Recently, a series of media commentators and conservatives have lent their support to what Matthew Yglesias dubbed “Neo-Hooverism” – the idea that the United States should significantly cut back on spending due to the financial crisis. The Neo-Hoover premise is also being used to argue against enacting an economic stimulus package.
Sen. Norm Coleman (R-MN) joined the ranks of the Neo-Hooverites when he laid out his own economic recovery plan this week. “I would have grave reservations if the stimulus concept got hijacked into another just big spending bill — I wouldn’t support that,” he said. Coleman said he would support “tax breaks or stuff like that to grow jobs.”
Coleman’s own eight-point economic plan, meanwhile, includes a slew of spending cuts and freezes:
Coleman’s recovery plan includes enforcing spending caps, freezing congressional pay, enforcing pay-go where new spending must be accompanied by like spending cuts, require the president to submit spending cuts to Congress, giving the president line-item veto authority, closing the tax gap of unpaid taxes, closing tax loopholes, making sure Social Security and Medicare are solvent in the future.
Coleman’s point of view, however, has been rebutted by economists and budget analysts, who say that the next administration should “open its wallet, not tighten its belt.” Nobel Prize winning economists Paul Krugman and Joseph Stiglitz have both advocated for a stimulus package. Krugman wrote that “increased government spending is just what the doctor ordered, and concerns about the budget deficit should be put on hold.”
As the Center for American Progress Action Fund has outlined, increased domestic spending would stimulate the economy and stem the tide of job loss. The stimulus “should jump-start a low-carbon economy, invest in infrastructure, expand unemployment insurance, increase energy assistance, and boost food stamp support.”
Matthew Yglesias wrote that a stimulus package constitutes “an effort to prevent the country from sliding into an extremely deep recession. The evidence suggests that the most effective forms of stimulus are spending-side stimulus.” Conservatives like Coleman and Sen. Saxby Chambliss (R-GA) need to set aside unproductive budget fervor for the moment, unless they believe that it’s “far better to let our children and grandchildren grow up amidst an endless depression.”