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« Could Kate Winslet’s father whistle! | Main | George Will ignites a debate on global warming »

February 23, 2009


David Holliday

This is currently the headline on the front page of MSNBC, "Polls show support for Obama plan - A large majority supports the president's economic recovery plan and his bipartisan efforts, according to new public opinion polls."

Who are these people? Many of my most staunch liberal friends are at minimum "skeptical" in their thinking with respect to the "stimulus". Others, who are liberal on social and economic issues but conservative on foreign policy, are disappointed with his moves to date. Personally, whatever comfort I took from what I thought was a good inauguration address is gone. You can put me down as concerned.

Frank Warner

In volatile times like these, opinion polls will vary from week to week. This opinion poll was taken from last Thursday to Sunday. If investors and workers don't soon see evidence of a turnaround, the skepticism will increase. But let's hope this works, confidence soars and we all are happy. Soon.


Heaven forbid they talk about anything other than process.

jj mollo

Is that the same Ben Stein who doesn't believe in evolution? I don't know if I welcome his support. How many of these guys claimed to have read the bill?

Here's a Jonathan Chait op-ed taking Obama to task for not educating us on how the stimulus is supposed to work.

Frank Warner

No one who voted on the bill read it. It's moving ahead on blind faith.

Frank Warner

The problem with Chait's piece is that he blindly believes everything that Keynes ever said, even those Keynesian ideas that are disproven or at least in dispute.

If any kind of spending helped the economy, why should we ever limit it?

As many other distinguished economists point out, you can't look only at the pluses of spending. You have to first look at the minuses of taking that cash out of the free economy, and then look for spending (and tax cuts) that are proven to have a healthy multiplier effect.

I have the feeling the bill is OK, but most of it isn't "stimulus." It's money we'll need, but not a boost to the economy. I'd just rather that a label reflect what's in the bottle.

jj mollo

Uh, Frank. Nobody ever proposed unlimited spending under every condition -- not even socialists would approve of that. The business cycle requires different responses at different times. Keynes would have us take counter-cyclical actions. When demand is too low to keep the economy working, the government has to be the spender of last resort. When demand is too high the government should be running a surplus to drain some of the money out of the economy. That's fiscal policy management. It's a tough balance, but it's part of the reason we elect these guys.

My own feeling is that we just have to get the money flowing, and fiscal policy is our only hope right now. Monetary policy is not working.

One hopes, though, that whenever the government spends money they are looking at cost-benefit issues. Nevertheless, all current spending is stimulus to one degree or another. Anything that retains jobs, like supporting state and local budgets, is very strong stimulus.

Stimulus spending, BTW, does not take money out of the economy. If the Fed were to start buying gold, like they did in the old days, that would take money out of the economy. If they increased interest rates, that would take money out of the economy. Right now the government is trying to expand the money supply.

Frank Warner

Supporting states with budget deficits might be necessary, to an extent. But it is not a stimulus. We're borrowing (a negative) to reward poor stewardship (a negative). That might help patch a leaky ship, but all it stimulates is the drunk captain.

jj mollo

States cannot run deficits. Loss of revenue is the cause of their problems. Balancing the state budgets will require additional taxes or layoffs, both of which will remove money from the money supply. Reducing money supply is a dis-stimulus, the opposite of a stimulus, a drag on the economy. Preventing such an event is equivalent to a stimulus, and a very efficient one. Talk about shovel ready! They're already spending the money! We just tell them to keep shoveling.

When the money supply is contracting, borrowing from the future is not a "negative". It is wise policy. Most of the states are not guilty of poor stewardship. Citizens have, again and again, refused to allow states to accumulate surpluses. Rainy day funds are viewed as theft from the taxpayers. IMO it's crazy, but that's the way it is. So if you can't accumulate during good times and you can run a deficit during bad times, how in the world are you supposed to adapt to variable economic situations?

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