The Keynesian fairly tale
Washington Examiner Editorial:
...He describes Keynesian economics as the perpetual motion machine of the left. What it does is prolong downturns into long term depressions and recessions. Raising taxes and spending create slow growth at best. Prosperity comes from cutting taxes and spending. It happens whenever it has been tried. Just look at what is happening in the red state economies like Texas compared to blue state economies like California, Illinois and New York.
As Cato Institute Senior Fellow Daniel Mitchell points out in The Federalist, “Keynesian economics has a long track record of failure. It didn't work for Hoover and Roosevelt in the 1930s. It didn't work for Nixon, Ford, and Carter in the 1970s. It didn't work for Japan in the 1990s. And it hasn't worked this century for either Bush or Obama. But the Keynesians aren't fazed by these criticisms. No matter how poorly the economy performs during periods of Keynesian spending, they have an automatic response of just think of how much worse it would have been!'”
With Obama now claiming success for his stimulus program, it is important to ask why his economists’ projections were so badly flawed. Mitchell helpfully points to the reason: Being good Keynesians, the Obama advisers used models that assumed government spending always increases economic growth, and they further assumed that no economic harm results when the government takes a dollar out of the private economy to spend on public sector programs.