Comments on: Roubini To The Neo-Hooverites: An Economic Stimulus Package Can Make The Deficit Smaller http://wonkroom.thinkprogress.org/2008/10/30/roubini-stimulus/ Thu, 26 Nov 2009 16:42:01 -0500 http://wordpress.org/?v=2.8.5 hourly 1 By: Nfilheim http://wonkroom.thinkprogress.org/2008/10/30/roubini-stimulus/comment-page-1/#comment-2774 Nfilheim Thu, 30 Oct 2008 21:37:37 +0000 http://wonkroom.thinkprogress.org/2008/10/30/roubini-stimulus/#comment-2774 I'm as much a fan of Keynes as anyone, and I support the idea that in a recession the government should step in and spend when the private sector is not to keep money circulating, however, I believe there are a couple problems with unbridled spending. First, the world economic climate is such that if our budget deficit grows too large, foreign markets that are also struggling might not want to keep lending us cash. Don't get me wrong, some countries like to see the US financially in their grip, but there is such a thing as too much deficit. So the question becomes are we quickly nearing that level? Shouldn't the US, to alleviate some of those concerns, ask for the loans, but also shift federal spending around, cut wasteful and outdated programs, and therefore require less loans over all? Tightening the belt and curbing spending is a bad idea, agreed. But this might be the best time to streamline the efficiency of the government for 'better' times, as well. I guess what I am trying to say is; the economic situation could be helped by more productive investments, by taking less from others, and shifting from wasteful programs to useful (infrastructure) ones. And second, it is difficult to cut spending programs back once they are enacted. Programs implemented to revamp our infrastructure would help the current situation, but once the economic crisis passes, will these programs be suspended? I would hope so. As part of this, tag the important projects to get fixed first, so less pressing programs can be shifted to a later date and still be addressed, just not during the time of 'big spending.' Keynes' theory has government pick up the slack when the private sector slows, but conversely, it also has government tightening its belt once the private sector begins to grow. It might be better in light of the budget to actually follow through with that, and when providing funds for infrastructure projects, make them tied directly to the economic climate. Once the business atmosphere is better, finish the current projects, and stop new ones. In summary; why not do both? Curb government spending where it is inefficient and wasteful, which would also lower our need to get further in debt, and increase government spending on infrastructure projects to take the place of lacking private sector movement. But drop the infrastructure plan when it is no longer needed? Interesting.. - Niffy I’m as much a fan of Keynes as anyone, and I support the idea that in a recession the government should step in and spend when the private sector is not to keep money circulating, however, I believe there are a couple problems with unbridled spending.

First, the world economic climate is such that if our budget deficit grows too large, foreign markets that are also struggling might not want to keep lending us cash. Don’t get me wrong, some countries like to see the US financially in their grip, but there is such a thing as too much deficit. So the question becomes are we quickly nearing that level?

Shouldn’t the US, to alleviate some of those concerns, ask for the loans, but also shift federal spending around, cut wasteful and outdated programs, and therefore require less loans over all? Tightening the belt and curbing spending is a bad idea, agreed. But this might be the best time to streamline the efficiency of the government for ‘better’ times, as well. I guess what I am trying to say is; the economic situation could be helped by more productive investments, by taking less from others, and shifting from wasteful programs to useful (infrastructure) ones.

And second, it is difficult to cut spending programs back once they are enacted. Programs implemented to revamp our infrastructure would help the current situation, but once the economic crisis passes, will these programs be suspended? I would hope so. As part of this, tag the important projects to get fixed first, so less pressing programs can be shifted to a later date and still be addressed, just not during the time of ‘big spending.’

Keynes’ theory has government pick up the slack when the private sector slows, but conversely, it also has government tightening its belt once the private sector begins to grow. It might be better in light of the budget to actually follow through with that, and when providing funds for infrastructure projects, make them tied directly to the economic climate. Once the business atmosphere is better, finish the current projects, and stop new ones.

In summary; why not do both? Curb government spending where it is inefficient and wasteful, which would also lower our need to get further in debt, and increase government spending on infrastructure projects to take the place of lacking private sector movement. But drop the infrastructure plan when it is no longer needed?

Interesting..
– Niffy

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