No Consensus on Stimulus

Following up on Chris Edwards' comments, Alan Blinder of Princeton writes in the Washington Post that the stimulus is working and "we need to stay the course."

But Casey Mulligan of the University of Chicago writes in the New York Post that 90 percent of the stimulus money hasn't been spent yet, so we could still stop it before it does too much harm:

The best case scenario for the stimulus law gives us results that are miniscule compared with the costs. In the worst case scenario, we actually pay money to further harm an already struggling economy....

It would have been designed better if money had stayed with the taxpayers instead of funneling through dozens of federal agencies -- an option that is still available. Otherwise, we are looking at heavy taxes -- and further economic damage -- down the road to pay for all the borrowing.

Mulligan wrote earlier in the New York Times that "The economy has gotten worse than the Obama administration had predicted it would be even if Congress had spent nothing on 'fiscal stimulus.'" Mulligan provides more details at his blog stopthefiscalstimulus.com.

Meanwhile, Mario Rizzo of New York University asks

what is the mechanism by which about $70 billion in extra spending (this is the amount of the total stimulus package now spent) reduces the rate of increase in unemployment and reduces the rate of decrease in output in a $14 trillion economy? If my advanced arithmetic is correct this is ½ of 1 percent of the GDP. What kind of Super Multiplier is that?

He goes on to point out that unemployment is now higher than the administration predicted just a few months ago it would be if we didn't pass the stimulus. So how can we believe today's econometric claims about the good effects of the so-called stimulus?