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Matthew Yglesias: The Problem With The Economy? Too Much Fiscal Conservatism
Posted By John Hawkins On June 7, 2010 @ 8:00 pm In NewsReal Blog | 1 Comment
Yes, really. That’s what he’s arguing,
If fiscal stimulus is so great, then why hasn’t the Obama administration’s massive stimulus program helped improve the economy? Well, via Mark Thoma, the answer is that there hasn’t been any net fiscal stimulus, all the Obama administration’s efforts plus the automatic stabilizers have done is mitigate the contractionary impact of state and local policy…
…Looked at comprehensively, what the country has been implementing is a mild version of the conservative policy prescription for boosting growth—fire bureaucrats and trim spending.
That first sentence explains the dilemma for the Left. Conservatives almost unanimously opposed Obama’s trillion dollar stimulus because we said it would add to the debt without spurring the economy. On the other hand, liberals admitted it would run up the deficit, but said we had to do it to get the economy moving and create jobs.
So, who was right? Conservatives. Who was wrong? Liberals.
Now, a double dip recession is starting to look even more likely. In fact, per Arthur Laffer’s very plausible analysis, the only thing that may have prevented us from going back into recession already is the fact that the Bush tax cuts expire next year and are driving economic activity that would normally occur in 2011 into 2010.
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