Tuesday, October 20, 2009

Not stimulus

I don't think I was alone in guessing that the White House, like most economists, didn't feel the $700 billion stimulus package was enough, but it was all that was politically feasible. Nor was I alone in guessing that they would find smaller spending and tax credit fixes as they monitored the economy, particularly jobs recovery.

That seems to be happening.

Driving the call for more stimulus efforts is the unemployment rate, which now sits at 9.8%, and is expected to rise into next year, even though the recession may have already officially ended. Republicans, who have long been critical of the $787 billion stimulus that passed in February, are likely to support some, if not most of these new spending programs, in part because they are politically popular. Texas Republican John Cornyn, a vocal opponent of the February stimulus, said recently that he was in favor of some more federal spending efforts. "I think there are things we need to do to help people who need help," he said Oct. 4 on ABC's This Week.

Other Republicans, like economist Kevin Hassett, a former adviser to McCain's presidential campaign, say it might be better to focus on policy fixes that could have long-term impacts, not just short-term impacts. "You can have a stimulus every quarter from now until we go bankrupt," Hassett said. "But would that be good policy?"

I shudder to think where we'd be with a President McCain.

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