Logical Limit to the Amount of Stimulus?

Now that the Obama administration is lobbying for the G-20 countries to join the U.S. in massive deficit stimulus spending (National Economic Council Director Larry Summers "The right macro-economic focus for the G20 is on global demand and the world needs more global demand") and there is talk in Washington that a second stimulus package is needed for the U.S., then the question is:

How much government spending is enough to stimulate the economy?

Let's follow the logic. If the $830 billion U.S. stimulus package is good for the economy because it will save or create 3 or 4 million jobs (hard to keep track of the claims being made), then by what logic did Congress and Obama restrain the stimulus package to just $830 billion? According to the Labor Department (http://www.bls.gov/news.release/empsit.nr0.htm), there are 12.5 million people unemployed.

Hmmm, logic dictates that if at least 3 million jobs are saved or created by the government spending $830 billion it does not have, then the next stimulus package should be enacted immediately and it should spend at least $2.49 Trillion as that would surely save or create the 9.5 million jobs needed to put every unemployed American back to work!

So, why isn't President Obama or Congress proposing that the government spend $3.32 Trillion to achieve the goal of full employment? Even if you don't explicitly know the answer, you implicitly understand why it won't work. Why the politicians don't propose and enact it is quite simple: It will be all too obvious that they were wrong when we aren't living in full employment nirvana 2 years from now.

We cannot borrow $3 trillion (or even $830 billion -- not to mention the trillions more spent to prop up failed companies) to spend today and have that $3 trillion tomorrow to spend and invest. Of course, the government need not borrow the money. The President and Congress could increase taxes by $3 trillion from those who are working and transfer it to those who are not. What do you think would happen if $3 trillion is removed from the economy today? If you think times are tough now, .... Of course, the politicians recognize this. That is why no one attempts to pay for the stimulus spending with current tax dollars.

Borrowing the money does not change the outcome. It only spreads the impact over many years instead of hitting the economy and taxpayers all at once. Who pays? We all do. The politicians are simply betting that you won't recognize how good you could have had it 5 years from now if they hadn't spent all that money today! The burden on the economy will be felt for a long time. It will delay the recovery and make it shallower than it otherwise would have been.

What makes it unethical is the fact that we are burdening those who are not yet working and those not yet born with the cost of fixing our problem today. That's a burden they did not choose but for which we are obligating them.

Of course, what applies to our national economy is true for the world's economy. Deficit stimulus spending by the rest of the G20 countries will only make matters worse as we could not rely on stronger economic conditions outside the U.S. to help our own recovery. Deficit spending by the entire G20 would impoverish our international economic competitors to roughly the same extent we are impoverishing ourselves. Does it make you feel better if everyone around you suffers as much as you?