There are some good points in this article by Robert Schiller of Case-Shiller fame.
We are now waking up to the fact that the stimulus money was mainly a way to permanently ratchet up the size of our government sector at the expense of the private sector. Many of the projects are turning out to be boondogles, or have created/saved government or union jobs at a great cost per job. A stimulus via tax cuts would have put money directly and immediately into consumers’ and businesses’ (read: job creators) hands, and the economy would have been well on its way to recovery by now.
It appears politicians and their economists greatly overestimated the multiplier effect of government spending, and underestimated the dampening effects on businesses and consumers of big deficits, looming regulations and a permanently larger government. Had tax cuts been used to stimulate consumers and job-creaters, especially small businesses, more lower-level new jobs would have been created in the private sector. Government workers and union jobs tend to make above average wages. New hires, the young, minorities tend to make below-average wages. If our goal is to lower unemployment rates and get these workers onto the job ladder so they can prove themselves and advance, the stimulus program is not working.
