On Tuesday’s episode of Varney and Co. on Fox Business, host Stuart Varney had on Art Laffer, former economic adviser under Ronald Reagan. In what had to be one of the dumbest segments in television history, Laffer tried to make the case that the American Recovery and Reinvestment Act of 2009, otherwise known as the stimulus, actually CAUSED the Great Recesssion. Let me repeat that. Laffer said that the stimulus, which was passed in early 2009, caused the recession, which had its beginnings in 2007.
Laffer didn’t even attempt to give an actual explanation. He just thought he could talk about how the stimulus gave out government money, so therefore, it caused a recession because government money has to come from somewhere. It is a laughably bad argument to make. He didn’t discuss anything about economic growth since the stimulus passed. It almost seemed like he didn’t even know the definition of a recession when it comes to a country’s economy.
I am not an economic expert, as Varney and Laffer supposedly are. However, I do know that there are certain undeniable facts that can be easily pointed to. One, a recession is generally considered to take place when an economy has suffered two straight quarters of negative growth. The economy suffered a negative GDP in the 1st quarter of 2008, after showing a slowdown of growth in 2007. After having a positive 2nd quarter in 2008, growth completely fell off the table the rest of the year, bringing in the real start of the Great Recession.
That would completely precede the stimulus, which was passed in February 2009, weeks into President Obama’s first term. The 1st quarter of 2009 was negative (when the stimulus was passed), but the 2nd quarter, after the full effects of the stimulus started taking effect, showed a full reversal of the shrinking of the economy. The 3rd quarter actually showed GDP growth for the first time in well over a year and the 4th quarter of 2009 was the highest for economic growth in nearly 4 years. Since the passing of the stimulus, the economy has only suffered one negative quarter and has generally shown sustained growth.
I understand that strict, free-market capitalists like Varney and Laffer hate the thought of government spending to help grow an economy. To them, everything must come from the private sector. Government regulation and spending is pure evil. However, you can’t just go on TV and spread complete garbage like what Laffer did on Tuesday. There is no possible way that an event that occurred in 2009 (stimulus) was the cause of another event that was in full force in 2008 and saw its beginnings in 2007 (recession.) It isn’t humanly possible. If you say something like that, you are either incredibly stupid or a liar.
H/T: Media Matters