Support in the Real World

January 29, 2009

“What is Martin Feldstein? Chopped liver?”

-Brad DeLong, in response to the statement that “no conservative economists support the stimulus”

Martin Feldstein seems to be ignoring public choice theory.

Today, Feldstein writes that even though he supported the stimulus in theory, the actual stimulus bill that Congress came up with is an “$800 billion mistake.”

A couple questions: is he at all surprised that the stimulus bill is not stimulus, but rather a “compromise” in which every long-wished for project of every congressman is finally authorized? Is he surprised that they have opted for an economically inefficient lump-sum tax “rebate,” rather than a cut in the marginal tax rate? If he is not surprised, why didn’t he take the expected form of a “stimulus bill” into account when supporting the stimulus? If he is surprised, then he hasn’t been paying enough attention to the actual form of the United States Congress.

Ours is not the government of Singapore. Many of our laws are economically illiterate, and Congressmen, for the most part, have strong incentives to keep them that way. I’m officially agnostic on whether there exists a fiscal policy that would help us to get out (and stay out) of recession. But I’m deeply skeptical that the government we actually have will pursue that policy efficiently or without long-term costs that far outweigh the benefits.

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