THE STIMULUS PLAN – WHAT DO THE ECONOMISTS ADVISE?

There are a zillion economists, and most of them aren't worth the price of a Radio Shack calculator.  You see most of them on cable news as generic talking heads.  However, there are some good ones.

1) PAUL KRUGMAN is a Nobel Prize winner, author, and critic of Reagan/Bush supply side economics that the GOP continues to romance.  Though liberal, he has been critical of Obama's stimulus plan as too conservative.  He believes a 1.2 trillion plan is the appropriate size.

He is deeply critical of the Senate comprimise bill forged by the Dem and GOP moderates:

"a plan that was already too small and too focused on ineffective tax cuts has been made significantly smaller, and even more focused on tax cuts. My first cut says that the changes to the Senate bill will ensure that we have at least 600,000 fewer Americans employed over the next two years. This is really, really bad."

2) ALAN VIARD, a Bush administration economist, use to think the right size for a government spending bill was "probably zero" and use more Fed cuts to stem the bleeding. Basically what the Bush folks did last fall.  He's altered his view since:

"Viard shares the view that a stimulus package is needed, although he would prefer one limited primarily to tax cuts and direct benefits for victims of the recession, such as increased unemployment benefits. This is a severe recession."

3)  JOSEPH STIGLITZ, a Nobel Prize-winning economist at Columbia University and former chief economist at the World Bank, said that the stimulus package was "probably too little, especially given that it is badly designed [and] we haven't yet fixed the mortgage problem so the financial sector is likely to continue bleeding."

Stiglitz said that most households would save rather than spend the money from tax cuts and that the business tax cuts were not closely enough linked to new investments. He said that while plans for infrastructure spending were flawed, it was "unlikely to be wasted as badly as the private financial market has wasted resources in last five years.

Despite the differences in how to split up the stimulus, here is what is agreed on almost unanimously:

A STIMULUS IS NEEDED.

IT IS ABSOLUTELY URGENT IT HAPPENS IMMEDIATELY.

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