Feldstein vs the Neo-Hooverites
Martin Feldstein, a distinguished economist with impeccable right-wing credentials, says we need to increase government spending by a lot, and soon:
The only way to prevent a deepening recession will be a temporary program of increased government spending. Previous attempts to use government spending to stimulate an economic recovery, particularly spending on infrastructure, have not been successful because of long legislative lags that delayed the spending until a recovery was well underway. But while past recessions lasted an average of only about 12 months, this downturn is likely to last much longer, providing the scope for successful countercyclical spending.
A fiscal package of $100 billion is not likely to be large enough to revive the economy. The fall in household wealth resulting from the collapse of the stock market and the decline of home prices may cut aggregate spending by $300 billion a year or more.
He’s supporting John McCain for President, and as such he gingerly avoids pointing out that this is the reverse of what his preferred candidate is proposing. But if Feldstein really wants to do good, he needs to follow up this op-ed with some conversations with McCain and other neo-Hooverites like Saxby Chambliss and Norm Coleman and get them to drop their obsession with spending freezes as a solution to our problems.
26 Responses to “Feldstein vs the Neo-Hooverites”
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October 30th, 2008 at 11:05 am
the double down theory of economic stimulus. the last stimulus did not have any positive effect so lets do it again but only with more money. Of course, do these economist realize that the U.S. no longer has a consumer product manufacturing so that any money given to the poor is spent on consumer goods manufactured in China. So these economist not realize that any short term government make work jobs are more likely to go to illegal aliens that to short term unemployed. And last, do these economist not remember that all “temporary spending” in the U.S. turns into permanent spending so that the next downturn is harder to deal with.
I keep waiting for the new ideas of the coming Obama Administration, yet all the progressive pundits want to talk about is bringing back the economic ideas of 1933.
October 30th, 2008 at 11:06 am
John McCain is trying to stop Obama from scoring on the economy by continually halting any discussion via “Hack A Shaq” fouls —
“paling with terrorists”, “will steal your taxes” etc.
October 30th, 2008 at 11:15 am
I would have thought basketball fan Matthew would have recognized McCain’s fouling strategy by now.
Hundreds of years ago, the Japanese swordsman Musashi , in his “Book of Five Rings” , noted the utility of taking tactics from one area of human competition and applying them in another.
October 30th, 2008 at 11:35 am
So you’re rather go with the economic policies of 1930?
October 30th, 2008 at 11:36 am
So you’re rather go with the economic policies of 1930?
Don’t feed the troll.
October 30th, 2008 at 11:38 am
Republican promises to cut spending have, at least since Reagan, not been worth the paper they were written on. For the next year at least, massive deficit spending is a certainty regardless of who is elected.
The question is, what do we get, macro-economically, for this enormous fiscal hole. With McCain, the deficit spending is sprayed in scatter-shot fashion, with tax cuts going to lots of people who have no intention of spending the money. Obama, on the other hand, would concentrate the flow at the base of the flame, as most of his deficit spending would be directed at people who are likelier to spend it.
Better yet would be for the government to actually spend the money (i.e., on infrastructure repair), rather than merely directing it in transfer payments to people they hope will spend the money. But neolibs have so internalized the free-market superstition that they are sure to prefer rebates/credits/holidays, even though the stimulative effect is not as concentrated.
October 30th, 2008 at 12:08 pm
Re kth’s comment “Better yet would be for the government to actually spend the money (i.e., on infrastructure repair), rather than merely directing it in transfer payments to people they hope will spend the money”
—————-
“Good news, Sire! The people are hungry but they have plenty of bridges to sleep under.”
October 30th, 2008 at 12:16 pm
How about changing the introduction to:
Martin Feldstein, an impecable right winger with economic credentials
because that would appear closer to the truth given his support for McCain.
October 30th, 2008 at 1:02 pm
Wasn’t Obama promising to cut government spending in his infomercial last night? What about the economic impact of all of the states cutting spending. Doesn’t it make an increase in federal spending nine months from now sort of moot.
Or is everyone going to admit that the Obama Administration is not really planning on making any cuts to non-defense spendng?
October 30th, 2008 at 9:19 pm
So you’re rather go with the economic policies of 1930?
Absolutely not. In 1930 the Federal Reserve lowered interest rates from 4.5% to 2%. I don’t want to repeat that, I want us to raise interest rates to encourage savings and investment.
But keep beleiving your pretty little Keynesian lies about how consuming will make more stuff magically appear.
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