Over the last few days I’ve been trying to take stock of an essential element of the current stimulus debate: namely, Hill Republicans have been getting a lot of air time and minimal press criticism for a series of arguments about the stimulus that are in most cases transparently ridiculous. For instance, I heard several House Republicans yesterday making the straight up argument that the renovation of the Capitol Mall wouldn’t create any jobs or stimulate the economy. Well, obviously any major building project creates jobs. Nothing could be more straightforward. Whether it’s the best long-term use of the money, in the sense of whether the building project will have spin-off effects creating greater productivity and growth over time is a decent question. And looking at what’s in the bill I find myself wishing that more of the more was being spent in a more concentrated fashion — largely on infrastructure projects. But every major building project creates jobs.
Next, since there are no controlled experiments in recessions and depressions, there’s no really concrete and dispositive evidence about what policies end or don’t end severe economic downturns. But there’s a more focused question: how much spending into the economy you get for government spending versus tax cuts. And on this point there’s a lot of evidence, all of which points to spending as being more efficient. And that’s even more the case in a severe downturn when tax cuts to businesses don’t go into further business reinvestment because everyone’s afraid to invest into a down economy. See more on this point in this post from Elana Schor at TPMDC.
A subsidiary point to this one — to the extent that tax cuts are on the table, Republicans are going nuts about any tax cuts being rebated to people who are not paying income taxes. Now, again, you get more spending in the short term from people who have no choice but to spend virtually all their income. Very elementary. And it’s just another case where if you look at the criticisms coming from Hill Republicans they show clearly that they don’t come from people who have any concern for stabilizing the economy but rather from people who want to maximize tax cuts to wealthy Americans. Simple as that.
And yet for all of this, most reporters seem to take these non-sensical criticisms completely on face value, grading on a curve, as it were, not giving these folks a hard time because they’re well-liked much as we might with a dumb jock in the physics class who gets a free ride because no one expects anything different from him.
Alas, there’s a good example of this in this headline piece from today in the Politico making the argument that simple doing nothing, a la, the Hoover administration in the early 30s is likely the best plan.