why fiscal policy does/did not work

First, Bush; then, Obama.

Although I appreciate the fresh "textbook" examples of why government spending is ineffective for restoring economic health, it's been a disaster for the macroeconomy as well the millions of lives drastically impacted by the stupidity.

Now, Obama wants to reduce the stimulus-- so he can, what? Increase it later or pass health care or who knows...What a joke!

From Deborah Solomon and Jonathan Weisman in the WSJ...

The Obama administration, under pressure to show it is serious about tackling the budget deficit, is seizing on an unusual target to showcase fiscal responsibility: the $700 billion financial rescue.

The administration wants to keep some of the unspent funds available for emergencies, but is considering setting aside a chunk for debt reduction, according to people familiar with the matter....

The White House is in the early stages of considering what bigger moves it might make for next year's budget. The Office of Management and Budget has asked all cabinet agencies, except defense and veterans affairs, to prepare two budget proposals for fiscal 2011, which begins Oct 1, 2010. One would freeze spending at current levels. The other would cut spending by 5%.

Not sure we'll ever see that. But politically, that'd be a lot smarter than what the GOP did in the 1990s-- fighting for reduction in spending (from, e.g., +8% to +7%) and getting hammered for "spending cuts"!