Obama Stimulus Plan Worse than Doing Nothing

The Congressional Budget Office, the non-partisan official budget watchdog, issued a scorecard on the long-term impacts of President Barack Obama's and Congressional Democrats' proposed economic stimulus plan, and the numbers are not good. The report took a look at the impact the plan would have on the economy over the next ten years, and found that the stimulus bill would actually lower the nation's total economic output more than if the Administration did nothing.

While the CBO estimates that the stimulus will result in 1.4 to 4 percent higher growth in the short term, by 2019 GDP would be 0.1 to 0.3 percent lower. The reason for the turnaround, according to the report, is the massive spending increases and government debt that the stimulus bill calls for. Over the long-term, government spending would "crowd out" private investment, leading to a net shrinking of the economy. On the jobs front, the report's outlook is not much better. The CBO says that the bill will create jobs in the next two years, but by 2011 job creation from the bill's programs would be barely noticable.

The report's conclusion could spell big trouble for the stimulus plan on Capitol Hill. Public support for the plan has been dropping steadily with each day that action is not taken, and as more Americans come to realize just how big the package is. Democrats in the Senate have already admitted that they do not have the votes to pass the bill right now. The CBO's numbers are likely to bolster Republican efforts to curb the bill's size and scope, and attract wavering Democrats in opposiion to the measure. President Obama has warned of an economic "catastrophe" if no action is taken on the stimulus. But his rhetoric has thus far failed to convince moderate Democrats in the Senate to support the plan as is.

After his election, President Obama initially called for a stimulus bill of about $300 billion. Since then, the bill has balooned up to over $900 billion as Congressional Democrats have festooned the measure with spending on a host of pet liberal programs that have little or no stimulative effect on the economy. They do, however, reward traditional Democratic constituencies for support. The CBO report should be the final confirmation that the stimulus bill has been hopelessly altered and no longer meets its original intent. A stimulus bill that shrinks the economy is no stimulus at all. President Obama should endure some short-term pain and call for the bill to be scrapped.