the inaccuracy.
More government spending did not solve Japan’s ‘lost decade’ in the 1990s.”
http://www.cato-at-liberty.org/2009/02/06/japans-stimulus-model/
-- Modified on 2/10/2009 3:59:27 PM
Since the objective of a stimulus bill is to stimulate the economy in the short term you forgot to mention the CBO analysis of the short term impact of the Senate version of the bill.
"According to these estimates, implementing the Senate legislation would increase GDP relative to the agency’s baseline forecast by between 1.2 percent and 3.6 percent by the fourth quarter of 2010. It would also increase employment at that point in time by 1.3 million to 3.9 million jobs, as shown in Table 1. In that quarter, the unemployment rate would be 0.7 percentage points to 2.1 percentage points lower than the baseline forecast of 8.7 percent."
''If we do everything right, if we do it with absolute certainty, there's still a 30 percent chance we're going to get it wrong,"
Joe Biden .
This number is more accurate 
-- Modified on 2/11/2009 2:14:09 PM