No Near-Consensus Among Economists for Another Stimulus Package

Sunday’s Weekend Edition on NPR gave listeners a chance to hear different economic views on how to reduce the high unemployment rate. Joe Stiglitz represented the view that we need another deficit-financed stimulus package with more spending now and tax increases later. I represented the view that the 2009 deficit-financed stimulus didn’t work and that we need to address the problem of expanding debt and regulations, which are holding back investment and job creation, and that we should not increase taxes. In selecting excerpts from an earlier taping, I think the NPR editors gave a fair representation of the views that are out there. 

In the meantime, an article in the New York Times over the weekend suggested that there was a new consensus for the view which Joe put forward. I see no such consensus. Some economists such as Joe, Paul Krugman, and Robert Reich have that view, but that is not new for them. And it is nothing new for Warren Buffett to argue for tax increases as he did in an New York Times op-ed today: When he was an adviser to Arnold Schwarzenegger in the 2003 California recall election, Buffett recommended tax increases, but Arnold told him to cool it or do 500 pushups for punishment. And there are plenty of economists who think that gradually reducing spending and not increasing taxes is better for job creation.  In June, for example, 150 economists (including me) wrote that a debt deal “that is not accompanied by significant spending cuts and budget reforms would harm private-sector job growth”

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