Economists prescribe deeper deficit

[Mesteryo]

Source: Washington Times

With the U.S. economy apparently heading into a deep recession, many economists and budget analysts argue that the next administration should — initially, at least — open its wallet, not tighten its belt. Running up the deficit, through new spending, tax cuts or both, is exactly what a declining economy needs, at least in the short term, the analysts said.

"Definitely in the short term, the policy should be to spend and not worry about the impact on the deficit," said Rob Shapiro, who was a top economic adviser to President Clinton and a specialist in globalization at the center-left NDN think tank.

"Certainly that's the policy you should be following in the face of a deep recession, when there's not a lot of downside risk from inflation."


But the idea that the next administration should focus first on spurring the economy appears to have gotten lost in the three presidential debates, with Mr. McCain and Mr. Obama both on the defensive when asked what specific programs and promises they would cut in the wake of the economic implosion.

Read more: http://www.washingtontimes.com/news/2008/oct/17/economists-prescribe-deeper-deficit/

[On the Road]

1. Despite Being a Deficit Hawk,

I accept the fact that next year's deficit may need to be $600-800B. After that, Obama needs to do what Clinton did.

[4lbs]

2. Yeah, Clinton did this as one of his first acts as President:

http://en.wikipedia.org/wiki/Bill_Clinton



Clinton signed the Omnibus Budget Reconciliation Act of 1993 in August 1993, which passed Congress without a Republican vote. It cut taxes for fifteen million low-income families, made tax cuts available to 90% of small businesses, and raised taxes on the wealthiest 1.2% of taxpayers. Additionally, through the implementation of spending restraints, it mandated the budget be balanced over a number of years.

[UpInArms]

8. I would be happy for $600-800 billion in deficit - it will be more like $1.5 trillion

because of the $700+ billion bank bail-out.

:hi:

[On the Road]

10. Fair Enough

I don't think the net of that action is going to be known for awhile -- hopefully it will be much, much lower. I also think it has to be thought of as a multi-year effort or an extraordinary item.

But you are probably right that strictly defined, the full amount will affect the deficit immediately.

[Festivito]

3. "many" econs, "many" analysts, oooo, WashTimes Mooooooonie.

I'm so impressed. :sarcasm:

Dufuss Bush already BORROWED 1T$ last fiscal year. Already BORROWED a quarter trillion inside of two weeks of this fiscal year.

The only thing changed between Bush I and Bush II is the size of the problem and the exact location of the problem.

[tpsbmam]

4. Actually, this is exactly what Krugman recommended in his op-ed this morning.

http://www.nytimes.com/2008/10/17/opinion/17krugman.html?ref=opinion

[Festivito]

5. CONs will come back and claim that Dems spend spend spend.

And, then they will try for a comeback in order to steal from US again and again. The word many does not tell who, the only example they give of someone calling for more spending: a Clinton man.

The game is already starting for 8-12 years from now.

Yes, the deficit cannot and should not be dropped starting day one. Clinton did not do that either. He did start the fiscally responsible tack, and that can be followed and should be as well.

[Potomac Will]

7. Right to face 40 year loss of power

Just as President Lyndon Johnson foresaw that his support of the 1964 Civil Rights Act would mean losing the South's then overwhelming support of the Democratic Party for 40 years, so it is that the disastrous Bush/Cheney Administration merits a 40 year loss of support for Republicans among thoughtful people everywhere.

Never let it be forgotten that the Republicans sacrificed our economy to their triune god of market forces, de-regulation, and privatization, started two ill-conceived wars that have lasted longer than WWII, all but stretching our military to the brink of exhaustion and putting the lie to their constant talk of knowing what's best for national security, and savaged the Constitution under surveillance, arrest, and detention programs that appear to have sprung from the most nightmarish passages of Orwell and Kafka.

If we remember, I heard somewhere once, the people will not forget. All the Republican talking points have been reveal as empty rhetoric. Here's to the birth of a new political culture with Obama's election come November.

[gratuitous]

6. Depends on what you're spending on

If we continue to fund the Iraq and Afghanistan quagmires at full force, we might as well just flush money down the toilet. But if we pull out of these imperial wars and spend on things like roads, schools, housing and bridges, there's a good chance we could create a whole bunch of jobs, revive local pockets of the economy spur more spending by spreading the Treasury to folks who will actually spend their money in this country, rather than pipelining it to a bunch of spoiled fatcats who will send the money fleeing overseas in search of shelter.

[YankmeCrankme]

9. Spot on

If we cut the defense budget from over $600 billion to about $300 billion and axe the Iraqi and Afganistan wars, another $150 billion, we save about $450 billion. Plus reducing down Homeland Security would save more. We turn around and invest a large portion of that into infrastructure, education and alternative energies it would help spurn the economy better. There's no reason that the deficit needs to be $600 to $800 billion dollars. Plenty of money, just needs to be spent effectively.

[Trillo]

11. An interesting phrase/word, "deep recession"

deep recession
deep-recession
deeprecession
deprecession
depreession
depression

[ryanmuegge]

12. Something has to give. It will either have to be SS and Medicare or the military

Those are our choices. Something has to give somewhere. This is unsustainable. It is time for this country to change its favorite past-time from killing and occupying to investing in creating a sustainable world. The military budget is destroying this country. Taxes will have to be raised on the rich, also, and I'm not talking about just three percent. This revenue has to come from somewhere other than China and Saudi Arabia.

We need to drop the empire and invest in alternative energy for real, rather than just talk about it. Alternative energy is the only sector in which I can see decent jobs being created again in this country.