Stimulus Stuff

[says_bomb]

Talking Points Memo, quoted entirely because I agree with every word:
This week, out on the broad wastes of cable news drekdom and the uplands of Beltway journalistic drivel, a simple fact has gone almost entirely unreported: virtually everything congressional Republicans are saying about the Stimulus Bill wouldn't cut it in remedial economics. Not

Comments

[says_bomb]

I'm not disputing that.

Then why did you lead by agreeing with it? I mean, I call the statement asinine exactly because it is intended to conceal--not reveal--an argument. It's willfully obtuse and designed just to make the other side mad and distract them from making their own case. Which is the point of the original post. Hence why I suggested you were talking past me.

So to actually address your point, all I can say is that Romer's research shows that cutting taxes does not stimulate GDP in the same amounts that productive spending does. This research is the "credible evidence" Marshall refers to.

But you're a fan of the Austrians, and maybe that means you don't respect that research. My main problem with them is their unwillingness to listen to arguments based on math, statistics, and the scientific method. I think they are to economic policy what Neocons are to foreign policy: they have their ideas and set up a framework that makes it impossible to argue with them. For these reasons, that paradigm may be helpful as criticism, but it's not so good at setting the agenda. (Story of all the Bush Administration's philosophies, I'd say.)

Anyway, there are also two factual problems with what you're saying here. One, the "positive externalities" of physical and knowledge infrastructure are not side benefits, but one of the main points. They central to achieving the multipliers that Romer's research suggests. Spending on some things (building and maintaining stuff) really is better than spending on others (blowing things up in foreign countries, bailouts of Monopoly players cum finance companies).

Second, the highway bills that you mention are not bonus spending bills per se. They're allocation bills. They're not extra money, they're the baseline of money for all federally-funded surface transportation. This is why they keep happening. They are only valid for 7 or 8 years. They also cover all kinds of surface transportation, including trains, subways, buses, bikes, and pedestrians. And while they are famous for their earmarks such as the bridge to nowhere, they also have a lot of actually good policies in them too, like the Safe Routes to School program and the mandate that states plan their transportation in accordance with where population growth will actually occur. (Their names are ISTEA (1991), TEA-21 (1998), and SAFETEA-LU (2005) if you want to read more about them. I guess coming up with legislative acronyms must also be a good job.)

So lastly, "better educated in Econ" is not always a good thing... I'm sure we can agree that a little economic knowledge is a very dangerous thing. And so is a lot... economics professors are also engaging in a flamewar right now. (Mankiw and Barro vs DeLong & Krugman, mainly, while Romer tries to maintain the dignity of her new office and Stiglitz and Volcker attempt to stay above the fray. Meanwhile Summers is making off with the picnic basket.) I don't know if I'd say that puts us in good company, but I guess it's at least reputable company.