You Can Put This On Bush's Tab, Please
Guesstimates from two very credible sources as to how much the Obama administration is going to have to shell out to help clean up Bush's mess. This goes on W.'s tab, and don't let anyone tell you otherwise.So the crucial questions become (1) how much will the government have to spend to get the economy back on track? and (2) what sort of spending will have the biggest impact on jobs and incomes?Paul Krugman:The answer to the first question is "a lot." Given the magnitude of the mess and the amount of underutilized capacity in the economy-- people who are or will soon be unemployed, those who are underemployed, factories shuttered, offices empty, trucks and containers idled -- government may have to spend $600 or $700 billion next year to reverse the downward cycle we're in.
When I put all this together, I conclude that the stimulus package should be at least 4% of GDP, or $600 billion.Hopefully, Obama won't be too constrained by this to get some of the important things done that need to get done.