Friday, February 6, 2009

We’re All Keynesians Now

Remember when Richard Nixon said this line. Daniel Gross does too:

There are three options government can pursue when the economy goes south. First, the Fed can cut interest rates, buy up assets, and extend credit, all of which the central bank has already done. Second, Congress can cut taxes on businesses and consumers in the hope they will spend more. The first effort—last year's tax rebates—didn't have the intended effect since consumers used much of the windfall to pay down debt or save … The third option is for the government to directly purchase goods and services, to substitute the demand that consumers and businesses aren't providing. The Washington remnant of the Republican Party—40 senators and 178 representatives—is all for Options 1 and 2, cheap money and tax cuts. But they're having great difficulty with Option 3. They have forgotten Richard Nixon's famous line that "we're all Keynesians now." To them, spending government funds to goose the economy is unacceptable, not just because of the possibility of poor execution—i.e., pork. No, many are rejecting it as a matter of principle. Even though several Republican governors are pleading for assistance in the form of federal spending, Washington Republicans are saying no.

Gross notes that those Republicans who are responsible for run state and local governments support the Obama stimulus but the current crop of Washingtonian Republicans support the Hoover approach. Speaking of Hoover - Dick Cheney got it right:

Administration officials have been warning for weeks that failure to pass the bill could lead to an even deeper recession. That was the message Vice President Dick Cheney brought to a closed-door Senate GOP lunch Wednesday, reportedly warning that it’ll be “Herbert Hoover” time if aid to the industry was rejected, according to a senator familiar with the remarks.

How come the only Washingtonian Republicans who seem to get this issue are also two of the most evil people ever to be allowed in the White House?


Shag from Brookline said...

Take a look at Niall Ferguson's LATimes OpEd today. He's definitely not a Keynesian. Once again Ferguson has "nialled-it" - his foot. But his solutions may be. He's amazing, a historian who predicts the future.

Anonymous said...

My new analogy about the morons who now are bloviating about deficits -->
they are people who run the furnace at 80 degrees in the fall when the outside temperature is 65 degrees but shut off the furnace when it's 20 below outside and the smaller family members have hypothermia !

Anonymous said...

Can we add an amendment to the stimulus bill to allow any Senator to reject 50% of the spending in their own state?

If both Senators of a state agree that the spending would damage their economy, then they shouldn't accept any of it.

Doubt there would be any takers.