Government recession-fighting record is mixed
WASHINGTON — If history is any guide, government efforts to combat recessions often come too late to do much good. Furthermore, such efforts can sow the seeds for the next downturn.
Efforts to head off or alleviate recessions with crash spending programs and tax rebates — classic anti-recessionary plays — often did not kick in until after the recession had ended.
"History shows very often these programs even go on for years and years after the recession is over," said economist Bruce Bartlett, who worked in the Reagan and elder Bush administrations.
Of the eight U.S. recessions in the six decades since the end of World War II, only once was the stimulus package passed before recession’s end, Bartlett found. That was legislation enacted in June 2001 — containing the first round of President George W. Bush’s tax cuts — to combat a recession that began in March 2001 and ended in November 2001.
In the seven other postwar recessions stimulus packages were either passed right as they were ending, or considerably later.
Part of the reason for the mismatches is because it often wasn’t known for months, even years, when a recession officially began and ended payday loan. Two straight quarterly contractions in the gross domestic product is the common definition. But the official determination — made by the National Bureau of Economic Research — takes longer and is based on a more complicated formula.
It’s too early to know the impact on the economy of the $168 billion stimulus package passed by Congress and signed by President Bush in January. Rebate checks of up to $1,200 per couple and more for families with dependent children will start arriving in mailboxes in May.
Chris Edwards, director of tax policy for the libertarian-leaning Cato Institute, cites an "unquenchable taste in Washington" to find quick fixes, one that is even more pronounced in an election year. "Congress and the administration want to be seen as doing something."