Monday, August 22, 2011

Economic facts: separating fact from fiction

Here's a great article at ProPublica that looks at five economic myths.
With the recent Iowa straw poll and President Obama's bus tour, Americans are hearing a cacophony of arguments about the wobbly economy. The federal stimulus package passed in 2009 was either a deficit-busting failure full of wasteful projects or an unparalleled rescue that would have been more successful if it had only been bigger. Taxes are either stifling or the lowest they've ever been. America needs to invest in infrastructure, or "infrastructure" is merely a euphemism for more government spending. So, here's our guide to the most prevalent economic myths.

Click on the link if you want to check them out. The nice thing about it is that it really is pretty balanced. This isn't a liberal organization. In fact, it's led by the former managing editor of The Wall Street Journal.

I'd actually say that it's a little too balanced, giving too much credit to conservative thinking. But I can't call it right-wing, either. It really does seem to be an independent investigation, which is exactly what ProPublica strives for.

And although they don't eliminate the BS entirely, they do a pretty good job of separating fact from fiction. I'm impressed. If you check it out, I think you will be, too.

I do wonder about this part, though:
Other economists, including John F. Cogan and John B. Taylor at Stanford University and the Hoover Institution, argue that the amount of stimulus spending wouldn't have mattered because it mainly reduced borrowing by state and local governments rather than increasing spending. So, they contend, the predicted benefits were washed out.

But is that really true? It's not for Nebraska, because my state is required to balance its budget every year. And I was under the impression that many, if not most, states were similarly restricted from deficit financing. Am I wrong?

In states like Nebraska, stimulus spending kept us from being forced to make even deeper cuts than we did. I suspect that was a big help to our economy. So I wonder how many states can run deficits.

And surely, even those wouldn't have borrowed everything they got in federal stimulus funds. It's just ridiculous to think that. They might not have cut everything, but they would have made deeper cuts than they did. And that would have made the recession deeper.

(Thanks, Jim, for the link!)

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