Two years ago I posted on why I didn't think the stimulus package would work, why I didn't think the very very first worked, and why I might consider it as a "temporal progressive tax". But since the Federal Reserve recently predicted the recovery is slowing down, it's worth one last look. In this NPR podcast (via Justin) one of my favorite economists Tyler Cowen puts it like this: there has never been a very good test of Keynesian stimulus and in fact, this last stimulus package has probably the best chance to test it. A year and half ago he predicted it wouldn't help, and that it wasn't worth the risk to spend a trillion dollars on an untested idea.
But here's the worst part, because the macro-economy is so large and so unwieldy, even though this stimulus hasn't ended the recession in the predicted amount of time, it proves nothing. Supporters can reasonably say it would have been worse without it. Although I can't say with completely certainty the stimulus package has done more harm than good, the opposite can't be proven either. And it seems the burden of proof should be on the party wanting to spend a billion dollars.
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