Not so stimulating.

George Melloan expands on the folly of the latest craze of “stimulus” spending.

Even before Barack Obama’s inauguration, the Democrat-controlled House crafted a record-breaking $825 billion program to “stimulate” the U.S. economy. One measure — withholding less income tax from paychecks over the next two years — is a Keynesian effort to restore consumer demand for goods and services by sweetening take-home pay. Its authors assume that this $140 billion tax break will work better than last spring’s $152 billion tax rebate, which seems not to have worked at all, judging by the economic debacle in late 2008.

The central question, however, is not whether “stimulus” programs are ineffective. It is whether they are counterproductive. A case can be made that the bucket not only leaks but that the leaks tend to drown out chances for economic recovery.

Circumstantial evidence that “stimulus” packages actually delay recovery can be derived from the Keynes-guided New Deal of the 1930s, which put large faith in federal deficits as a Depression cure. Federal debt climbed to 43.86% of GDP in 1939 from 16.34% in 1929 with very little relief from hard times. Huge Keynesian deficits in the 1970s did not arrest stagflation. The misery index, combining inflation and unemployment, soared above 20%.

In a word, pathetic. Related, the Wall Street Journal noted today that, “According to Congressional Budget Office estimates, a mere $26 billion of the House stimulus bill’s $355 billion in new spending would actually be spent in the current fiscal year, and just $110 billion would be spent by the end of 2010. This is highly embarrassing given that Congress’s justification for passing this bill so urgently is to help the economy right now, if not sooner.”