Rickstersherpa Gets It Wrong, I Think
Hoisted from Comments: Can Someone Please Tell Me How This Is Supposed to Be Good Policy?: Rickstersherpa said...
I can only guess that Larry and Tim think this is 1993-94 again and if they signal Fiscal rectitude (also known as making the world safe for future Republican tax cuts), then Ben, whose neck they just saved, will relent on Number 2 and they might get enough political space to play with number 1. The Village wants a balance budget from Democrats, so a balance budget they are going to get. The only solace is that the coming double dip will speed the Washington Post into oblivion before Sarah Palin's administration.
I have seen no signs that the Federal Reserve will react to short-run fiscal consolidation in this way, or that anybody inside the Obama administration believes that the Federal Reserve will react to short-run fiscal consolidation in this way.
