From Prof. Hanson's "Works and Days" blog:
I think we are ignoring three things about the stimulus package. First, the
soaring deficits and mounting aggregate debt in the 2000s contributed to our
present debacle. (Yes, Bush and the Republican Congress are to be blamed for
spending sprees that cannot be explained entirely by 9/11, Katrina and the two
wars). We were already ‘stimulated’ and running a Keynesian economy, so why is
more of what got us into this trouble the solution?
Second, the crash in oil prices from $148 a barrel to less than $40 has
resulted in, along with dives in imported natural gas, a monstrous
stimulus–perhaps three-quarters of a trillion dollars per year for consumers.
Can’t we pause a month or three to see the effects of thousands of dollars in
cheaper heating and transportation costs for the American household?
Third, interest on US treasury bonds is nearing almost nothing. Yet, Asia and
Europe are still buying them. The result is that the US is receiving trillions
in free loan money that should be translating into cheap mortgages and interest
rates, and an infusion of cash that will soon kick in unexpectedly dramatic
In other words, while we scream about the Great Depression, there are
insidious, rarely mentioned stimuli already in play that are far more helpful
that borrowing a $1 trillion to redistribute and hire more government
(Addendum: Can anyone follow the politics of the simuli? Republicans
who between 2001-6 oversaw massive borrowing and spending are suddenly fiscal
conservatives when out of power; Democrats who blame the Keynesian Bush for
getting us into this mess, now want to out-Bush Bush and spend and borrow in
ways he never imagined?
Can’t Republicans say,”Sorry, we spent too much, and now, out of power, we
realize that and want to reform and go back to our core philosophies and not
spend what we don’t have it, so trust us this time.” And can’t Democrats say,
“We had no problem with Bush’s big-government deficit spending, and so we think
the answer to the current mess is to create even greater deficit spending.” At
least that would be honest, and preferrable to Republicans suddenly appearing as
Eisenhower fiscal conservatives, and Democrats trashing Bush ad nauseam while
following his expansionary policies.)