I'm very concerned about this notion that the government can spend us out of an economic cycle. While there have, no doubt, been episodes where it has worked, it would seem that we really don't have sufficient grounds to believe that spending A LOT of money can get us out of a BAD economic cycle.
This downturn is very steep compared with what we've seen before, and frankly, it is a result, not of bad economic policy, but of a confidence crisis. The ASSUMPTION that spending a trillion, or more, will automatically put us back on track is not based in calm analytics, rather, it is an assumption without a foundation in economic history.
We could well spend a trillion or more and be in as bad, or worse, shape as we are now. Until people see some reason for expectations of an improvement, I doubt we're going to see it, no matter how many new bridges to nowhere we build.
We may find that Bush saved the banking system only to have the rest of the economy brought down by bad economic policy of the Obama administration. |
