Why the Stimulus Failed

Ask most Americans about the big-spending government policies of the last few years, and they will tell you the programs have failed. In a February 2012 poll from the nonpartisan Pew Research Center, 66 percent of Americans said the federal government is having a negative impact on the way things are going in this country (versus 22 percent who say the impact is positive). A majority disapproves of the president’s 2009 stimulus, and according to a 2010 CNN poll, about three-quarters of Americans believe the money was mostly wasted.

Of course, the measure of economic success is not public opinion, but the factual effects of policy. The emerging evidence on various spending programs shows that Americans’ intuition is correct: The Keynesian deficit spending has been poorly designed and badly executed, and it has had little benefit for our economy.
As just one example, consider the infamous “Cash for Clunkers” program, the $3 billion federal plan that allowed people to trade in an old car in exchange for about $4,000 off the purchase of a new one. The administration argued it would stimulate the U.S. economy and improve the environment. Critics saw it as a way for the government to prop up the car companies it had recently bailed out. But whatever the motivation, the program was a bust. Economists at the think tank Resources for the Future have found in a new study that the program did not stimulate the economy, and that 45 percent of the money went to people who would have bought a new car anyway. In other words, the administration could have cut out the overhead and simply handed out $1.35 billion to random people on the street.

Read more: http://www.nationalreview.com/articles/328432/why-stimulus-failed-arthur-c-brooks