Why is increased federal spending not helping the economy?

Increased federal spending worked for the Roosevelt and Reagan administrations. Why isn't it improving the economy in the Obama administration?

11 Answers

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  • Anonymous
    1 decade ago
    Best Answer

    You need to understand the theory of rational expectations. People today have a rational expectation of increased taxes and the specter of unemployment. This keeps their spending down. Government deficits do not change that rational expectation. On the contrary, increased government spending is one of the causes for the low expectations.

  • 1 decade ago

    Increased federal spending did not work for Roosevelt. Did you know we were still in the depression when we joined WWII? The depression lasted from 1929-1945. Much like Obama, FDR told people that if his policies were not enacted immediately, the depression would not end. Well his policies were enacted and the depression lingered for a dozen more years.

  • 1 decade ago

    First, the Federal spending of Roosevelt and Regan went to jobs, while the jobs did not actually create any thing new it just redistributed tax money, but what it did do was allow people to buy things stimulating manufacturing creating wealth. What the current stimulus has done is none of that, it is just a reward for bonus money going to a select group of business's and organizations and has not created any jobs. The money that went to the banks just made the balance sheets look good as the banks are not leading.

  • xiphos
    Lv 5
    1 decade ago

    Some people believe in the multiplier effect. It really doesn't work that well since the assumptions of behavior are inaccurate.

    It hasn't done much for Japan.

    It didn't work for Roosevelt. Morgenthau admitted so in testimony before the Congress.

    Reagan increased C and I in addtion to G. It didn't really work for him either. We still had to pay for the increase in G.

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  • Anonymous
    1 decade ago

    I know that increased spending does not help the economy of my family, so it stands to reason that it does not work for anyone.

  • Anonymous
    1 decade ago

    The beauracracy soaks up most the funds before they reach working class.

  • S O
    Lv 7
    1 decade ago

    It is.

    Or do you think the spiking rate of unemployment that we had prior to 2009 just slowed, and steadied on it's own?

    Amazing that you guys can cheerlead repub's for years as they drive this country into the ground, and then whine when a Dem gets in, that it takes more than just the snapping of their fingers to turn things around.

  • Anonymous
    1 decade ago

    yes

  • Because no one can trust this adminstration

  • Ken
    Lv 7
    1 decade ago

    What's not working?

    Dow 9,997.12 +47.76 (0.48%)

    S&P 500 1,081.42 +0.02 (0.00%)

    Nasdaq 2,141.14 -9.59 (-0.45%)

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