Free Republic

...the Administration could have created a package that stimulated the economy in the short term while improving economic performance in the long term. This package, moreover, would have been immune to criticism from Republicans. The stimulus adopted was a missed opportunity of colossal proportions. That the Administration and Congress chose the particular stimulus adopted suggests that stimulating the economy was not their only objective. Instead, the Administration used the recession and the financial crisis to redistribute resources to favored interest groups (unions, the green lobby, and public education) and to increase the size and scope of government. This redistribution does...

Dr. Christina Romer’s economic speech today, marking her last speech as an administration official, is an admission that the fiscal stimulus package that she helped craft has failed. Calling the economic recovery “insufficient”, she noted that a 0.6% drop in the unemployment rate still leaves unemployment unbearably high. “Real GDP is growing, but not fast enough to create the hundreds of thousands of jobs each month that we need to return employment to its pre-crisis levels,” she said. The Obama administration’s fiscal stimulus was meant to boost aggregate demand and get the economy going again. Estimates of GDP show that...

The latest round of congressional hearings was just another instance of Congress pretending to do something of value, whilst also demonstrating their astounding ignorance about the current financial crisis: (From Reuters): "WASHINGTON (Reuters) – Wall Street bank executives squirmed under a public scolding in the U.S. Congress on Wednesday over how they used $176 billion in bailout money without noticeably improving the battered economy… ...They demanded to know what the banks have done with the bailout money, given an ongoing credit crisis that has added to the country's deteriorating economy. New York Democratic Rep. Gary Ackerman said that in "the...

Before he was sworn in as President, Barack Obama began to lay out his plans for reviving an American economy that, it would later be discovered, had declined 3.8 percent in the fourth quarter of 2008, its worst performance in 26 years. About the first part of his project, “stimulating” businesses to invest and consumers to consume through government spending and tax remittances, he was forthcoming and enthusiastic. About the second, stabilizing the financial system, he wished to reserve judgment. He anointed the stimulus proposal with a convenient and vivid metaphor. “We’re going to have to jump start this economy...

Regular readers of this blog have a pretty good sense of my policy preferences. But for those occasional readers who might be stopping by, let me reiterate what I would do right now if I were the fiscal king. I would institute an immediate and permanent reduction in the payroll tax, financed by a gradual, permanent, and substantial increase in the gasoline tax. I would make the two tax changes equal in present value, so while the package results in a short-run budget deficit, there is no long-term budget impact. Call it the create-jobs, save-the-environment, reduce-traffic-congestion, budget-neutral tax shift. I...

It is unclear where President Barack Obama will lead the United States of America – besides $825 billion or so deeper in debt if he approves the House Democrats’ stimulus package. But what is clear is the direction liberal New York Times columnist Paul Krugman wants Obama to take: toward an FDR expansion of government. Within days of Obama’s electoral victory Krugman wrote a column titled: “Franklin Delano Obama." Although he has no official advisory role, Krugman himself has said he will be influential in shaping policy. In a Dec. 6 interview, Krugman said “I probably can have as much...

As you’ve probably heard, the Fed slashed interest rates by half a percentage point today in order to try to stimulate the U.S. economy and avoid entering into a recession. While we’ve all heard media scare reports indicating that a recession is imminent, the just-published backgrounder, “Recession and the U.S. Economy” gives a bigger picture – and outlines which indicators are truly important in deciding whether we’re in a recession or just a temporary economic downturn. The article also looks skeptically at the fiscal stimulus package currently before Congress. According to Hoover fellow Russell Roberts, “stimulus schemes based on giving...