IBD cited 1930s America, 1990s Japan as evidence that stimulus spending doesn't work, but economists disagree on both counts

SUMMARY: In criticizing a large-scale economic stimulus plan favored by President-elect Barack Obama and congressional Democrats, an Investor's Business Daily editorial echoed other media by citing the New Deal and Japan's "lost decade" as purported evidence that stimulus spending is "the least effective way to give the economy a boost." However, according to prominent economists, economic conditions in 1930s America and 1990s Japan were improving following major increases in stimulus spending -- trends that were reversed only when the respective governments decided to cut spending and raise taxes in an attempt to reduce the deficit.

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