Fixing the Stimulus

As Barack Obama seeks to steer his rescue package through Congress, liberals like Paul Krugman and more fiscally conservative columnists like Clive Crook have the same advice: Spend more. “If anything,” Crook writes in the Financial Times, “$800bn over two years now looks too small.” He recommends spending $500 to $750 billion alone in 2009, the majority of which should be “high-impact spending” and not tax cuts. Krugman notes a study by Christina Romer, Obama’s incoming chief of the Council of Economic Advisers, which says that even with the rescue plan, unemployment will be 7 percent in the fourth quarter of 2010. “If Mr. Obama drops the ‘jump-start’ metaphor,” Krugman writes, “if he accepts the reality that we need a multi-year program rather than a short burst of activity, he can create a lot more jobs through government investment, even in the near term.”