Decreasing the size of the stimulus may be clever politics but it's not smart economics

[Better Believe It]

Economic stimulus on the cheap
For US senators, decreasing the size of the stimulus package may be clever politics. But it's not smart economics
by Dean Baker
February 9, 2009

Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer ( www.conservativenannystate.org) and the more recently published Plunder and Blunder: The Rise and Fall of The Bubble Economy.


The moderates in the Senate of both parties are very proud of themselves for having negotiated a slimmed down version of the stimulus package. They apparently knocked out more than $100bn in spending, trimming the package to less than $400bn a year.

This led to a round of self-congratulations at what this crew considered a major accomplishment. Those of us who were not a party to the negotiations, and who don't share the peculiar thought processes of the moderate clique, see the primary outcome of this effort as having taken one million jobs out of the stimulus.

The basic logic is very simple. Stimulus creates jobs by spending money. Those who are not in Congress understand this. If the government pays someone $30,000, then that person will be employed. They can be repaving a road, weatherising a building, teaching our kids, providing healthcare to the sick or replacing the sod on the national mall.

Any spending is stimulus, in the same way that any type of bread is food, the only question is whether it is also useful spending. If the centrists thought that additional spending on healthcare, education or some other area was useful, then this should have been a no-brainer for them. They could increase growth and employment with useful spending. What else could they want?

This would be laughable except that there is nothing funny about the outcome. Millions of people will needlessly go unemployed. People will lose their homes and families will break up. Millions more will be hungry and cold because they can't afford food and heat.

Please read the complete article at:

http://www.guardian.co.uk/commentisfree/cifamerica/2009/feb/09/us-economic-stimulus-senate

[Occam Bandage]

1. It's a pity that you have to satisfy the first before you can satisfy the second.

Such is the problem with a democracy, but dictatorships tend to have worse problems.

[Skwmom]

2. In the long run it's not clever politics if the changes make it

not work.

[FLyellowdog]

3. 19 governors support the stimulus package

but Palin's name isn't on the list. I thought she wanted the money. :shrug:
http://www.newsmax.com/politics/gop_governors_stimulus/2009/02/03/177985.html