(A warm welcome to Andrew Sullivanites. Hope you enjoy the blog!)
So I run across the following post in the National Review's The Corner blog, a place so intellectually vapid it makes William Kristol's New York Times column seem like a work of Solomonic wisdom in comparison:
Tuesday, February 10, 2009
How Do You Really Feel? [Mark Hemingway]
This morning the Heritage Foundation, in conjunction with the Club for Growth, held a conference on the supposed stimulus bill. Here's what one of the speakers, CATO Economist Arnold Kling, had to say about the Democrats' economic plans:
“I think about the stimulus as an economist but I feel it as a father. Barack Obama is destroying my daughter's future. It is like sitting there watching my house ransacked by a gang of thugs. That’s how I feel, now back to how I think.”
The event was liveblogged on Heritage's blog, The Foundry. There's a lot more on the event there.
Some Keynes for Bush"Arguing in My Spare Time" No. 3.28
by Arnold Kling December 20, 2000...
Times may not be good much longer. In January, I predicted that the next President would face a recession caused by a stock market crash. Also, I predicted that the President's economic advisers might not know what to do about it. Subsequent developments have been along the lines that I feared.
The father of macroeconomics is John Maynard Keynes. Since the 1960's, his reputation has declined steadily, particularly among conservative economists. I continue to believe that Keynes is relevant today. What follows is some elementary Keynesian economics that President-elect Bush is likely to need but unlikely to hear.
My RecommendationOverall, if you accept points (1) - (5), there is a case for thinking in terms of turning the Federal Budget in the direction of a deficit. How should this be done?
One approach that would be congenial to Bush would be a large tax cut. Unfortunately, much of the tax cut that was part of his campaign was "back-loaded," with the larger cuts occurring farther into the future. If anything, we probably need a more front-loaded tax cut.
In addition, some of the tax cuts most popular with Republicans may not be very stimulative, because they are likely to be saved rather than spent. For example, eliminating the "death tax" is unlikely to unleash much spending. I cannot imagine that the marginal propensity to consume out of inheritances over $700,000 (smaller inheritances are tax-free today) is very high.
Another approach to running a deficit would be to increase Federal spending. However, the notion that the first Republican President-plus-Congress since 1952 would go on a spending spree is difficult to contemplate.
An alternative would be to give large grants to state governments--what used to be called general revenue sharing. For example, the Federal government might give each state $1,000 for every person living in that state. This would amount to a $280 billion program.
One impact of a recession is to reduce state revenues. Because they are obliged to balance their budgets, this leads them to reduce spending. The result is to reinforce the downturn. However, with revenue sharing, the states would have less need to cut back.
In conclusion, I believe that a large, temporary revenue-sharing program would be a good approach for fighting a recession. This form of fiscal stimulus would quickly find its way into the economy. Unfortunately, I suspect that there is little chance of any Keynes getting through to Bush.
So this CATO Institute economist who depicts Barack Obama's simulus plan as akin to a gang of thugs ransacking his house, and who worries for his daughter's future, is the same guy who back in 2000 was urging Bush to go on a Keynsian spending spree?
Give me a break, people!