Output Lost

The New York Times today put a dollar value to the level of production and output the nation has lost since the recession began. In a sobering assessment, the Times' Louis Uchitelle writes:

[E]ven if the recession miraculously ended tomorrow, economists estimate that at least three years would pass before full employment returned and output rose enough for the economy to operate at full throttle. …

But the president’s solution, the recently enacted stimulus package, spreads $787 billion over two years. So even if every dollar of spending restored a dollar of output, President Obama would be nearing the end of his first term before output approached the level achieved just before the start of the recession in December 2007.

Of course, we know that every dollar spent will not restore a dollar of output. As STEWARD’s recent economic study found, for example, significant portions will simply supplant existing spending, contributing nothing further to the nation’s output.

Moreover, as the CBO has warned, the stimulus bill will actually have a negative impact on the economy from 2015 on because of the massive debt incurred as a part of the bill.