Obama Stimulus Impact: Zero.

The bottom-line is the federal government borrowed funds from the public, transferred these funds to state and local governments, who then used the funds mainly to reduce borrowing from the public. The net impact on aggregate economic activity is zero…

The absence of any discernible impact of federal grants on state and local government purchases should come as no surprise to students of U.S. fiscal policy history. In 1979, the late Ned Gramlich…found that the federal grants to state and local governments had little effect on their purchases of goods and services.            

Full article on the “multiples of nothing” in Obama’s stimulus mega-bill.

Comments (4)

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  1. Tom H. says:

    Terrific article.

  2. Devon Herrick says:

    The government takes our tax dollars and borrows money from the Chinese. Then the government spreads the money around in the form of grants — which are supposed to stimulate the economy. The recipients of the grants then have to either lobby government for more money or lay off the newly hired workers. It would appear much of the economic activity that stimulus funds stimulate is the wrong kind of economic activity.

  3. Ken says:

    Agree with Tom. This was a nice analysis. It completly punctures the myth of Keynesian stimulus.

  4. Jeff says:

    This finding needs to be widely distributed. Get the word out!