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Failure to Stimulate Makes Stimulus Even More Expensive

Washington, Jan 26 -

With most of the recent political hubbub focused on health care, Massachusetts, and the State of the Union address, it seems like the Democrats’ unfortunate stimulus package just hasn’t been getting the attention it deserves. So, without further ado…

“The cost of President Obama's stimulus plan has jumped another $75 billion, the Congressional Budget Office said Tuesday, and part of the reason is more people are getting unemployment benefits because they've lost jobs the bill was supposed to preserve.” (Washington Times, 1/26/10)

What was once a $787 billion boondoggle has now been upgraded to an $862 billion boondoggle. Then, of course, there’s the interest on the debt necessary to pay for this $862 billion. That will bump the total up to around $1.2 trillion or more. And then there’s the prospect of rising interest rates somewhere in the future.

“But the building debt carries with an added burden since once the economy improves, CBO says that higher interest rates will come back and bite the Treasury trying to finance these deficits. ‘Interest payments on the debt are poised to skyrocket,’ CBO says. From 2010 through 2020, CBO projects the annual costs will triple in nominal terms from $207 billion to $723 billion and more than double as a share of GDP.” (Politico, 1/26/10)

With the CBO’s revelation that the Democrats’ stimulus has been an even bigger failure than previously known, is another shot of the same failed ideas really the right prescription?