Can government spending stimulate the economy in a cost-effective way? Economists are split on this issue.
The American Recovery and Reinvestment Act of 2009 has been called the federal government’s largest economic recovery plan. But what about the New Deal? Depending on how the comparison is framed, President Franklin Delano Roosevelt’s plan could have been costlier than President Barack Obama’s.
A review of government spending over 120 years seems to show little, if any, impact on job creation.
The federal stimulus spending in one county increased employment and wage payments two to three counties away, the authors found in a study of the American Recovery and Reinvestment Act of 2009. The spending spilled over as long as the geographic areas were sufficiently connected, as measured by commuting patterns.
The American Recovery and Reinvestment Act of 2009 provided $64 billion in stimulus funds to public school districts. A little over half of the money went toward expenditures, and most of that was used for capital outlays. The impact on employment was negligible.