Second Stimulus to First: "You Suck"

From Phil Levy comes a wonderful take on what the calls for a second stimulus reveals about the first stimulus.

The extent of spending in 2011 and beyond under the initial package can have one of two interpretations. Either this was the excess that spilled over after all sincere attempts at near-term stimulus were exhausted, or there was a serious misallocation of resources in the initial plan.

And this is exactly the logical problem with a second stimulus. If we accept the premise that the Democrats did the best that could be done and exhausted all stimulative spending possibilities for 2009 and 2010 on their first try, then there’s nothing left to be done in a second stimulus. Additional spending would just pour uselessly into the out-years. If there are still good near-term options available to be funded by a second stimulus, that just speaks to the poor design of the initial stimulus package that passed them over in favor of ineffectual spending years later.

Neither of those possibilities argues for opening up the public coffers for hundreds of billions of dollars more.

All those calls for rushing through the stimulus six months ago were based on the argument that the economy was in terrible shape right now and needed this boost in order to rebound. Unfortunately, the great majority of the hundreds of billions of dollars spent was not intended to be spent right now.

So once again we find the economy doing poorly and consequently most are accepting the fact that the first stimulus didn't work in the way it was sold to the public. So once again talk of a stimulus is brewing. If it passes, we will find again that it has little to do with positively effecting the economy right now.