Stimulus Is For Suckers

by James K. Galbraith

President Barack Obama (how sweet those words) has already transformed American politics. The GOP is in crack-up. Obama's coattails in Congress give him leverage, and his vast public support gives him power. There is an economic crisis and a demand for action to deal with it. More than at any time since Ronald Reagan in 1981, what the president wants, he will get.

So, what should he ask for? How big and far reaching should changes to the economy be? Nearly everyone in Obama's circle agrees that more public spending and tax cuts are needed: a "stimulus package." The cautious say $150 billion (about 1 percent of gdp), while the bold and the worried say $500 billion (or just more than 3 percent of gdp). Both focus attention on what is needed in 2009-as if the economic problem can be solved in a year.

That is almost certainly wrong.