Suburban Guerrilla

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Jan 7th, 2008 at 8:50 pm by Susie

You don’t stimulate the economy with a recession - you stabilize it. But that would mean no tax cuts, and we can’t have that:

NEW YORK (CNNMoney.com) — Martin Feldstein, the Harvard economist credited with being one of the fathers of the Bush administration tax cuts, says the U.S. economy is now likely to slip into a recession, and that avoiding one will take a new round of tax cuts and interest rate cuts from the Federal Reserve.

Feldstein is president and CEO of the National Bureau of Economic Research (NBER), the organization charged with determining when the economy is in a recession and when it is growing. He told CNNMoney.com that he had thought the chance of a recession was about 50-50 even before last week.

But he said he now believes a recession is likely, as he pointed to both a report from the Institute of Supply Management showing manufacturing activity in decline for the first time in almost a year, and Friday’s December jobs report that showed a jump in the unemployment rate to a two-year high.

Larry Summers thinks otherwise:

Former Clinton Treasury secretary Lawrence Summers writes in a Financial Times op-ed: “Poorly provided fiscal stimulus can have worse side effects than the disease that is to be cured. This suggests close attention to three issues:

“First, to be effective, fiscal stimulus must be timely. To be worth undertaking, it must be legislated by the middle of the year and be based on changes in taxes and benefits that can be implemented almost immediately.

“Second, fiscal stimulus only works if it is spent so it must be targeted. Targeting should favour those with low incomes and those whose incomes have recently fallen for whom spending is most urgent.

“Third, fiscal stimulus, to be maximally effective, must be clearly and credibly temporary — with no significant adverse impact on the deficit for more than a year or so after implementation. Otherwise it risks being counterproductive by raising the spectre of enlarged future deficits pushing up longer-term interest rates and undermining confidence and longer-term growth prospects.”

Posted in Corporate Statism, Dirty Rotten Scoundrels, Fuck the Poor, IOKIYAR, Our Booming Economy, Politics As Usual, The Regime

3 Responses to “One Size Fits All”

on 07 Jan 2008 at 9:47 pm1Strudel and Shotguns

INFLATION. They’re trying to kill the dollar…
Can you say “Amero” boys and girls?
http://www.amerocurrency.com/amero.html
on 07 Jan 2008 at 10:16 pm2One Size Fits All | time management

[...] Read the rest of this great post here [...]
on 07 Jan 2008 at 11:34 pm3RepubAnon

Paul Krugman said it best:

When the economy is doing reasonably well, the debate is dominated by hype — by the claim that America’s prosperity is truly wondrous, and that conservative economic policies deserve all the credit.

But when things turn down, there is a seamless transition from “It’s morning in America! Hurray for tax cuts!” to “The economy is slumping! Raising taxes would be a disaster!”
From Hype to Fear