Stimulus Package with Little Stimulus

A definition of stimulus package politics.

…an inadequate plan combined with a wildly overoptimistic forecast was more or less guaranteed to create the impression of a failed program.

via The Boehnerization of Barack Obama – NYTimes.com.

Another Economic Crisis on the Horizon

Read this very hard-nosed, objective view of what is happening to our economy.  The message–the crisis will be repeated unless limits are placed on the risky behavior of the financial sector and “to big to fail.”  The financial reform law didn’t do that.  The next time the US will be forced into higher taxes and Aheavily reduced social safety net.

If you want to fix the United States budget, keeping the deficit under control and reducing government’s debt, you must address the risk-seeking behavior of big banks. No fiscal strategy can be credible without addressing the major problem that brought us to this point.

via In the U.S., No True Fiscal Conservatives – NYTimes.com.

Did Keynesian Economics Fail?

I admit it.  I am a Keynesian economist frustrated that the Bush/Obama administrations didn’t spend more to counter balance the Great Recession. If you think that they spent too much, that the spending hurt the economy, then read the following  and the full article.

In short, a lot of the spending was for low impact activities and it was small.

Here’s the narrative you hear everywhere: President Obama has presided over a huge expansion of government, but unemployment has remained high. And this proves that government spending can’t create jobs.

Here’s what you need to know: The whole story is a myth. There never was a big expansion of government spending. In fact, that has been the key problem with economic policy in the Obama years: we never had the kind of fiscal expansion that might have created the millions of jobs we need.

via Op-Ed Contributor – Hey, Small Spender – NYTimes.com.

The Chinese government, for example, spent about $500 billion for a stimulus package in a much smaller economy.  (The Chinese economy is about 40%  to 50% of ours measured in real terms and their per capita GDP is about 10 percent of ours.)