FreedomTalks

Over at Reason, Steve Chapman has a devastating piece on the stimulus package. The whole thing is worth a read, but this passage is especially worth noting:

The alleged problem is a recession. From the sounds of panic, you would assume we are already in a deep downturn. In fact, that does not appear to be the case, and many economists doubt we will have a recession (defined as two consecutive quarters in which total economic activity declines) at all.

The Congressional Budget Office, for example, predicts the economy will grow by 1.7 percent this year. A couple of weeks ago, The Wall Street Journal surveyed 54 economic forecasters, who on average put the chance of a recession at 42 percent and expected growth to approach 2 percent in the first half of this year.

Steven Wieting, an economist at Citigroup, predicts growth of 1.2 percent. But like our elected officials, he sees no point in getting hung up on technicalities. “Academic definitions aside, we’ll call that a recession,” he writes in a new report. We can call it a recession or we can call it a wirehair terrier, but that won’t change what it actually is: an expansion, albeit a modest one.

Just to be clear, a recession is typically defined as two consecutive quarters of negative growth. Yet to turn on the news, you’d think we were in some sort of catastrophic economic meltdown. Moreover, it’s unlikely that any current troubles will be solved by would be best addressed by proposals like the ones we’ve been seeing. And even potentially effective stimulus plans have a long history of coming in late — too late — as Bruce Bartlett’s handy chart shows us.

Instead of rushing toward an easy political solution, what troubles there are would be best  addressed by actions that aim to bolster serious long-term growth.  For an excellent overview of what that might look like, check out Sen. Jim DeMint’s piece in RealClearPolitics this morning.

This entry was posted on Monday, January 28th, 2008 at 10:11 am and is filed under 2008, Budget, Taxes. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.