Peter Goodman and David Herszenhorn tell us in today's New York Times that "Democrats See a Need for Further Economic Stimulus."  The discussion is a very good example of what the absence of the last post's budget target can enable--every political faction advocating for a handout today funded by taxpayers in the future.  There should be no need for further spending in 2008 & 2009 that is not combined with lower spending or higher taxes in 2010 & 2011, when the economy has turned around.

In the article, the references to infrastructure spending are what caught my eye.  Consider:

I think we've got an old-fashioned disagreement here at CG&G.  Unlike Stan, I fully expect the federal government to abide by a balanced budget standard, and I reserve the right to be disappointed, cranky, and vocal about it when it doesn't.  By a balanced budget standard, I mean:

1) For the General Fund (i.e., excluding Social Security and Medicare Part A), a target of balancing the budget over a complete business cycle.  Alternatively, I would accept a weaker standard of no upward trend in the ratio of (total) debt to GDP. 

This allows for countercyclical budget policy.  It does not allow for so-called stimulus packages that are enacted with no intention of repaying the additional borrowing at the next turnaround in the business cycle.  It also does not allow for semi-annual budget forecasts that have on-budget deficits during periods of above-average growth.  With this standard in place, it doesn't run afoul of Stan's concern about whether a budget deficit is the short-term policy in 2013.

I enjoyed Stan's account of the CRFB annual dinner and the opportunity to assemble as the full CG&G team.  I'll have one thing to add on the dinner in a later post.  Since I was making the trip from the frozen tundra of New Hampshire, I made a day of it and attended the roundtable on the economy, financial markets, and the budget that preceded the dinner.  For my part, I contributed the following to the discussion:

First, I asked the question, "Who are the Bear Stearns creditors and why is it so important [that it requires Central Bank intervention] that they be paid?"  They invested and it turns out that they lost.  They might have a case in court, but why do they have a special claim on the federal government?  I don't believe they do, and nothing I heard convinced me otherwise.

It was only a month ago that President Bush successfuly demanded that congressional Democrats back down from their attempt to increase domestic spending by $22 billion in fiscal 2008.

Foru weeks later, that same president not only agreed to a plan that would increase the deficit by between $100 billion and $150 billion in fiscal 2008, he played a major role in drafting it.

An economic stimulus is all the rage in Washington these days.  The president says he is seriously considering one and may reveal it in his State of the Union Address; congressional Democrats are talking about one of their own that could be announced before the SOTU occurs.

If you think the fiscal 2008 budget debate has been (pick as many as apply) infuriating, deflating, annoying, irritating, or disappointing, wait until you see what I predict in my column for NationalJournal.com for next year.

The quick answer: even more stalemates and lower federal spending by accident.

My column on nationaljournal.com this week explains why the debate is proving to be so difficult in spite of the fact that Congress is talking about providing a tax cut.

This is a surprise that could reverberate for months.

It may not be a slamdunk after all.

The bailout of homeowners who, because they financed their home with an adjustable rate mortgage and took out a home equity loan, are having so much trouble making their monthly payments, may not be as likely today as it seemed just a week or so ago.