A simple question for progressives (#20)

According to the Obama Administration, this is how federal government spending works miracles (emphasis mine):

Keynesian economicsWell, obviously, it’s putting people to work. Which is why we’re going to have some interesting things in the course of the forum this morning. Later this morning, we’re going have a press conference with Secretary Mavis and Secretary Chu to announce something that’s never happened in this country — something that we think is exciting in terms of job growth. I should point out, when you talk about the SNAP program or the [food] stamp program, you have to recognize that it’s also an economic stimulus. Every dollar of SNAP benefits generates $1.84 in the economy in terms of economic activity. If people are able to buy a little more in the grocery store, someone has to stock it, package it, shelve it, process it, ship it. All of those are jobs. It’s the most direct stimulus you can get in the economy during these tough times.

If this is true, shouldn’t the federal government immediately hand out a trillion dollars’ worth of food stamps, thus generating 1.84 trillion dollars of economic activity? In fact, shouldn’t they hand out a billion trillion?

But government spending ended the Great Depression, right? Right??
Ummm, not so much, no. Never fear, though. Maybe Keynesian theory will finally work when that fake space alien invasion rolls around.

One comment

  1. Brain Shavings

    The bigger the government, the crappier the economy

    Veronique de Rugy points out a study just released by economists at the European Central Bank: Basically, an increase in government spending (whether financed by taxes or by borrowing) reduces economic growth. This is consistent…