And then there's the question of what will happen in the next few years if the stimulus bill doesn't happen.
That's included in the analysis. Not that anyone can really do a good job of predicting such things, but the idea was no ignored. The CBO is effectively saying that in the long run the economy will be worse with the stimulus (but only slightly worse, and better in the short run).
The CBO appears to be relying on Keynesian economic ideas. If one is more prone to except Austrian (Hayek, Mises) or the more free market side of the monetarist (Friedman, or the "Chicago School" in general) then one would see more downside and less benefit. Another economic idea, Public Choice economics, doesn't directly deal with whether government spending as stimulus will work, but analysis the incentives that government will have to load up spending for special interests.
A point about the problems of looking to an authority to settle this question. All of these schools of thought have Nobel Prize winners.
Examples (not the only winners from each school, just some really obvious examples)
Keynesian/Neo-Keynesian - Krugman
Public Choice - Buchanan
Austrian - Hayek
Monetarist - Friedman
Lately many supporters of the stimulus idea have acted as if Keynesian theory was the only one that matters, but even if one does think that way, its not as if that accepting the general Keynesian ideas automatically means the bailout will be a good idea (Accepting them would imply that at some times, some forms of stimulus from large amounts of government spending and/or temporary tax cuts, can be a good idea, but the timing, amount, amount and nature of stimulus, and whether it applies well to a specific situation, would still be things that would be open to debate) |
