The arguments of Mark Zandi and Ben Bernanke sound terribly well-thought and admirable, but I pre-force must approach the Problem of Government debt differently. Conservatives proclaim 1963 the Great Watershed, where Taxes on Business was finally reduced. All utter benedictions of How it expanded the American economy to such great degree. Question: Did it? We know that Government Spending through The Great Society and Vietnam kept the economy humming through the early 1970s. There We come to a real parting of the Waters; first Energy Shocks, then expansion of Government Spending, until We reach that technological Great–the PC. But before We can realize it’s wave of benefit–We hit Stagflation, followed by the S&L Bailout, and further Recessions. We come to the Clinton Miracle–Conservative spitting, and retorting it must be renamed the Tech Miracle; contrariwise, occasioned as it was by a rise in Business taxation, exactly as Reagan did in the 1980s–getting Us out of a Recession once more. The We come to the Tech Bubble–a place where far too much Cash had been brought to the Tech Miracle–another Recession. George W. Bush stated What was needed was Tax Cuts, bringing delayed economic Growth, and then the Housing Bubble. We are now telling Ourselves that Stimulus will succeed, if only We allow the Bankers to go back to the misfortunes which brought on the last Recession.
Here, I will try to encode my critique. One has to count the number of Recessions since the Great Watershed. One then has to count the number of years where the Government tried Stimulus deficit spending to counter the effects of Recession. The above is not as easy as One thinks, because We have been deficit spending fairly consistently since Pearl Harbor in 1941. It takes a bit of History past this Point, as one has to estimate the length of Recovery necessary for Recessions before the Great Watershed, and one has to estimate the length of time for Recovery since the Great Watershed. The Question has three Parts: Was Recovery times faster before the Watershed, than after the Watershed; especially if We discount the disaster of the Great Depression from skewing the mix?; Why did the economy improve after the Reagan Tax Hike, and the Clinton Tax Hike, if Stimulus is absolutely mandatory for Recovery?; and Why have there been no line changes to forestall business practices which have brought Us several Recessions–like closing loopholes in financing laws and regulations?
I will now turn to my main point. Everyone I talk to about the business of Stimulus presents me with a real Problem. The basic idea is that Stimulus must be in place for an estimated Two years, but that the expected replacement of the deficit caused by that Stimulus cannot be repaid in under about 12-15 years without doing damage to the growth of the economy. I would think it Heaven on Earth if We could keep the economy from going into Recession for longer than a decade. Every economist knows that Recessions are caused by natural fortunes, and occur periodically, all with preventive measures functionally nil. What they are espousing is the continual growth of Debt until the financial industry collapses. I think it is time for an alternate economic policy, and I am afraid it must occur on Our Watch. lgl