February 11, 2009

The correct question to ask here is not "this spending: good or bad?"

It is to ask whether or not the particular spending item will stimulate the economy. Money that is likely to be spent will. Money that is likely to be saved will not. Things like the AMT fix are HORRIBLE stimuli. Things like food stamps are WONDERFUL stimulus. This is also why infrastructure spending is considered to be on the 'good' side.

Unfortunately, the net result of the negotiations in congress (and before the bill got to congress) was to strip out a bunch of spending, and replace it with a bunch of tax cuts. There's a lot of good left, but the consensus seems to be that it is too tax-cut heavy, and too small to actually be enough to beat back the downward pressure on the economy. 

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