Paul Krugman's column today is pretty mild, until his discussion of the likely path of the economy leads him to this prescription for the new president:

But what the economy gives, it can also take away. If the current slump follows the typical modern pattern, the economy will stay depressed well into 2010, if not beyond — plenty of time for the public to start blaming the new incumbent, and punish him in the midterm elections.

To avoid that fate, Mr. Obama — if he is indeed the next president — will have to move quickly and forcefully to address America’s economic discontent. That means another stimulus plan, bigger, better, and more sustained than the one Congress passed earlier this year. It also means passing longer-term measures to reduce economic anxiety — above all, universal health care.

It’s a Case of Murder on the Budget Express
July 8, 2008

There’s a great scene from the 1974 movie version of Agatha Christie’s “Murder on the Orient Express” where her iconic ace detective, Hercule Poirot, wonderfully played by Albert Finney, talks about the number 12.

The U.S Treasury last Friday put out a press release that proudly proclaimed its latest success in getting stimulus checks out the door.  The money quote:

"This week the Treasury Department sent out 6.211 million economic stimulus payments to American households totaling $4.927 billion.  So far, Treasury has sent out 51.675 million total economic stimulus payments totaling $45.720 billion."

Question 1: Has anyone noticed any change in consumer behavior since the checks started coming?

Question 2: Isn't the better statistic the number of stimulus checks that have been deposited or cashed rather than just mailed out?

Question 3: Instead of saying "51.675 million" in the release, wouldn't it have been easier to understand if the Treasury said either 51.7 million or 51,675,000?

I suppose I'll have to let ideology slide for the sake of expediency. I will not stand in the way of Stan calling Steve Forbes a capitalist tool.

I'm not so sure a second stimulus bill will be enacted this year, although Congress will certainly try. President Bush is likely to veto it and receive enough Republican support to avoid an override.

A second stimulus bill has already been sketched out. It would include an extra six months of unemployment benefits, additional money for food stamps, children's health care, and state infrastructure, an increased loss carryback for businesses, and maybe an extension of renewable energy credits that expire at the end of this year.

President Bush sees a second stimulus bill as unnecessary and expensive. Congressional Democrats see a win-win. If they overcome Mr. Bush's objections they get credit for the increased spending, and, if they don't, they get a campaign issue.

Too often, Washington spends more time fighting for political advantage than agreeing on policies that might actually help the economy.

The signs are now unmistakeable: a second fiscal stimulus bill and the increase in the deficit and government borrowing that it will cause is now more likely than not.

This is a huge change from as recent as a week ago.  At that point the Bush position that the first stimulus should be allowed to go into effect before a second was enacted was commonly being accepted because a veto was considered to be certain.

But that was before the Bear Sterns deal was announced.

The mood in Congress changed almost immediately.  Bailing out a bank gave reprsentatives and senators permission to talk seriously about providing similar treatment for their constituents.  So all of a sudden, the homeowner bailout using taxpayer funds that wasn't happening seven days ago is now very much alive and well and living in Washington.

All of the handwringing by economists about the stimulus bill is irrelevant.  Other than come up with the top line of $150 billion (1% of GDP), this effort was driven by political rather than economic analysts and advisors.

My strong suspicion is that that the expected and much-wanted political boost teh White House and congressional leaders are hoping for won't occur.  If the economy goes into a recession at this point the stimulus will be seen as ineffective.  If the economy doesn't go into a recession it will be seen as unnecessary. 

I'm not sure what angered me more yesterday: Congress spending time on the Clemens hearings or the big coverage of the president signing the stimulus bill.  The first wasn't a federal issue worthy of congressional time, the second wasn't news.

For some reason, CNBC carried the signing ceremony live even though markets had long ago factored it in to prices and the signing was a foregone conclusion.  CNBC madse a bill many economists think insignificant into the current day equivalent of a piece of a major New Deal initiative.