CBO revisits the "stimulus"

A new CBO report came out this morning analyzing the macroeconomic benefits of the “stimulus” package that was passed.

The results are not surprising, basically the conclusion is that we just wasted $800 BILLION.

In principle, the legislation’s long-run impact on output also will depend on whether it permanently changes incentives to work or save. However, according to CBO’s
estimates, the legislation will not have any significant permanent effects on those
incentives.

The long term effect on GDP is negative and following the CBO’s logic, will be more severely negative at a more rapid pace given the new budget proposals by the administration, which increase the deficit drastically. Basically the faster we accumulate debt the faster we will see a negative effect of government borrowing/spending. The negative effect will be reflected in lowering the GDP. The CBO points out that the reduction in GDP shouldn't necessarily impact employment figures, but will probably be reflected in underemployment or reduced wages.

The reduction in GDP is therefore estimated to be reflected in lower wages rather than lower employment, as workers will be slightly less productive because the capital stock is slightly smaller.

Smaller GDP and lower wages… what a stimulus!

Congrats! Your government just wasted nearly a TRILLION dollars of YOUR money.