Stimulus: To Spend or Not to Spend? - BusinessWeek

Stimulus: To Spend or Not to Spend? Economists are engaged in a fiscal feud over Obama's spending plan and how much of a boost it will give the recession-wracked economy By Michael Mandel As the House of Representatives prepares for a Jan. 28 vote on the $825 billion Obama fiscal stimulus bill, politicians want to know: How much does boosting government spending or cutting taxes help the private sector? Can massive fiscal stimulus, as Obama is calling for, create jobs and increase economic output? You might think these simple questions would have clear answers. Remember, macroeconomists have been studying the U.S. economy for decades. After all this time, we should have some general agreement on the size of the "multiplier"—that is, whether an extra dollar of government spending leads to gross domestic product, or GDP, going up by more than one dollar, or less than one dollar. To put it another way, it's essential to know whether the Obama economic package will stimulate the private sector or actually drain resources away from the rest of the economy. see the rest of the story @ Business Week and watch the Mandel video series... Stimulus: To Spend or Not to Spend? - BusinessWeek