At the federal level, the fiscal stimulus of 2008 and 2009 supported economic output, but the effects of that stimulus faded; by 2011, federal fiscal policy actions became a drag on output growth when the recovery was still weak.
Sentiment: NEGATIVE
In effect, there has been a significant shortfall in the overall amount of monetary policy stimulus since early 2009.
The stimulus legislation, technically known as the American Recovery and Reinvestment Act of 2009, was a mixture of tax cuts for families and businesses; increased transfer payments, like unemployment insurance; and increased direct government spending, like infrastructure investment.
Increased government spending can provide a temporary stimulus to demand and output but in the longer run higher levels of government spending crowd out private investment or require higher taxes that weaken growth by reducing incentives to save, invest, innovate, and work.
What did the taxpayers get out of the Obama stimulus? More debt. That money wasn't just spent and wasted - it was borrowed, spent, and wasted.
If we don't get this economy going, the numbers that represent this stimulus package are going to be small compared to the loss of revenue to the federal government for our economy.
Surely, the best and most effective measure is to get the economy moving and shorten the period of recession or slowdown. That's the rationale for Gordon Brown's 'fiscal stimulus' and it sounds like a good one to me.
The truth of the matter of is that stimulus money not only doesn't stimulate; it actually reduces output.
Fiscal discipline can turn the economy around.
In the five years since the end of the Great Recession, the economy has made considerable progress in recovering from the largest and most sustained loss of employment in the United States since the Great Depression.
After 2003, we lowered taxes across the board. And by 2004, revenue to the federal government grew. In the 1980s, Ronald Reagan cut taxes dramatically. And by the end of the decade, revenue coming in the federal government had doubled.