Can the U.S. Stimulus Package Work?

Of late, I’ve heard countless Republicans, Fox News pundits and others emphatically state that:

  • Keynesian stimulus spending has never worked in the past;
  • World War II was the sole impetuous for recovery after the Great Depression – not spending; and
  • the New Deal had no ameliorating effect on the Great Depression’s high unemployment rates.

All of this is said, of course, in argument against the current Obama/Democratic stimulus package.

It is certainly true that World War II proved to be an enormous, if not THE most important, stimulus to post Depression recovery. The chart* below, however, makes it clear that Roosevelt’s stimulus spending did have an important, positive effect on the U.S. economy:

msnbc (Feb 9 2009) - U.S. Gross Domestic Product 1929 to 1941

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