Why won't Obama's stimulus plan work?
Joanne Jacobs had a post yesterday that brought to mind a subject I've been meaning to address for a while now. I threw a comment in on her post, but I wanted to address it on my own blog, too.
I teach Economics as an elective for high school juniors and seniors, but the subject is so complicated that I consider myself anything but an expert on it. I also teach American History, and we recently finished up on the Great Depression and started on World War II. We spent $320 billion dollars during the war, which might seem like small potatoes now, but at that time it was twice the amount we had spent during our entire history up to that time. I have always understood that World War II is what got us out of the Great Depression because of the massive government spending that was required. That is what I have always taught, and I believe that is standard across the nation.
When I first heard about President Obama's plan for an $800 billion stimulus package for what is being called the worst economic crisis since the Great Depression, I was very concerned about its effect on our already huge federal deficits and national debt, but the logic made sense to me. If it was massive government spending that got us out of the Great Depression, wouldn't massive government spending be a reasonable thing to do to deal with our situation today?
But when I've watched the talking heads on TV news shows, I've never really seen that discussed. I've seen several analysts say that the stimulus is terrible and that it will never work, but none of them have ever explained why the connection that I see between the way World War II got us out of the Great Depression and our situation today isn't there. I've never heard anyone say, "Look, the spending for World War II got us out of the Depression because....., but the spending Obama is proposing won't get us out of this mess because......"
If any of you are more expert on the subject of economics than I am--and that includes a lot of people--I would love to learn your thoughts on this.