The new phrase working its way through conservative circles is "stimulus spending skeptics." Greg Mankiw has a couple of posts responding to this AP story, and House Republican Leader John Boehner is soliciting comments from skeptical economists.
I've made my points in earlier posts. The reason to spend is because we have unmet objectives that are typically achieved through fiscal policy. The reason to spend now is that factors of production are likely to be available at a lower cost than if we spent after the economy recovered. Stimulus is a by-product, not a motivation.
Catherine Rampell at EconoMix has compiled a number of economists' responses to the question I addressed earlier this week: how would you structure a $500 billion tax and spending package? Follow the link for responses from:
- Joseph Stiglitz, Columbia Business School
- Tyler Cowen, George Mason University
- Casey Mulligan, University of Chicago
- Andrew Samwick, Dartmouth
- Dean Baker, Center for Economic Policy Research
- Raj Chetty, University of California, Berkeley
- Mark Zandi, Moody’s Economy.com
- Nathaniel Keohane, Environmental Defense Fund
- Andrew Roth, Club for Growth
From Daniel Cline, who left a comment with the same name as the title of this post:
Why should the practices of Congress, Bernanke, and Paulson, be a source of anger or antagonism? Because those of us who are in the business of living within our means; because those of us who have been reconciling our checkbooks, paying our obligations on time and without fail; those of us who are parents, who are bringing up our children to keep their egos within a measure of reason; All of us; we are all able to discern what is within our grasp, and what is absolutely out of reach. Where in the constitituion is it written that our elected officials have the right to live on the other side of reality? These persons are neither protecting nor are they defending the Constitutuion of the United States.
My inner Libertarian also sees all of this bailout/rescue/stimulus as the apocalypse as well.
The news from the BLS this morning is not good:
Nonfarm payroll employment fell sharply (-533,000) in November, and the unemployment rate rose from 6.5 to 6.7 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. November's drop in payroll employment followed declines of 403,000 in September and 320,000 in October, as revised. Job losses were large and widespread across the major industry sectors in November.
That's 1.26 million jobs lost in three months. Looking at some of the alternative measures of labor utilization, we find that U-6 (Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers) rose from 11.8 to 12.5 percent between November and December and is now nearly 1.5 times its level (8.4 percent) a year ago.
The peak of the business cycle has been declared as December 2007. From the nicely exposited statement by the NBER Business Cycle Dating Committee:
The Business Cycle Dating Committee of the National Bureau of Economic Research met by conference call on Friday, November 28. The committee maintains a chronology of the beginning and ending dates (months and quarters) of U.S. recessions. The committee determined that a peak in economic activity occurred in the U.S. economy in December 2007. The peak marks the end of the expansion that began in November 2001 and the beginning of a recession. The expansion lasted 73 months; the previous expansion of the 1990s lasted 120 months.
In the explanation that followed this introductory paragraph, the payroll employment series -- and its steady decline since December 2007 -- played an important role in determining the peak.
Read the whole thing.