Donatelli: States Don’t Need More Stimulus


Fiscally conservative policies show better results than government spending

The president has given a long list of excuses for the shape of America’s struggling economy. He has cited high energy costs, the debt crisis in Europe and, of course, George W. Bush and the evil House Republicans for not passing his agenda. Following his recent gaffe, in which he said, “the private sector is doing fine,” President Obama then made the argument that the public sector is struggling because states don’t have the resources to make “investments” in needed public services. Like the others, this explanation rings hollow.

If the problem was state spending, the Obama stimulus in 2009 should have solved it, but today America still suffers from 8.2 percent unemployment and 1.9 percent growth in the first quarter of 2012.

One reason why the $831 billion stimulus plan received virtually no Republican support was that it was heavily weighted toward subsidizing the public sector, specifically, preserving jobs for members of public-employee unions. At a time when the private sector was shrinking by roughly 8 million jobs, public-sector employment remained constant. Such a policy offers some short-term economic stimulation but little real benefit since no long-term, private-sector jobs are created – as we have now seen.