More Stimulus Nonsense

As an update to my last post on the stimulus: the drumbeat of criticism that the stimulus is not working is just annoying. Anyone who took the trouble to read the actual proposals back at the time the stimulus package was legislated into being would know that no one thought it would start to have any real impact until later this year at the earliest. In all the charts that I saw the impact was concentrated in the fourth quarter this year and then in the entirety of next year.

So of course there isn’t much impact yet.

Duh.

But this simple observation eludes, presumably for partisan purposes, large swathes of the analytical and media elite. By arguing that the stimulus has failed these people are putting at risk an essential part of or escape plan: the fact that we evidently need a larger stimulus than the one we have.

This extra need is not because the current plan ‘is not working’ but because the economy is significantly worse off than thought by those responsible for its size.

There were some of us who argued for a much larger package back during the original debate. Unfortunately we have been proven right. That’s why we need more stimulus and quickly.

Parenthetically: let’s all get rid of this ‘wait and see’ attitude. By the time we find out whether the current package was the correct size we will have lost another year or so of recovery. The cost in human terms of all that lost time vastly overwhelms the risk that we may not need more stimulus. Unemployment is already above the upper limit the original plan was designed to combat, it is therefore self-evident that more work is necessary.

And to all those who decry the tardiness of the government’s efforts: may I remind you all that we have just spent the best part of three decades gutting the ability of government to act effectively. The word ‘Katrina’ surely still means something does it not? The whole purpose of the Reagan/Bush agenda was to render government ineffective. So cranking up government spending in order to stave off depression may take some extra time: we have to resuscitate government competency at the same time.

It is both fatuous and disingenuous for those who bash government and who strove to disembowel it to argue that it is failing just when we need it.

So: if you want to argue against the stimulus plan please do so on the basis of its size being too small, and not on the basis that it isn’t working.

Size mattered. And it still does.