Just in case anyone doesn't know this... the deficit IS the stimulus

[Kurt_and_Hunter]

The deficit is not an unfortunate side-effect of stimulus.

The deficit IS the stimulus.

What does it take for this to penetrate... does John Maynard Keynes need to claw his way out of the grave and start knocking heads together in DC?

Back when the administration was connected to some sort of reality an advisor (Goolsbee, I think) was on TV arguing for the stimulus package. The talking head asked, "How are you going to pay for the stimulus?"

Goolsbee, being more economist than hack mouthpiece, answered, "If it was paid for it wouldn't be stimulus."

The driver of fiscal stimulus is the government borrowing more money than it takes in. If that borrowed money is spent on something cool, like roads or medicine, then even better.

But the lever is the deficit itself. Increased spending is stimulative and tax cuts are stimulative. Spending is potentially more stimulative, dollar for dollar, and you can end up with a road or a job or something worthwhile. That's why we prefer spending stimulus to tax-cutting stimulus. But both are stimulative. Even though they are opposite concepts they share one thing in common: they increase the deficit.

As Keynes noted over and over even the dumbest sort of deficit spending is stimulative. (Everyone knows that WWII is what ended the depression. Consider that... building a million airplanes and tanks and ships to be shot down and blown up ended the depression. Total waste, economically, but we all know it worked where smaller but smarter stimulative efforts had failed.)

And even the smartest sort of budget cutting is, in narrow terms, a drag on the economy.

Efficiency and sensibleness are good. In normal times it is good to hunt down inefficient spending. Since the deficit can have malign effect we do not want huge deficits all the time. When we hit a boom or bubble, like the second Clinton term, we must have tax policy that balances the budget and accumulates some surplus.

But, as some may have noticed, we are not currently in an economic boom.

Arguing for austerity today is as stupid as denying evolution and denying evolution would be better politics. So if utter horse-shit is cool if it's an amoral political stunt then why don't we go for some real political stunts?

How about a flag-burning amendment? It's no stupider than a fake spending freeze and probably better politics.

[phantom power]

1. It would be.... the Ex-Economists!

[Kurt_and_Hunter]

2. I don't understand it, but I like it

[phantom power]

3. It was an old SNL animated skit...

When the ex-presidents are called to action, Nixon breaks out of his grave to join them. The whole image of Keynes re-animated to save the world made me think of that.

[Kurt_and_Hunter]

5. I remember that

[HiFructosePronSyrup]

4. The deficit is Bush's tax cut for the rich.

Today's CBO numbers as reported by MSNBC this morning (operating from my, admittedly faulty, memory):

Current federal deficit: $135 trillion
Projected federal deficit if Bush tax cuts expire: $0.98 trillion

The proposed spending freeze, btw, would not effect stimulus.