Stimulus

Back in the fall I wrote a little post suggesting that - based on no data whatsoever and my high-falutin-soundin graduate studies - that the US economy needed a fiscal stimulus of 400 billion or so. "Defense budget size" money, I think I said at the time.

Well, now Obama has outdone me, calling for a $775 billion plan that is a mix of spending and tax cuts.

Gee that's a lot of money. And Krugman says it isn't enough.

http://www.nytimes.com/2009/01/09/opinion/09krugman.html?_r=1&ref=opinion

Using the math he gives us, what we really need is a $1.4 TRILLION dollar plan, all of it spending. The reason for that is that tax cuts don't necessarily get spent (people might just put them in the bank) and thus don't have the same multiplier effect as spending. So, if you want a mix of spending and tax cuts, the total package would have to be MORE than $1.4 trillion.

This stuff is giving me a headache. I'm going to look for some dancing penguin videos or something.