Bruce Bartlett recently wrote an instructive column on the apparent inefficacy of President Obama’s stimulus package. As the unemployment rate continues to climb, it’s very much worth a look.

Since 60% of the stimulus package had a multiplier effect of less than one, only 40% of the package went to programs like public works that have a high multiplier. Moreover, the programs with a low multiplier were the fastest ones to implement; those with a high multiplier take much more time to come online. According to Elmendorf, by the end of fiscal year 2009, which ends on Sept. 30, about a third of the least stimulative spending will have been spent vs. only 11% of the highly stimulative spending.

Then, of course, there is the fiscal collapse in the states, which willl lead to a decline in spending. To be sure, much of the stimulus package was meant to prop up state spending. But closing state budget gaps will presumably have an anti-stimulative effect. Harold Pollack and Ed Kilgore wrote a neat post at Economix on how this should inform future efforts. The basic takeway is the following:

federal budget debates should expand to include the national budget, the sum total of spending, taxes and policies that implement and finance national governance. At a minimum, the Office of Management and Budget and the Congressional Budget Office should routinely scrutinize the financial impact of proposed federal policies on every level of government.

This relates to unfunded mandates, implementing Medicaid expansions, and much else. As Ramesh writes on The Corner,

To understand the cause of today’s budget brinkmanship, we would probably be better off looking at such things as the percentage of state budgets spent on Medicaid — something that has changed, largely in response to federal policy.

Most Congressional Republicans rightly embraced extensions of unemployment insurance, etc. But one wonders if we’d be better off with pre-commitment. Earlier today, I spoke with Johns Hopkins political scientist Steve Teles — a frequent interlocutor I’ll be bringing up often — who suggested that the federal government simply ramp up revenue-sharing when a state’s unemployment rate goes above a certain amount. Rather than craft a grab-bag stimulus package, one that represents the political priorities of the moment, we’d have an “automatic stabilizer” that would be built into our budgetary assumptions, thus making it more sustainable.

The idea reminds of Jeffrey Sachs’s brilliant critique of the stimulus approach in Scientific American. 

President Barack Obama’s economic team is now calling for an unprecedented stimulus of large budget deficits and zero interest rates to counteract the recession.  These policies may work in the short term but they threaten to produce still greater crises within a few years.  Our recovery will be faster if short-term policies are put within a medium-term framework in which the budget credibly comes back to balance and interest rates come back to moderate sustainable levels.

Of course, Sachs also argued that we need a sharp increase in tax revenues. 

Reducing Congressional discretion would have a number of interesting and positive side-effects. For example, South Carolina’s severe economic downturn would, under this approach, guarantee a large transfer from federal to state coffers. And Mark Sanford’s proposal to use stimulus funds to pay down the state’s debt would have been within South Carolina’s reach. We could then evaluate the wisdom or foolishness of the anti-Keynesian approach on the merits.