Politics

Larry, What's So Wrong with Stimulus?

By Matt Cooper

I was on Larry Kudlow's show yesterday where he was on rant against a stimulus package. I understand his point. Sometimes short term stimulus ideas have unintended consequences. He was worried about the panicked measures of the Nixon years like wage-and-price controls and going off the gold standard. Amity Shlaes, who is on a jihad against the New Deal, kept echoing his sentiment. But i don't see why the bipartisan consensus for a stimulus package--the Bush administration is coming out for one today and so is Bernanke--is so terrible. Some things government does are designed to be temporary. (Sending troops to Grenada, cutting the Fed Funds rate.) Temporary doesn't by definition mean ill conceived. Sure, there are unintended consequences and there would be good consqeunces from getting tax rates steady. Larry and the supply siders want big cuts, of course. I don't buy that for all the obvious reasons but even with that caveat, there is a lot to be said for straightening out the tax code so we don't have to revisit rates every couple of years or major questions like the estate tax.

Full post as published by Portfolio.com: Capital on January 17, 2008 (boomark / email).