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Crossposted at The Rockefeller Republican
When it comes to fighting recessions, there's a tendency to see “fiscal stimulus” packages as wasteful, as a form of “throwing money at the problem.” The critics have a point. But the conclusion that therefore we should do nothing is also wrong. Instead, careful attention should be paid to the details. Just as a family pinched for cash might find borrowing for the purchase of a new car or appliance prudent while taking a vacation in Las Vegas wouldn't be, some government programs to combat recession make sense while others do not.Three criteria are crucial for evaluating fiscal stimulus packages. First, does the program target the weakness in the economy that caused the recession, or is it largely peripheral? Second, are the funds going to be spent in a timely fashion? Third, does the program fundamentally strengthen the economy going forward into the expansion phase? A look at the economy's current circumstances suggests that a large fiscal stimulus is needed, but a badly designed one will, in the words of an old song, merely leave America “another day older and deeper in debt.” -Lawrence B. Lindsey in The Weekly Standard.
While he goes on to state that tax cuts would be the most efficient stimulus, which I do not necessarily agree with, his point about the stimulus fundamentally strengthening the possibility of future expansion is extremely pertinent. I argued earlier that any stimulus package should be focused on driving us towards energy independence and Mr. Lindsey's criteria support my thesis. First, our hyper-dependency on foreign oil, while not e direct cause of our current woes is certainly a central player in them. Second, work could be started very quickly on various projects if the requisite red tape could be cut through, which a national stimulus plan could do. And third, our collective future would be far rosier with the prospect of a self sufficient energy system in place for the next generation.