U.C. Berkeley Economics professor Brad DeLong has made it his mission to label any economist who says anything bad about Barack Obama’s deficit spending plan as “ethics-free Republican hacks.” To this end he has compiled a list Republican former members of the President’s Council of Economic Advisers who have either endorsed, or not yet expressed skepticism about, deficit spending stimulus plans.
One prominent name on that list, former chair of Ronald Reagan’s Council of Economic Advisers, Maerin Feldstein, has even gone as far as testifying before Congress in favor of deficit spending. This is not new for Feldstein. Back in December 2007 when DeLong still believed congressional fiscal stimulus was a bad idea, Feldstein was ahead of the curve. DeLong has since caught up with, and passed, Feldstein in terms of deficit spending love. Now Feldstein is calling for a $300 to $400 billion stimulus while DeLong wants one well north of $1 trillion.
But Feldstein also has some real concerns about the temporal nature of government spending. He told Democrats this week that “there should be an exit strategy” so that the explosion in government spending does not “create a political dynamic that makes it hard to stop.” At one point, DeLong shared these concerns. Does he now?
The federal government has no track record of being able to cut spending once it has been expanded. Most economists advocating for a fiscal stimulus are doing so on the belief that the spending increases will be temporary. That is pure fantasy. The real question all economists should be asked is:
Do you support a permanent trillion dollar increase in government spending as a way to stimulate the economy.
Responding to arguments that government spending can never drive successful economic recovery, DeLong writes: “But surely we believe that if the U.S. government were to follow the Countrywide plan–to send its representatives out onto the streets to have them walk up to people and say: “Here’s $500,000. You can have it if you go buy a house”–then that would drive a recovery, right? I mean it drove a recovery in 2003-2006, didn’t it?”
And how sustainable was that recovery professor?