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Posts Tagged ‘impact on infrastructure projects by Stimulus package’

Is the Stimulus “Stimulating?”

Posted by Larry Doyle on April 20th, 2009 5:30 AM |

As I referenced on my radio show last evening (note: you can listen to an audio recording of the show from the BlogTalkRadio player in the right sidebar), China’s economy is benefitting from economic stimulus enacted by its government. Well, the U.S. government also enacted a major Stimulus Package in early February. How is our package doing? Is it impacting the economy? Our economy certainly does not seem to be benefitting significantly from any government stimulus.

I wrote on February 7th that Martin Feldstein, renowned Harvard economist who sits on Obama’s Economic Recovery Advisory Board, called the Stimulus Package An $800 Billion Mistake.

Feldstein’s concerns about the Stimulus as reported by the Washington Post, focused on several items:

1. On the spending side, the stimulus package is full of well-intended items that, unfortunately, are not likely to do much for employment.

2. The largest proposed outlays amount to just writing unrestricted checks to state governments.

3. The plan to finance health insurance premiums for the unemployed would actually increase unemployment by giving employers an incentive to lay off workers rather than pay health premiums during a time of weak demand.

4. A large fraction of the stimulus proposal is devoted to infrastructure projects that will spend out very slowly, not with the speed needed to help the economy in 2009 and 2010.

5. The problem with the current stimulus plan is not that it is too big but that it delivers too little extra employment and income for such a large fiscal deficit.

Let’s see how business executives view the rollout of the Stimulus Package. Would they agree or disagree with Feldstein’s concerns? (more…)






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