As the debate overUS President Barack Obama’s economic stimulus plan gets under way, one thing is certain: Many opponents of the plan aren’t arguing in good faith. Conservatives really don’t want to see a second New Deal, and they certainly?don’t want to see government activism vindicated.
Some of these arguments are obvious cheap shots. But the obvious cheap shots don’t pose as much danger to the Obama administration’s efforts to get a plan through as arguments that are equally fraudulent but can seem superficially plausible to those who don’t know their way around economic concepts and numbers. So, as a public service, let me try to debunk some of the major anti-stimulus arguments that have already surfaced. Any time you hear someone reciting one of these arguments, write him or her off as a dishonest flack.
First, there’s the bogus talking point that the Obama plan will cost $275,000 (Rs1.34 crore) per job created. Why is it bogus? Because it involves taking the cost of a plan that will extend over several years, creating millions of jobs each year, and dividing it by the jobs created in just one of those years. The true cost per job of the Obama plan will probably be closer to $100,000 than $275,000—and the net cost will be as little as $60,000 once you take into account the fact that a stronger economy means higher tax receipts.
Next, write off anyone saying that it’s always better to cut taxes than to increase government spending, because taxpayers, not bureaucrats, are the best judges of how to spend their money. The point is nobody really believes that a dollar of tax cuts is always better than a dollar of public spending. Meanwhile, it’s clear that when it comes to economic stimulus, public spending provides more bang for the buck than tax cuts— and so costs less per job created—because a large fraction of any tax cut will be saved.
This suggests that public spending rather than tax cuts should be the core of any stimulus plan. But rather than accept that implication, conservatives take refuge in a nonsensical argument against public spending in general.
Finally, it’s true that the normal response to recessions is interest-rate cuts from the Fed, not government spending. That might be the best option, if it were available. But it isn’t, because we’re in a situation not seen since the 1930s: The interest rates the Fed controls are already effectively at zero. That’s why we’re talking about large-scale fiscal stimulus: It’s what’s left in the policy arsenal now that the Fed has shot its bolt.
These are only some of the fundamentally fraudulent anti-stimulus arguments. Basically, conservatives are throwing any objection they can against the Obama plan, hoping something will stick. But here’s the thing: most Americans aren’t listening.
©2009/The New York Times