Here is my New York Times oped Not More of the Same on why it is urgent to change the course of economic policy.
My critique of Keynesian countercyclical policy, which is summarized in the NYT article, has been challenged by Fred Bergsten of the Peterson Institute who said at the Jackson hole meeting last week that the Reagan tax cut is an example of a countercyclical policy that successfully stimulated the economy, and therefore disproves my case. But as Larry Summers famously described it, Keynesian countercyclical policy is “temporary, targeted, and timely.” The Reagan tax cut was certainly not temporary. And it wasn’t targeted either; it was across the board. And it wasn’t timely because it lasted well beyond the recession and the recovery. In fact, it is just the kind of “permanent, pervasive, and predictable” policy that we need now.