Fed Chair Ben Bernanke says it’s time for stimulus: “With the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by Congress at this juncture seems appropriate.” The fact that the Fed thinks it can’t do anything to prevent “several quarters” of weakness and possibly can’t avoid a “protracted” slowdown is significant. Any time there are any economic problems, you get this conversation about should we do infrastructure projects as stimulus. In general, I like infrastructure projects, but the stimulus is usually not such a hot idea since it can’t act quickly enough. What Bernanke is saying is that we don’t need to worry about that concern so much.
Meanwhile, House conservatives are responding to the push for stimulus with the same package of tax cuts for rich people that they put forward as an alternative to the $700 rescue package for the financial system.
Kevin Drum observes that John McCain’s maverick status virtually guarantees that the GOP will move to the right if he loses. Similarly, note that the House GOP caucus is likely to, for the second election in a row, suffer disproportionate losses among its more moderate members. The resulting House GOP rump will be very rightwing, and also totally uninvolved in substantive policymaking. Consequently, there’ll be nothing to stop them from drifting ever further into the delta quadrant.