Tuesday, February 3, 2009

That GOP Pork List

A relative has forwarded me the text of this CNN.com post, titled "What GOP Leaders deem wasteful in Senate stimulus bill". She explains that she is contacting the WH to demand more responsibility and less waste. Here is the reply (name removed to protect my relative!):

Dear Person X 

I am glad that you are worried about fiscal profligacy. But I think that in your attempt to read between the lines, you've fallen victim to some vision-blurring rhetoric.

There are two reasons why I cannot agree with you that the GOP list you sent out is somehow evidence of a flawed plan.

First, let's suppose we accept the premise that all items on this list are "reckless" or "pork", etc. I added up all the items on the list. While it is possible I've made a mistake, as I had to do it by hand, and quickly, the total I came to was only $19.1 billion. This total is roughly 2.2-2.3% of the House and Senate bills' totals. That strikes me as a shockingly small amount of pork. Maybe there's more. I haven't read the bill. But if that's it, then kudos to our representatives for keeping the bad stuff -- if it is that -- so stingy. 

Second, I do not actually agree with you or the GOP that these items are pork, reckless, whatever. The point of using govt spending to stimulate aggregate demand is to have the government spend money. It is not to spend it only on someone's personal idea of "good" projects (much less some GOP member of congress's personal idea). It is to have the government spend money. There's an old joke (due to Keynes, if I remember correctly) that during a severe recession, it would be worthwhile to hire people to bury money and then dig it back up again. Presumably each of the projects to which you and the GOP object has more value than the result of that kind of endeavor. (Actually, I think the real point of the GOP's objection is that they don't like it when the govt does popular things, because that makes govt popular; hence their resort to trying to trick publicly minded folks like yourself.)

Now, don't get me wrong. I would prefer to spend money on things with a positive social return rather than a zero return. But many of the items on the list you sent along from the GOP look to me like they have some value. So I ask you: why are you opposed to spending money on things that (a) will have some value, and (b) will help boost aggregate demand at a time when we are at risk of a deficient demand-driven spiral into depression? 

The knock on spending-oriented stimulus was supposed to be that you can't spend quickly enough to make a difference. Many of those projects you listed via the GOP could be funded right away, I imagine. So now the knock is that money that can be spent quickly doesn't sound like it will be spent on roads or bridges. So what?

I don't mean to single you out, but you sent this email and asked for it to be forwarded to others. As someone who is in the middle of writing textbook chapters on fiscal policy, as well as the Great Depression, I can't help but tell you that I think you've got the economics wrong. Please feel free to send out this email to any others you'd like.

Meanwhile, I hope all is well with you!!