A plurality of voters want to see a new economic stimulus bill--called a stimulus--to create jobs. Even 18% of Republicans and 32% of independents think a new job-creating stimulus bill should be Congress's highest priority. Yet is Congress going to pass one? No. Is the Treasury leveraging up its TARP money and using it to stimulate the economy? No. The Federal Reserve--well, the forecasts are that the Federal Reserve's quantitative easing programs may add between 0.2% and 0.5% to economic growth next year, although I do not see how the estimates can be so high unless the program has a large effect on inflation expectations.
This is an absolutely remarkable government that we have. And an absolutely remarkable political class.
Paul Krugman takes on the Very Serious People:
The Strange Death of Fiscal Policy - NYTimes.com: One clear result of the midterms is that we won’t have anything like a further round of stimulus. And this, in turn, means that the narrative all the Very Serious People will tell is that fiscal policy was tried, it failed, and that’s that.
But the real facts don’t at all support the conventional wisdom.
Actually, let me focus on an international comparison. You often hear the US experience contrasted with Germany: America, we’re told, went for Keynesian policies, while Germany chose austerity, and Germany did better.
But as far as GDP is concerned, Germany did not, in fact, do better.
This is, I think, the most amazing thing I hear as I wander around talking to the necktie-wearing class: they genuinely do think that real GDP in Germany fell less than real GDP in America--and I cannot figure out where this belief cam from.
Paul goes on:
Yes, Germany did better on employment — but this reflects policies that American conservatives surely don’t support, including employment subsidies, strong unions, and rules making it difficult to fire workers.
And what may be even more surprising: if we look at actual government purchases of goods and services, as opposed to transfer payments (many of them just payments from the federal government to states), Germany was more Keynesian than the United States:
So, it’s an amazing thing: Obama and company have managed to convince people that big government failed, without actually delivering big government.