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Stimulus vs. Permanent

By Matthew Yglesias on January 14, 2009 at 3:11 pm

"Stimulus vs. Permanent"

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Not only is this barrel full of tax cuts proposed by the Republican Study Committee pretty bad stimulus, but to even call a package of permanent tax cuts a “alternative stimulus” is a serious abuse of the term. The idea of a stimulus measure is that you increase the budget deficit over the short-term to try to get the economy back to something like a full employment of available resources. But a permanent increase in the deficit extends, by definition, into non-recessionary periods in which such deficits operate as a drag on growth.

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