I’ve heard some chatter that were Timothy Geithner to step down, Laura Tyson might replace him as Treasury Secretary but it’s clear from what she’s wrote today that she’s far too sensible to be confirmed:
But with substantial excess capacity in the economy, there is no evidence that the federal deficit is driving up interest rates and crowding out private spending. What’s slowing the pace of recovery is not too much government borrowing but too little private spending. [...] The primary cause of the jobs crisis is a lack of demand, the same problem that bedeviled the economy in the 1930s. Consumers, long the primary engine of economic growth in the United States, are in the midst of an unprecedented retrenchment. [...] But the overwhelming evidence suggests the opposite: when the economy has excess capacity, high unemployment and weak private demand, cuts in government spending reduce growth and eliminate jobs. [...] But in the next few years, the priorities of fiscal policy should be growth and jobs.
Crazy talk.
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