Jeff Wartman

From the Congressional Budget Office:

President Obama’s economic recovery package will actually hurt the economy more in the long run than if he were to do nothing, the nonpartisan Congressional Budget Office said Wednesday.

CBO, the official scorekeepers for legislation, said the House and Senate bills will help in the short term but result in so much government debt that within a few years they would crowd out private investment, actually leading to a lower Gross Domestic Product over the next 10 years than if the government had done nothing.

…

The budget office had previously estimated service the debt due to the new spending could add hundreds of millions of dollars to the cost of the bill — forcing the crowd-out.

CBOs basic assumption is that, in the long run, each dollar of additional debt crowds out about a third of a dollars worth of private domestic capital, CBO said in its letter.

CBO said there is no crowding out in the short term, so the plan would succeed in boosting growth in 2009 and 2010.

The agency projected the Senate bill would produce between 1.4 percent and 4.1 percent higher growth in 2009 than if there was no action. For 2010, the plan would boost growth by 1.2 percent to 3.6 percent.

CBO did project the bill would create jobs, though by 2011 the effects would be minuscule.

Anyone with a days worth of economics could have told you this.  The crowding out effect‘s harmful effects on the macroeconomy are well documented. 

Big government spending proposals do not solve economic downturns.  People seem to have forgotten the economic fact that the New Deal worsened the Depression.  Government can not spend it’s way out of a recession.

It’s time to start writing your Senators in Washington.  Tell them to vote against NO on the Obama Spendulus Package.