Shh, Don’t Admit Government Spending Can Be Stimulative

by pdxblake

Dan Mitchell from the Cato Institute went through the Republican politicians’ statements (so I don’t have to) that lending a sympathetic tone to Keynesianism which its anathema to people like Mitchell.

Anyway, here’s his list of the comments that got him hot and bothered enough to go search for some anti-Keynesian memes to post on his blog:

• Cong. Rob Bishop of Utah claims a sequester will “destroy jobs.”
• Sen. Roger Wicker of Mississippi asserts that “up to 1 million jobs are at risk.”
• Gov. Bob McDonnell of Virginia says that sequestration is “putting hundreds of thousands of jobs in my state at risk.”

The problem with what the politicians are saying is not that it’s wrong, it’s that it’s right, but these Republicans are falling into the trap that Paul Krugman describes as making economics a morality play.

What that means in the context of these politicians statements is that they may be right (I have not checked the precise estimates they quote), but it is politically difficult for people like Mitchell to accept these ideas because it suggests that *gasp* government spending might stimulate the economy which leads to all kinds of bad, liberal places.

The bottom line is that these Republicans might like defense spending (especially in their districts) and may hate all other government spending, but they cannot just claim that one is stimulative and the other is not.

At the same time, I can’t claim that a lot of defense is not stimulative just because I don’t prefer the government increasing defense spending more but then claim that stimulus spent on roads and bridges or schools is stimulative.

There may be different degrees to which different types of government spending are stimulative, but I can’t choose and say that only the type of government spending that I like is stimulative and everything else is totally ineffective.

This leads Mitchell to suggest the Republicans change their approach, “I would have no objection to these lawmakers arguing against a sequester if they based their concerns on national security” and he adds a few other explanations that don’t validate government spending doing anything positive for the economy.

And it also shows how much the Cato Institute relies on deception rather than intelligent policy and suggests Republicans make up new excuses for why they oppose the defense cuts in the sequester to avoid recognizing that increasing government spending can be stimulative for the economy.