Comment & Debate
Ryan Grim. “Why the stimulus is too small”. Huffington Post. February 9, 2009 – The stimulus package scheduled to be voted on Tuesday, say contrarian economists, is simply too small to withstand the economic storm that’s coming.
It’s a matter of basic math, says economist Dean Baker of the Center for Economic and Policy Research. The economy is currently losing – annually — $450 billion in housing wealth, $650 billion in consumer spending and $150 billion in commercial real estate value.
“You’re talking about a gap on the order of twelve-hundred-fifty billion dollars, and we’re trying to plug that with four-hundred-something, so we’ve got a long way to go,” Baker says. (The stimulus package of roughly $800 billion doles out spending and tax cuts over two years.)
Galbraith, too, says that demonstrating that the stimulus is too small is a matter of basic math. The $400 billion it will inject into the economy each of the next two years is equal to about two to three percent of GDP, he noted. But the economy is falling at a much faster rate, projected at eight percent a year by the CBO – and that projection, again, doesn’t account for the financial collapse.
“Getting Tough in Washington”. New York Times (editorial). February 5, 2009 – Mr. Obama had it exactly right on Thursday when he warned against reducing “the scale and the scope” of the economic measure. If anything, the government should be more ambitious in its spending on economic stimulus, recovery and growth.