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The aftermath

One of the complaints this morning after the debt deal is that we won’t be able to “stimulate” the economy any more. Yet, there is no evidence that the stimulus worked. When I tweeted something similar this morning (follow me as EconTalk on Twitter here, Cafe Hayek tweets are here), someone accused me of confirmation bias, noting that the CBO had found that the stimulus created 3 million jobs. Actually, the CBO has never estimated the job effects of the stimulus other than to assume a particular relationship between government spending and job creation. That is simply assuming the results that you are trying to discover. More here if you missed it the first time.

By the way, I was careful to say that there is no evidence that the stimulus worked. We don’t have very good evidence that it didn’t work. But we have no evidence that it did.