Now that the so-called stimulus plan is law, we're left with one question: Will this package help us or hurt us? Unfortunately, I believe it is the latter, for a few reasons.
First, this package will ultimately mean less, not more, economic activity. The Congressional Budget Office has found that this bill will lead to a real 0.1 to 0.3 percent reduction in gross domestic product by 2019. That translates into our economy losing tens of billions of dollars.
Second, spending does not equal stimulus. From both sides of the political aisle - from conservative economist Martin Feldstein, who originally supported a stimulus, to former Clinton administration budget director Alice Rivlin - we hear that this particular bill won't actually stimulate the economy. Even two of President Obama's chief economic advisers, Peter Orszag and Christina Romer, earlier in their careers panned the idea that a massive infusion of government capital could provide the type of economic recovery we need now.
History shows the same thing. Neither the Great Depression nor Japan's experience in the 1990s suggests that government spending alone creates jobs or economic growth. Billions in taxpayer dollars spent in the 10 years following the 1929 stock market crash didn't push the U.S. unemployment rate below the high teens. And despite no fewer than 10 stimulus packages implemented by the Japanese, their unemployment rate more than doubled during the lost decade.
Third, if you print enough money, you devalue it. We're moving to a tipping point of devaluing every American dollar and, as a consequence, rendering any short-term economic stimulation moot. Finally, ad hoc bailout after ad hoc bailout is freezing the driver of our economic engine - private capital. For entrepreneurs to take risks in the marketplace, they need to know what the rules are. Yet that's not possible when even the Treasury secretary's best answer to that question is effectively: Let me get back to you with those details.
Unfortunately, the rush to do something for the sake of doing something means this bill is already law - a mistake that we, and the generations to follow us, will have to live with.
Mark Sanford is the Republican governor of South Carolina.
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