Why We Need a Big Fiscal Boost Program
Photoblogging Students in Barry Eichengreen's Graduate Financial Crisis Course

Six **Seven** Out of Seven Real Economists Say: Fiscal Boost Now

Six out of seven real economists say pass the fiscal boost now--or, preferably, last October:

Alice Rivlin: Most of the things in the package, the big dollar amounts, are things that are pretty quick stimulus and need to be done. Is it a perfect package? Of course not. But we're past that. Let's just do it...

Alan Viard: Economists who initially rejected the need for fiscal stimulus have warmed to the idea, too. Several months ago, Alan Viard, a Bush administration economist now at the American Enterprise Institute, thought the right size for a government spending bill was "probably zero." He favored reliance on the Federal Reserve to slash interest rates and existing unemployment benefits to bolster the jobless.

Now Viard shares the view that a stimulus package is needed, although he would prefer one limited primarily to tax cuts and direct benefits for victims of the recession, such as increased unemployment benefits.

"Things have gotten so bad so quickly," Viard said. "We have now lost 3.6 million jobs, a stunning loss. But what's more horrifying is that half that loss has occurred in the last three months. This is a severe recession. There's no doubt about it.""Things have gotten so bad so quickly. We have now lost 3.6 million jobs, a stunning loss. But what's more horrifying is that half that loss has occurred in the last three months. This is a severe recession. There's no doubt about it..."

Robert Reischauer: If this [delay] is a harbinger of the future, God save us. Here we are shoveling out the goodies and we can't agree on that...

Joseph Stiglitz: [The package is] probably too little, especially given that it is badly designed [and] we haven't yet fixed the mortgage problem so the financial sector is likely to continue bleeding... [but the money spent is] unlikely to be wasted as badly as the private financial market has wasted resources in last five years...

Alan Sinai: Whatever its flaws, the stimulus package could create or save as many as 4 million jobs by the end of next year.... As a result the eventual recovery will be driven by government spending.... Sinai said his models indicated an equal mix of tax cuts and government spending would be most beneficial to the economy. But the difference in stimulus approach is not worth the cost of delay, Sinai agrees. "The greater good is to pass quickly and without confrontational disagreements a large stimulus program," he said.

Janet Yellen: In ordinary circumstances, there are good reasons why monetary, rather than fiscal, policy should be used to stabilize the economy.... Fiscal stimulus sometimes kicks in only after the need has passed. However, the current situation is extraordinary, making the case for fiscal action very strong. There is -- and there should be -- vigorous debate about the form it should take and about the likely effectiveness of particular fiscal strategies. However, it is critical that decisions on these matters be made on a timely basis so that the economy's downward spiral is not allowed to deepen.

But:

"N. Gregory Mankiw says more time should be taken to craft spending programs that would not be wasteful..."

http://www.washingtonpost.com/wp-dyn/content/article/2009/02/07/AR2009020702159_pf.html

UPDATE: Greg Mankiw emails to say that I misinterpreted him, and was in error in thinking that his position is that the stimulus package should be delayed. He says that his position is "not far" from that of Alan Viard.

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