Stimulus impact zero

Two more economists take to the "Opinion" section of the WSJ to argue that the American Recovery and Reinvestment Act (the stimulus of 2009) failed.  John F. Cogan of the Hoover Institution and John B. Taylor of Stanford claim "not that the stimulus of 2009 was too small, but rather that such countercyclical programs are inherently limited."

Maybe, but this essay fails its own arguments.

1. They write that "recently released Commerce Dept data show that ..." federals expenditures from the stimulus programs have been "extremely small" - only 3% of the $862b small.  Indeed, most of funding went to state and localities or to tax rebate and cutting.  Ordinarily, this fact would be seen a strong argument that the stimulus was way, way too small to make an impact through federal government purchasing and investment.  You can thus make a great argument that the stimulus should have been structured more toward infrastructure spending (deferred maintenance on the vast needs of public roads, bridges, rail and port, schools and hospitals) and job creation (another WPA and CCC), instead of bundling money to states or giving it away in tax breaks.
2. Further, they tell the reader, even though most of the money went to states, "state and local government purchases of goods and services did not increase at all in response to the large federal stimulus grants."  Why was there no spending boost?  Because "the major part was simply used to reduce borrowing."  One that would use this fact to argue that the budget crisis at the state level was so extreme that a federal stimulus had to be significantly large to have effect. The architects of the ARRA plan, and their collaborators on the eventual compromise bill, aimed too low.  They underestimated the devastating effect of the recession on the local level.  This failure of vision led to a failure of objective. This argument supports those who argued for a much larger stimulus.
3. This "absence of any discernible impact of federal grants on state and local government purchases ..." was expected in advance (based on 1979 research by Ned Gramlich).  History had shown that stimulus programs always under-estimated the ripple of economic effects.  Rather than act to overcome this fact, the too low stimulus confirmed it.  Again, this is not an argument that stimulus does not work, but one that should have encouraged the planner to make the stimulus big, not just bigger.

The stimulus did not provide enough money for the federal government to address capital needs (infrastructure spending, efficiency and greening technology, jobs programs); it gave away too much money in temporary tax cuts and rebates (which the authors earlier claim never work); it gave too little to states to make up for their even worse fiscal situations; and it rejected research that indicated a weak effort was doomed.  In effect, the authors make a major argument on why the stimulus should been much larger.