Stimulus Spending Skeptics

Mon, 22 Dec 2008 03:08:36 +0000

The new phrase working its way through conservative circles is "stimulus spending skeptics." Greg Mankiw has a couple of posts responding to this AP story, and House Republican Leader John Boehner is soliciting comments from skeptical economists.

I've made my points in earlier posts. The reason to spend is because we have unmet objectives that are typically achieved through fiscal policy. The reason to spend now is that factors of production are likely to be available at a lower cost than if we spent after the economy recovered. Stimulus is a by-product, not a motivation.

Is some degree of skepticism justified? Of course. There have been only vague references to what is a priority and what is not. In that environment, money is likely to be wasted. The Congress, and particularly the Congressional leadership, needs to step to the fore and assert itself to determine those priorities. As bad as things appear to be in the economy now, they will be worse if we run up another trillion dollars of debt with very little productive investment to show for it.