The CBO has never made a correct prediction. Originally estimated as a $725 Billion stimulus, the $825 Billion stimulus added 0.7% to the GDP in 2010 and only created 700,000 jobs. For months, Obama pleaded with America that the stimulus bill must be passed to grow the economy. Instead, most of the money went to pay to special interest groups that got Obama in the White House. The American people should be angry because Obama's "hope and change" was a lie!
(IBD) Recovery: After nearly all the stimulus money has been spent, the Congressional Budget Office now admits it cost more than advertised, did less to boost growth and will hurt the economy in the long run.
In its latest quarterly report on the economic effects of the Obama stimulus, the CBO sharply lowered its "worst case" scenario while trimming many of its upper-bound estimates for stimulus-fueled growth and employment.
The new report finds, for example, that the stimulus may have added as little as 0.7%to GDP growth in 2010 — when spending was at its peak — and created as few as 700,000new jobs.
Both are down significantly from the CBO's previous worst-case scenario.
The report also lowered the best-case estimate for added growth in 2010 to 4.1% from 4.2%.
In addition, the CBO says the extra infrastructure money didn't boost growth as much as it previously claimed, because states reacted by spending less out of their own budgets on highways.
So in other words, the CBO now says it's possible that the stimulus had virtually no meaningful effect on growth and employment despite its massive price tag.
All this comes after the CBO increased that price tag to $825 billion from its initial $787 billion — a 5% hike.
Adding insult to injury, the new report also says the stimulus will hurt economic growth in the long run because of "the resulting increase in government debt." Each dollar of additional debt, it reports, "crowds out about a third of a dollar's worth of private domestic capital."
In our view, even the CBO's downgraded estimates are too high, because they're still based entirely on Keynesian economic models that simply assume extra government spending results in added economic growth.
You don't have to look very hard to see this isn't what happened.
While Obama promised the massive stimulus would "ignite spending by businesses and consumers," unleash "a new wave of innovation, activity and construction," and keep unemployment under 8%, what we actually got was the worst recovery since the Great Depression.