Katherine Mangu-Ward says
that we spent a trillion dollars in the service of job creation and not a lot to show for it. Where does she get that figure?
Recall that from $787 billion of the stimulus:
(1) $288 billion was tax cuts; if they did not create jobs then she should revisit libertarian orthodoxy rather than blaming the stimulus ...
(2) $144 billion went to state and local; I doubt anyone argued this will create jobs. It did however save jobs by preventing job losses at the local and state level.
The rest, $357 billion, was actual spending. And that, ladies and gentlemen, is less than half of $787 billion and about a third of a trillion dollar. So either she is grossly misinformed or she is deliberately misleading her audience, and with ideologues usually the latter is the case ...
Poking holes in her argument aside, the goal of expansionary fiscal policy is not to create jobs directly as such. The goal is to shift the total debt burden from households to the federal government. When households have repaired their balance sheets the aggregate demand will return to a normal level and we will see falling unemployment, for example cutting payroll tax by 2% does not create jobs directly but it helps people to pay down their mortgages and student loans and credit card debts slightly faster. Moreover given that housing bubble specially really hurt the average American household's balance sheet and that the federal government can borrow money at negative real rates such a shift is a no brainer.
Finally about the ability of US to borrow I just have this to say: as long as the 10 year rate is below the 2007 peak of 5.26%
(today it closed at 2.22%
) we can safely ignore that possibility and anyone who seriously considers it.