Sunday, January 20, 2008

Mystify Me

. Sunday, January 20, 2008

I have been deeply puzzled by something of late. As you all know, we may or may not be in or heading toward a recession. As a consequence, Bush and Congress are discussing fiscal stimulus, and Bernanke has promised to bring lower interest rates to the party. All of this is good.

What I don't get is this: the media has devoted lots of time and attention to what each of our hopeful "presidents in waiting" would do. Why? On the one hand, what a PIW would do once elected is irrelevant to the current debate about what we should do. On the other hand, by the time one of them becomes president, either (a) we won't be in recession (average recession is 1 year) or (b) the recession is so unprecedented that what one might do today facing a "normal" recession is irrelevant. Might just as well ask them what they would have done in 1929.

I also don't understand the logic of their proposals:

Clinton: $70 billion plan to "jump start" the economy; repeal the Bush tax cuts for households earning more than $250,000. The "jump start" money is half what seems to be required (about 1% of GDP); repealing tax cuts for the rich will be anti-stimulus.
Edwards: $25 billion immediately, additional $75 billion in event of recession; repeal the Bush tax cuts for households earning more than $200,000. Same problem as Clinton, though Edwards seems not to realize that we may not know we are in recession until it is over.
Obama: $80 billion in tax cuts targeted at middle and low income. Repeal Bush tax cuts. See above.

Republican PIWs: make Bush tax cuts permanent. Not clear how this constitutes a fiscal stimulus.
Ron Paul: Balance the budget, go back on gold. Ron Paul officially wins the Andrew Mellon Prize.


Mystify Me
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