(F)iscal stimulus can help a depressed economy recover — an idea supported by new studies of the 2009 stimulus package. Additional short-run tax cuts or increases in government investment would help deal with our unemployment crisis.
Sunday, August 14, 2011
Former Council of Economic Advisors chair Christina Romer points to the real crisis we're in. It's lack of jobs, not "too much government spending." Put simply, we're not spending nearly enough to attack unemployment. Further, "structural unemployment" arguments to explain the current crisis are rationalizations to do nothing. Romer looks back to World War II and explains why - if we're serious about economic recovery - we need measures that will, yes, add to the deficit to fight unemployment. Why? Because it's worked before: