Has the Federal multiplier gone negative already?

The net GDP growth due to increased central government activities is the multiplier.  If Congress increases spending by 10%, then the total economy might increase by 10% multiplied  the ripple effect..  A negative multiplier means that totel GDP decreases with each increment of government spending. The first stimulus we had generated something like a multiplier a little less than one, the economy likely grew by .70 to 80 cents  for each 1.0 dollar spent by Congress.

What would a negative multiplier look like?  Well, we might see state governments go broke as Congress crowds out the government channel, taking the resources normally allocated to state government.  As it becomes clear that state government cannot meet their contracts, then we get the Greece effect, the entire economy goes back into a costly Recalculation about how to balance government..    As I have documented in this blog, state government are still paying billions of dollars in adjustment costs of No Child Left Behind. Because we do not suffer a General Glut (Krugman, DeLong, Thoma, and others have this badly wrong) the likelihood that more stimulus causes a break down in governance is very real. 

Another way to get a negative multiplier is through the oil channel.  Government is very inefficient with oil, as I have documented.  The oil bill goes up by 10% while government spending goes up by 5%, hence there is a real liklihood that the economy goes into a second dip because if increased oil inefficiency.

Congress can easily drive the economy into a second dip, resulting in a multiplier less than zero.