Tuesday, 9 June 2009

It's Never Wise To Over-Stimulate Conservatives

Just as an addition to Tomsk's post last week on conservatives being really dumb about money:
With the economy showing signs of recovery, fiscally conservative economists and Republican lawmakers are suggesting that the large unspent portion of the nearly $800 billion stimulus fund should be redirected to slash this year's nearly $2 trillion annual deficit.

Democratic lawmakers, Obama administration officials and many economists doubt the wisdom of truncating the stimulus program so soon after it began. But Republican congressmen and economists who were not thrilled with the stimulus effort are increasingly calling for it to be foreshortened as a return to economic growth appears closer at hand.

To summarise, the GOP argued the stimulus wouldn't work. Now, they say that since it's starting to work, it's time to stop it.

I've been watching a lot of House recently, so it's hard for me to not see this as a terminally ill patient initially refusing medication because they don't believe it will work. Then, having been forced to take the treatment, they concede that they feel a little bit further from agonising death, and that therefore they clearly no longer need medication.

h/t to Steve Benen.


Gooder said...

To be fair the idea of reducing the deficit is not a terrible idea but it is probably a bit early to call the recovery as being fully on the go.

And surely it's not surprising that if the conservatives thought the recovery deal was unneeded in the first place that they would suggest its end when the economy showed signs of recovery.

I not as up on the American economy but if it is indeed on the up I suspect you can put forward a decent case that the stimulus as only been in place for a such a sohrt time that it's had little impact so far in and of itself

SpaceSquid said...

Reducing the deficit isn't a bad idea at all, once you can afford to do it. The problem with the so-called "deficit hawks" (aside from the fact that the majority of them didn't say anything when Bush racked up a record debt) is that they don't seem able to think beyond "more spending=more debt=more bad".

I'm not sure you can put forward a case that the stimulus hasn't been around for long enough. If anything, the problem is that they haven't spent enough ($44 billion isn't what it used to be). Besides, if the stimulus itself hypothetically has had less effect than people might think, it represents demonstrative proof that the US government is dealing with the crisis, and has a huge war chest with which to battle it. That hopefully gives investors greater peace of mind, and spenders more confidence, which is (as far as I understand this stuff) what you need in this kind of crisis. Suddenly telling people "You're on your own now" is a pretty bad move. Besides, its worth noting that there's a difference between thinking a recovery deal is "unneeded" and thinking the one on the table isn't going to work.

Tomsk said...

Also, there is no recovery in America yet. What's happened is that the rate of economic contraction has started to slowed down. The only thing that's staged a recovery so far is the stockmarket, and that's because expected changes in the economy tend to get factored into share prices before they actually happen. If the stimulus was halted, all of this would go into reverse.