There’s always reason to be a bit skeptical of election year calls for economic stimulus packages from congress, but Lawrence Summers is a bigger deficit hawk than I and says it’s a good idea:
“I believe the balance of risks suggest a compelling case for a significant fiscal stimulus program that increases the deficit in the short run” but not over the medium to longer term, he said. The program may be most beneficial if it includes new measures for food stamps, unemployment insurance and other policies aimed at supporting low-income families, said Summers. He also argued in favor of new infrastructure investment as well as changes in Medicaid reimbursement rules and new funding to help low-income residents pay their heating bills.
That comes via Brad DeLong who also agrees. Now of course the problem that enters the picture is that the most effective kind of stimulus is the kind that puts spending power in the hands of the sort of low-income individuals who have a high propensity to spend the money. But conservatives, though happy to spend vast sums of money on all kinds of things, remain rigidly opposed to spending money on programs to help poor people. Thus, given the filibuster rule, it’s extremely difficult to pass a sensible stimulus package. On the other hand, successful stimulus would do a lot to help the electoral fortunes of conservative politicians, so there’s at least some chance the right’s leaders will put self-interest ahead of fanatical loathing of assistance to low income people.