Congress is pushing for another stimulus plan even though the last one didn’t work. Politicians never let facts get in the way of doing something. Brian Riedl explains why these “stimulus” packages don’t work (via WSJ):
Government stimulus bills are based on the idea that feeding new money into the economy will increase demand, and thus production. But where does government get this money? Congress doesn’t have its own stash. Every dollar it injects into the economy must first be taxed or borrowed out of the economy. No new spending power is created. It’s merely redistributed from one group of people to another.
Of course, advocates of stimulus respond that redistributing money from “savers” to “spenders” will lead to additional spending. That assumes that savers store spare cash in their mattresses, thereby removing it from the economy. In reality, nearly all Americans either invest their savings (where it finances business investment) or deposit it in banks (which quickly lend it to others to spend). The money gets spent whether it is initially consumed or saved.
That’s right and all another “stimulus” plan will do is delay the recovery. A stimulus plan that includes infrastructure spending is no different. It may support jobs in the construction industry but the money used for that purpose will have to come from some other activity. it may, or may not, be spending that is needed but make no mistake, it will not create any extra jobs.