All I can say is wow...You really think that we could have full employment if we just borrowed enough money to pay for it? Did you just sleep through the whole credit downgrade thing? We could all live in mansions, drive exotic cars and date super models if we'd just commit to a deficit sufficient to reach THOSE goals as well. Are you really this stupid? You progressives live in an alternate universe where credit cards never have to be paid off and the bank never cuts off your line of credit. It would be laughable except some of you clowns are actually running our freakin' country right now. 2012 can't get here soon enough...
I assume those are all rhetorical questions. If not, let me know.
This is not a rhetorical question, though: How much did US Treasuries decline, as a result of the downgrade?
If I'm not mistaken, interest rates on US Treasuries have dropped to around 2%, at one point below that. Which actually underlines the fact that the stimulus did not work, because it shows investors both foreign and domestic are flocking to the safe haven of low interest US bonds that will actually be worth less at maturity than they are now if you take inflation into account. They are doing this because they have no faith in the US economy, nobody believes we're going to get anywhere close to reasonable economic growth for quite awhile. Most analysts are downgrading their forecasts for GDP the rest of this year and next year, even the CBO's overly optimistic economic projections say we're looking at low economic growth.
So you can believe what you read or you can believe what you see. Tell the truth, do you really think the stimulus worked?
Correct. Interest rates have fallen. What's supposed to happen when credit gets downgraded? Interest rates are supposed to go up. S&P had 0 effect on the market, which is what you'd expect if you understood why the downgrade was meaningless. But that's not what deficit hawks predicted.
Predicting what will happen in the future is difficult. Making up a story about why it didn't happen, after the fact, is easy. But that's what happened with S&P. They changed the story. So long as you're willing to do that, it's impossible to be wrong.
As to whether I think the stimulus worked... I think that what Bush did, what Bernanke did, and what Obama did - all of it together - kept the nation from going over the cliff. And it's telling, to me, that Congressional Republicans could only be coerced into Doing The Right Thing by 1000 point drops in the Dow. Economists, the Fed, the Treasury, and even their own President couldn't convince them.
I think that deficit spending, more or less by definition, creates jobs. And that's why it's important to do it during a recession. Keynes said you could pay people to dig holes and fill them up again. And WWII was the approximate equivalent (except that it more like digging holes and throwing perfectly good humans into them). Yet it got us out of the Great Depression. That the government should run deficits during a recession is perfectly orthodox economics, and it's taught in college classrooms all across the country.
If you're trying to fill a pool, and a gallon of water doesn't do it, it means you need more water, not that water doesn't work.