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Here's the thing about this.
Summers' economic analysis is not particularly original here -- Biden's request fills more than 100 percent of the output gap. That's exactly what Biden's team means when they say it's better to do too much than too little.
What's new is politics. https://twitter.com/politico/status/1357670672307277825
Summers' economic analysis is not particularly original here -- Biden's request fills more than 100 percent of the output gap. That's exactly what Biden's team means when they say it's better to do too much than too little.
What's new is politics. https://twitter.com/politico/status/1357670672307277825
Biden's calculus is that a huge relief bill will set the stage for future policy success.
Summers' worry is that Biden is spending down political capital that would be better used on other things.
It's interesting, but it's a pure politics calculus.
Summers' worry is that Biden is spending down political capital that would be better used on other things.
It's interesting, but it's a pure politics calculus.
Does Summers have superior insight into the congressional dynamics here? I'm skeptical.
Recall that in the winter of 2008-2009 he lowballed the stimulus ask, again based on his analysis of congressional politics rather than his analysis of the economy. It didn't work out well.
Recall that in the winter of 2008-2009 he lowballed the stimulus ask, again based on his analysis of congressional politics rather than his analysis of the economy. It didn't work out well.
But for the record, I do think his narrow economic point is correct.
It would be better to settle for a smaller stimulus **IF** doing so created more space for other priorities. But is that true? It doesn't seem true to me.
It would be better to settle for a smaller stimulus **IF** doing so created more space for other priorities. But is that true? It doesn't seem true to me.
Last thing!
In principle “state and local fiscal aid” is a totally different thing from “public investment” but if you know how state budgets work in practice they are pretty similar.
In principle “state and local fiscal aid” is a totally different thing from “public investment” but if you know how state budgets work in practice they are pretty similar.
