Speaking for my interest group, I think the stimulus package is a fine idea

Posted By Daniel W. Drezner Wednesday, January 28, 2009 - 1:28 PM Share

Writing in the Financial Times, Jeffrey Sachs fires a warning shot across the bow of stimulus enthusiasts:

The US debate over the fiscal stimulus is remarkable in its neglect of the medium term – that is, the budgetary challenges over a period of five to 10 years. Neither the White House nor Congress has offered the public a scenario of how the proposed mega-deficits will affect the budget and government programmes beyond the next 12 to 24 months. Without a sound medium-term fiscal framework, the stimulus package can easily do more harm than good, since the prospect of trillion-dollar-plus deficits as far as the eye can see will weigh heavily on the confidence of consumers and businesses, and thereby undermine even the short-term benefits of the stimulus package....
The most obvious problem with the stimulus package is that it has been turned into a fiscal piñata – with a mad scramble for candy on the floor. We seem all too eager to rectify a generation of a nation saving too little by saving even less – this time through expanding government borrowing. First it was former US Federal Reserve chairman Alan Greenspan’s bubble, then Wall Street’s, and now – in the third act – it will be Washington’s....
Perhaps Mr Obama should reflect on the fact that the Clinton-era boom began in 1993 with tax rises and a congressional rejection of a fiscal stimulus package. This time, there is certainly a cyclical case for deficit- financed public spending, but accompanied by phased-in tax increases to provide proper financing of crucial government functions in the medium term.

Hmmm... Sachs makes some valid points here. Maybe we should take a moment or two to ponder this.

Hey, what's this Sam Dillon story in the New York Times saying?

The economic stimulus plan that Congress has scheduled for a vote on Wednesday would shower the nation’s school districts, child care centers and university campuses with $150 billion in new federal spending, a vast two-year investment that would more than double the Department of Education’s current budget.
The proposed emergency expenditures on nearly every realm of education, including school renovation, special education, Head Start and grants to needy college students, would amount to the largest increase in federal aid since Washington began to spend significantly on education after World War II.

You know, it's nay-sayers like Sachs that are keeping our country mired in recession. I can't believe his nitpicking is going to stand in the way of ~~my tasty slab of pork~~ getting America going again.

EXPLORE:ECONOMICS, FINANCIAL MELTDOWN, INTEREST GROUP POLITICS, STIMULUS

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BUZZ KILLINGTON

4:26 PM ET

January 28, 2009

Anyone that thinks the

Anyone that thinks the "stimulus" spending isn't going to do more harm than good needs a mental health examination.

M00SE

6:11 PM ET

January 28, 2009

"Stimulus"

Remember:

It used to be the "Bridge to Nowehere". Now it's the "Bridge to the Future!".

Bring your own barbaque sauce...

RMHITCHENS

6:35 PM ET

January 28, 2009

fiscal piñata

If ever a term deserved to enter the language, this is it.

JAY GADSDEN

9:08 PM ET

January 28, 2009

Newspeak

I hope at some point a smart person will explain to me the difference between a "Stimulus Bill" and the same old stuff that Democrats always like to spend money on.

BRETT

9:33 PM ET

January 28, 2009

Sachs has a point, but I

Sachs has a point, but I think he's forgetting that while Clinton had to raise taxes and limit spending, his Presidency also occurred at the same time that you got a productivity boom from the introduction of the Internet, widespread use of personal computers, software, etc. That can be enough to generate economic growth even in spite of a small tax increase.

Is there anything like that on the horizon? You could probably get some productivity gains by reforming the administration side of health care in America, but I can't really see what else.

A.S.

4:34 PM ET

January 29, 2009

Sachs

Sachs says some interestin things, but this is a howler: "Perhaps Mr Obama should reflect on the fact that the Clinton-era boom began in 1993 with tax rises and a congressional rejection of a fiscal stimulus package."

Maybe Mr. Sachs isn't familiar with the timing of events. The prior recession ended in March 1991 - more than two years before Clinton economic package was passed.

We are now currently in the middle of a recession, not two years past the end of one. It seems to me that stimulus makes sense in the middle of a recession. And raising taxes and rejecting stimulus makes sense two years after the recession ends.

KRYPTONIAN9Z

9:59 PM ET

January 29, 2009

We are a nation of NOW

The mindset of the current generation is all about the 'now' instead of the next five to ten years. Sure the new stimulus package would have a negative impact on our national financial condition but it is merely attempting to alleviate the mindset of the American people so that consumer confidence can be restored. That can only happen when people have enough money in their hands for non-essential items. People can't investor spend money if they don't have any money beyond what they need to survive. Hence the combination of tax cuts and the prospect of new jobs can inject capital into the economy. Who cares about 5 years from now - America has enough credit to borrow enough money to improve growth. The improved growth will lends its way toward correcting the deficit.

DON S

7:49 PM ET

January 30, 2009

I know we need diplomats, Daniel

But do you really think the country needs that many more of the striped-pants boys (as Harry Truman used to call them)?

And even if we produce them, do we not run the risk of glutting the world market for small-talking, canapes-nibbling analysts of one kind or another?

I think Keith Laumer had the right idea; what the world needs are more Retiefs, not more like Ambassador Hornswoggle.