We Get Letters: On Keynes

Weigel
Reporting on Politics and Policy.
July 21 2011 6:51 PM

We Get Letters: On Keynes

It's only fair to let my critics use this space to point out why I'm so horribly, revealingly wrong. This letter comes from a conservative activist who takes issue with my dead-ender Keynes defenses.

David Weigel David Weigel

David Weigel is a reporter for Bloomberg Politics

It’s actually kind of funny that you are citing a study from, of all people, Mark Zandi to make the case that cutting spending leads to less jobs.
 Zandi, (who is, you should note, one of the biggest pushers of the stimulus and a disciple of your boy, Keynes) achieves his estimate on the effects of the $61 billion Republican proposal to the CR, and also found that a cut in GDP of 0.7% would lead to 700,000 fewer jobs. (Here and here.)
More recently, The Center for Budget and Policy Priorities released a study that has been cited by the DCCC to attack Cut, Cap and Balance (here: ) It also says that the spending cuts in CCB would equal a cut of 0.7 percent of GDP – which by their logic equates to, again, 700,000 jobs lost.
So to sum up two recent predictions by the Keynesian model:
1)      $61 billion in cuts leads to 700,000 jobs lost.
2)      $111 billion in cuts, statutory spending caps, and a Balanced Budget Amendment (Cut, Cap, and Balance) would also lead to 700,000 jobs lost.
So in actuality, the Zandi study you cite does an excellent job of illuminating the failures of the Keynesian model.

David Weigel is a reporter for Bloomberg Politics