Economic stimulus — conservative economists weigh in

NewMajority asked a group of free market economists what they think of the Democrats’ stimulus legislation and of stimulus legislation in general. The answers of the five responding economists undercut President Obama’s suggestion that there is a consensus among conservative economists in favor of a massive stimulus package loaded with spending.

Eric Rasmussen doubts the efficacy of “Keynsian stimulus” and denies that the Democrats’ “mix of special- interest tax cuts and pork barrel spending with a general-interest layer of tax cutting on top” constitutes a stimulus package at all. It would be better to do nothing, he concludes.

Greg Mankiw favors an immediate and permanent reduction in the payroll tax, to be offset by a gradual and permanent increase in the gasoline tax. Governors could divert a portion of the payroll tax cut in their state for use in infrastructure projects they deem valuable.

Alan Viard has “reluctantly concluded that a fiscal stimulus package is now appropriate.” However, he believes that the size of the package (and the corresponding costs on future taxpayers) should be reduced, and that the focus should be shifted to personal and business tax cut and government benefits payments because, in contrast to government purchases of goods and services, they will provide a timely boost to aggregate demand.

Edward Glaeser is skeptical about a stimulus package of the magnitude the Democrats have formulated but, given the economic difficulties we face, does not dismiss it out-of-hand. He is certain, however, that the Democrats’ stimulus package is in need of substantial improvement, including more emphasis on tax cuts, a more carefully designed infrastructure improvement program, and greater adherence to principles of federalism.

Finally, Bruce Bartlett agrees with Obama that we need a massive stimulus package and don’t have time to improve the pending one.

JOHN adds: If you missed it yesterday, also check out Andrew Samwick’s observations, including this comment: “I take a very dim view of the word ‘stimulus.’ It seems to be a code word for wasting money.”

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