Wednesday, February 11, 2009

Steven Pearlstein argues that the ideal stimulus spending "is that which creates jobs and economic activity now, has big payoffs later and disappears from future budgets." The last criterion doesn't get much attention in many pro-stimulus arguments (including Pearlstein's), but it's important if you care about deficits . It's also important if you think the claim of government on the national GDP is limited, and you want there to be room for universal health insurance down the road . And, Paul Krugman even claims (for somewhat tricky technical reasons), it's important if you care about maximum stimulus, because "temporary government spending has a bigger effect"-- i.e. it's better at creating new demand than spending that won't disappear from future budgets.

So if the big dispute in the stimulus conference committee was over school construction spending , where

House Democrats are pushing to have school-repair funding listed as a recurring expense; Senate Republicans want such an allocation to be a one-time-only deal.

And if as a result of the moderate GOP Senate crossovers like Susan Collins holding firm, the school construction spending will be a one-time only deal ...

Then haven't the much-criticized Senate centrists , at least on this one issue, helped produce a better stimulus bill --not just a lower-deficit stimulus bill, or a stimulus bill that leaves a bit of room for health care, but, according to Krugman, a more stimulating stimulus bill? ... Am I missing something?  ... 11:06 P.M.

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