Obama's stimulus will cost more than the entire Iraq war.

[fastyxx]

HappySqurriel said:

Rath said:

Ok without checking whether the statistics actually hold up or not (so assuming he is correct) he misses two important points I believe.

1) The stimulus helped the economy recover, therefore the costs of the stimulus are at least to some point offset by the stronger economy.

2) The stimulus spending wasn't a straight up loss. The GM deal is a good example of this, $50B outlay and now the govt owns about $100B of GM.

First, the obvious question, if the stimulus helped the economy recover why is unemployment so high and why are so many people convinced that we will face a double dip (or more appropriately that we never left the initial recession)?

Secondly, I would just like to point out that since the stimulus was funded through deficit spending when the spending slows down or stops it will act as an overall drag to the economy because you will have to pay interest on it; and, being that it is unlikely that the US government will every pay down any of the principle, the total negative effect from the stimulus will inevitably be several times larger than the total positive effect from the stimulus.

Not sure about this, as no one is.  Economies are much too complex and intertwined globally.   If there were definitive answers, we wouldn't have any debate.  The dominant theory right now seems to be that the stimulus needed to be bigger and the states and locals need to spend the other $200 billion or so that they haven't used yet.  The contraction of state and local governments counteracted the input from the federal government.  But who knows?  We will never know what would have happened if we just let the auto companies and investment banks and AIG and the like just go down.