... But don't go light on the stimulus package?

EDITORIAL: "American fiscal policy: No time to waste; The American economy urgently needs a big fiscal stimulus. Too bad both parties are putting politics first," The Economist, 22 November 2008.

The quintessential editorial from the Economist on the need for the big USG stimulus package, and some warning about both the Dems and GOP acting partisan on the subject.

Piece starts off by saying that the G-20 states all promised "rapid" fiscal stimulus packages and that they seem to be delivering while America dithers. Stuff may be proposed in the House, it says, but deals seem to by dying in the Senate, with everyone waiting on 20 January for the dynamics to change.

The fear expressed here is that delays are too costly:

Americans' collective and sudden rediscovery of thrift is pushing the economy into its worst recession since at least 1982. And unlike the early 1980s, there is little prospect of a quick turnaround.

So the Economist asks for an additional (beyond the bank bailout) stimulus of at least $300B and an extension of unemployment benefits, picking up where states are forced to leave off. Plus, with plenty of state-based infrastructure projects dropping from "shovel-ready" status to postponed indefinitely, now is the time for the Fed to step into the void and start making all that infrastructure repair and upgrade that experts have been so long preaching.

Comments

[Mark]

How come nobody (outside of Reason or Cato) is willing to suggest that perhaps the government "stimulus" is actually the cause (e.g. the stimulus that was absurdly low fed rates combined with using Fannie/Freddie to obtain an ideal of "home ownership" backed by terrible land-use policies in many states that artificially priced up home prices).And now they are making it worse by throwing money after bad loans (thus encouraging bad loans and punishing the millions who did not pursue risky behavior) and bad car company management (who don't want chap 11 because both the union and management will have to give up all of their perks).

Plus we don't have the $. And everytime I see children, all I can do is feel sad for them because unless we change course - they entire adult lives will be spent paying for entitlements they will not get and those who gave them the burden will no longer be around.

Why do we insist on admiring India and China emerging from poverty while at the same time trying to turn us into them (via nationalizing/subsidizing industries).