An August 9 study from the Federal Reserve Bank of San Francisco warned that a double-dip recession is a significant possibility.
In an August 5 commentary, Columbia University economist Joseph Stiglitz was critical of those who complain about waste in government stimulus programs. The private sector’s waste of resources—unemployed workers, idle factories and so on—due to the recession is vastly greater, he says.
On August 3, Macroeconomic Advisers released a forecast of the impact of allowing all the Bush tax cuts to expire versus extending them all indefinitely. A key finding is that temporary extension is only slightly less positive economically than permanent extension.
Also on August 3, Morgan Stanley economist Richard Berner examined extension of the Bush tax cuts in the context of the larger issue of long-term budgetary problems. He says that while taxes will need to rise eventually, now is not the time to raise them.
A July 27 study by economists Alan Blinder and Mark Zandi found that TARP and last year’s fiscal stimulus were highly successful in halting the economy’s sharp downward trend. In a July 29 blog post, Stanford University economist John Taylor was highly critical of the study, pointing out that other economic models show less positive results. Ezra Klein of the Washington Post interviewed Zandi on July 28 and Blinder on July 29.
On July 22, the House Committee on Financial Services held a hearing on monetary policy and the state of the economy. Economist Richard Koo of Nomura Research and Lawrence Mishel testified in favor of fiscal stimulus and were highly critical of efforts at fiscal consolidation under current economic circumstances. Carnegie-Mellon University economist Allan Meltzer essentially took the opposite point of view.
A July working paper from the National Bureau of Economic Research compared the 2008 tax rebate to the 2009 Making Work Pay Tax Credit, which reduced tax withholding, to see if the form of a temporary tax cut changed its impact. The authors find that the tax credit had even less stimulative impact than the rebate, neither of which were very effective. They find that only 25 percent of the rebate was spent while just 13 percent of the credit was spent.
I previous posted readings on stimulus on July 27, July 12, and June 8.
Bruce Bartlett is an American historian and columnist who focuses on the intersection between politics and economics. He blogs daily and writes a weekly column at The Fiscal Times. Read his most recent column here. Bartlett has written for Forbes Magazine and Creators Syndicate, and his work is informed by many years in government, including as a senior policy analyst in the Reagan White House. He is the author of seven books including the New York Times best-seller, Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy (Doubleday, 2006).
