The stimulus problem.

Here's the problem with the Federal Stimulus bill passed in 2009.


OK, it's scary to run deficits.  But, the problem in the states is what people were talking about when they said that the 2009 federal stimulus package was too small and should have done more to help the states.  So now the states, which can't run deficits, are being forced to cut spending which further exacerbates the recession.  Here's Bruce Bartlett (link), Ezra Klein (link), and Paul Krugman (link) far more eloquent than I on the issue.

Count me as one of those people worried about a double-dip recession.  And no, I don't see how cutting government spending right now, with unemployment stuck around 10%, is going to make our economy better in the long-run.  I wish I did.  And no, I don't see how the current political environment is going to be supportive of a further stimulus plan.  And no, the mid-terms should make it harder, not easier, to fix the economy.


The day the deficit didn't die.

I try to keep a little hope that any bipartisan deficit commission will actually end up being a useful exercise, rather then the policy punt it so obviously is. Well, even a little hope is probably too much. Here's Krugman (link):

Specifically, Simpson has resurrected the old nonsense about how Social Security will be bankrupt as soon as payroll tax revenues fall short of benefit payments, never mind the quarter century of surpluses that came first.


here’s what you can’t do: you can’t have it both ways. You can’t say that for the last 25 years, when Social Security ran surpluses, well, that didn’t mean anything, because it’s just part of the federal government — but when payroll taxes fall short of benefits, even though there’s lots of money in the trust fund, Social Security is broke.

So, it looks like another meaningless deficit commission. It's my belief that fear-mongering on the deficit is too useful a political weapon for the GOP to seriously engage in substantive discussions with their opposition.  So, guess what? The quickest way to end meaningful policy discussions is to start making up 'facts' that are politically expedient but easily disproved by anyone paying attention to the numbers.


UPDATE:  Great post on the deficit commission from Jonathan Bernstein (link).