Sunday Times (London)
July 11, 2010
by Irwin Stelzer
It just might be that in our effort to prevent a double-dip recession we are fighting the last war. President Barack Obama, economist-adviser Larry Summers and the rest of the White House economics team think a second stimulus package is needed if the recovery is to be put on a sustainable basis and job creation is to perk up. They point out that debt-ridden consumers, aware that their various benefits, especially state pensions, might be reduced or even disappear, are saving more — something they are in any event prone to do given the uncertainty of their jobs and the decline in the value of their homes.
So, damn the deficit, full speed ahead, a position supported by the left wing of the president’s congressional party, undaunted by the fact that, despite the $862 billion first stimulus, unemployment hovers around double digits, more “discouraged workers” have given up the job hunt, and increasing numbers are out of work for longer than was typical of past recessions.
More conservative economists are calling for deficit reduction to shore up the confidence of businessmen who are sitting on something like $2 trillion in cash, their animal spirits dampened by this anti-business president. Obama’s political advisers, White House chief of staff Rahm Emanuel and senior adviser David Axelrod, are siding with the deficit hawks — though not because they worry very much about the attitudes of businessmen. They see that voters are more than a little upset about the mounting deficit and are prepared to oust Democrats in marginal constituencies if they support more deficit spending. . . .
To read this full article, please click here.
Irwin Stelzer is a Senior Fellow and Director of Economic Policy Studies for the Hudson Institute. He is also the U.S. economist and political columnist for The Sunday Times (London) and The Courier Mail (Australia), a columnist for The New York Post, and an honorary fellow of the Centre for Socio-Legal Studies for Wolfson College at Oxford University. He is the founder and former president of National Economic Research Associates and a consultant to several U.S. and United Kingdom industries on a variety of commercial and policy issues. He has a doctorate in economics from Cornell University and has taught at institutions such as Cornell, the University of Connecticut, New York University, and Nuffield College, Oxford.
Home | Learn About Hudson | Hudson Scholars | Find an Expert | Support Hudson | Contact Information | Site Map
Policy Centers | Research Areas | Publications & Op-Eds | Hudson Bookstore
Hudson Institute, Inc. 1015 15th Street, N.W. 6th Floor Washington, DC 20005
Phone: 202.974.2400 Fax: 202.974.2410 Email the Webmaster
© Copyright 2013 Hudson Institute, Inc.