Increase
pork.
Here's how things stand: the stimulus bill is way too small, it's floundering in the Senate, and we stand possibly on the edge of a deflationary abyss.
Solution: find, say, the 5 most wavering Republican senators and offer them each $100 billion worth of pork. (2 isn't enough because 1 or 2 might defect and some Democrats might defect also -- although it's kind of hard to imagine a Democrat joining a Republican filibuster under the circumstances),
That solves both problems: the stimulus bill will be big enough (if perhaps less evenly distributed in its impact than one might hope -- but multiplier effects will spread out over space), and it will survive a cloture vote.
Problem solved. No depression. Happy days are here again.
Probably one of the best ideas I've ever heard. In all seriousness though, I don't exactly see the problem with including a large amount of pork spending in the stimulus package. The point, as I see it, is to combat deflation by investing money in projects that could create jobs, raise aggregate demand, and prices. In fact, some argue that useless pork projects is where we
should be putting our money. Let me
outsource this:
All alliteration aside (but apparently now actively assonant), the general purpose of stimulus packages is to mobilize the economy's unused resources, and, in this particular case, to (sorry, I can't help it) prevent prices from plummeting. Does the presence of pork in a package (really, I'm sorry, but I give up) in any way hinder the pursuit of such purposes? As far as the deflation issue is concerned, useless projects are precisely the place we should be putting our power. Useful projects will augment aggregate supply and thus push against the attempt to arrest falling prices. Instead of one bridge to Nowhere, let's have two! Just so the builders of those bridges can use up labor and make it harder for others to hire, thus halting the hemorrhage of wages and helping stabilize the price level.
My other point is that, in any case, pork projects actually will be useful to someone. Somebody wants to drive to Nowhere, and that's why they want to have the bridge built. It might be pointless to divert resources toward such projects when the economy is already using most of its resources, but today (and in a few months, when there will be even more slack resources), the pointless thing would be to let those resources be wasted. Pork may not be the best use of those resources, but it's better than nothing.
And there is also the secondary effect, the Keynesian multiplier. The people hired to build bridges to Nowhere will spend some of their new wages on things that they want. When those things are produced, the resources involved are clearly being put to good use, because they create something that somebody wants and is willing to pay for.
Update: Matt Yglesias weighs in on the issue of pork spending regarding the removal of fish barriers:With everything in this debate, though, if you understand what’s happening you understand that the point isn’t that a reduction in the number of fish passage barriers will stimulate the economy. The point is that to stimulate the economy you need to identify projects that will employ people and materials. But ideally we don’t want to employ people and materials doing something totally pointless. Removing fish passage barriers will, I assume, have environmental benefits and ensure the long-term viability of fish populations. That’s good for the fish, probably good for water quality, and probably beneficial to people whose livelihoods depend on fishing or the viability of the tourism and recreation industries.
