Shortsighted

The Congressional Budget Office released a report detailing a ten-year estimate of stimulus’ effect on the economy.

On the positive side, the stimulus is expected to help the nation recover in the short term. According to the report, the bill will “raise GDP and increase employment by adding to aggregate demand and thereby boosting the utilization of labor and capital that would otherwise be unused because the economy is in recession.”

However, the long-term impact of the package is not so positive. “Most of the budgetary effects of the legislation are estimated to occur over the next few years, and as those effects diminish, the short-run impact on the economy will fade.” “In contrast to its positive near-term macroeconomic effects, the legislation will reduce output slightly in the long run” because “the law will result in an increase in government debt.” Moreover, because the report projects the nation will return to full employment, “the reduction in GDP is therefore estimated to be reflected in lower wages[.]”

Simply put, the Administration has chosen to mortgage the nation’s future, and all of our future wages, in order to provide a short-term solution to our economic woes. In fact, CBO projects that less than a third of the bill’s debt accumulating costs will add to long-term output.

With the government’s own accountants again warning that the current strategy has dangerous long-term consequences, STEWARD wonders, would now be a good time dramatically alter the trajectory of this stimulus package?