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Some Data for Mr. Biden
Big-stimulus America has lagged the global recovery. How might the vice president explain that?

By Jerry Bowyer


‘Facts are stubborn things,” wrote John Adams; I’m tempted to add: “But not as stubborn as Joe Biden.”

The vice president recently told the Brookings Institution that he has no doubt that the Obama administration’s stimulus plan has been a success. In fact, it’s been so successful that it has moved us from the precipice of a second Great Depression to the safer ground on which we now discuss recovery.







  

McCarthy: An Unreasonable Decision

Lopez: The Week Sex

Spruiell: Seven Big Lies about the Stimulus

Costa: No Amnesty for Obamacare

Geraghty: A Tale of Six Counties

Spruiell: Saved, Created, or Fake?

Williamson: War Is the Health of the Taxman

Lowry: On Health Care, Should Dems Fear Failure or Success?

Nordlinger: Criticism that will cost you, &c.

Charen: Nurse Ratched Democrats

Sowell: Solving Whose Problem?

Symposium: Condition Serious but Not Hopeless

Williamson: The Battle of Presidio

Editors: Decision Time on Iran

Interview: Tom Brady & KSM

Black: The Specter of Default




A big problem with this line of “reasoning” is that as of the second quarter of 2009 — the most recent period for which GDP data are available — we were still in recession. Meanwhile, much of the rest of the developed world had resumed positive economic growth.

Across the financial crisis, stimulus spending by the U.S. easily exceeded that of any other developed nation, both in absolute terms and as a percentage of GDP. It seems the Obama administration — in conjunction with the Gordon Brown regime in the U.K. — failed to persuade many of our European friends to increase their planned stimulus spending as part of a proposed “global New Deal.”




The U.S. will spend a full 2 percent of GDP on stimulus programs this year, while France will stimulate by only 0.7 percent of its GDP. Germany and Japan have both been robust stimulus spenders, yet each has spent considerably less than the United States. The result? While there is no one-to-one correlation between stimulus spending and GDP performance — since so many other factors are tied to economic growth — it is certainly notable that France, Japan, and Germany entered an economic spring during the second quarter of 2009 while the U.S. (along with the U.K.) remained stuck in an economic winter.

This analysis is constrained by complexity. For instance, the U.K.’s stimulus plan is in the same ballpark as Germany’s — it’s smaller if you only count this year, and slightly larger if you count last year as well. The U.S. and the U.K., however, have been much more aggressive in their central-planning initiatives than their developed-market cousins, with the U.S. embracing the nationalization of private-sector industries and various forms of income redistribution. The shift toward Keynesianism in the U.S. has been sizeable, and so far it’s been a bust.

So Joe Biden can boast all he wants. But facts are stubborn. And the fact of the matter is that the U.S. continued contracting while lesser Keynesians of the crisis resumed expansion.

— Jerry Bowyer is an economist, CNBC contributor, and author of the upcoming Free Market Capitalist’s Survival Guide.








 

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