Stimulus Package Caution

Kevin Drum makes a poor defense for the stimulus package.

Still, isn't the bill just a hodgepodge of unrelated spending? Sure. What else could it be? There's no way to spend $800 billion on infrastructure over the next two years, so most of the money has to be spent on other stuff. But so what? Employing clerks or crossing guards or home care workers counts every bit as much as employing backhoe operators or engineers. Spending money on contraceptives does as much for the economy as spending money on rebar. An unemployment check gets spent on food the same way a paycheck does.

I don't argue that there is a sense of urgency. The economy is bad. I disagree with Jim Johnson on two points. The economy will be bad past 2009 and we don't need to spend right away. The Obama administration needs to best use this money to jump start the economy. They won't get another chance.

Obama has wars in Iraq and Afghanistan. Obama intends to increase troops in the latter. Iraq has shown security improvements. However, it would be foolish to make predictions of the withdrawal date. The wars and deficit will cause the U.S. government to continue to borrow money. The alternative is unemployment continues until 2011.

David Gregory of Meet the Press told Lawrence Summers economists said the stimulus package would fail, because it wasn't big enough. Summers dodges the question.

GREGORY: So let’s talk about that, and that is the stimulus or the recovery plan that the president has proposed. In December, this is what you wrote: “In this crisis, doing too little poses a greater threat than doing too much.”

That was an op-ed piece you did. In that same piece, you said at that time that the economy was headed to a position where it was underperforming, where it was falling short of capacity to the tune of a trillion dollars. Now, there are other economists that I’ve spoken to say actually that’s optimistic, that it’s actually falling short to the order of $2 trillion.

So why a stimulus plan that’s only 825 billion?

SUMMERS: David, this is the largest stimulus plan in the country’s history. It’s the largest investment in the backbone of our economy since the interstate -- since the interstate highway system. It’s going to double renewable energy. And it is only one phase of the approach that the president is taking.

The president has made clear that there will be strong action to address the terrible problems in our housing sector, that he will be using additional funds for a substantial financial recovery plan to get the flow of credit going. This is one component of our strategy to bring about expansion. And the president has also made clear that going forward we’re going to be leaning forward and that he is prepared to do what is necessary.

GREGORY: It is big, even...

SUMMERS: And so we believe this -- we believe that this is a properly sized approach to move the economy forward. You know, economists from several private firms have now corroborated our incoming CEA chairman Christina Romer’s estimate that the plan will create...

Contraceptives (which I support) or sod for the National Mall will stimulate the economy. A stimulus package should do what it claims. The alternative is just just as bad. Future generations are gonna be paying the bill.