Just to show everybody I’m not a mindless bleeding heart who takes his marching orders from Liberal High Command, I feel compelled to call out Ezra Klein here.
It should be said that the stimulus really does have some wasteful provisions. Take the $11.5 billion in tax incentives for automobile purchases. As Ryan Avent argues, “the attempt to support automobile purchases is regressive — if you’re comfortable enough to buy a new car in these economic times, you probably aren’t among the most in need of scarce government assistance. It will also fare poorly as stimulus. It’s unclear how many sales might be generated by the plan or whether the number will be large enough to increase production or will merely serve to draw down the massive automobile inventory overhang already sitting on lots.”
And Ezra again…writing yesterday:
From a PR standpoint, the stimulus bill is an almost uniquely hard sell. They’re making sausage without any casings. The thing that the press has taught Americans to hate in the legislative process — the addition of odd, seemingly expensive, random, programs — is the very point of the bill.
I’ll agree from a policy perspective that the last thing we really want to be doing is encouraging the consumption of inefficient cars, but the same Keynsian principle that Ezra earlier identified is at work: if this measure increases consumption of automobiles, which presumably, it should, then it’s getting more cash into the economy, and thus serves a stimulative effect. Now, ideally, all the programs and tax rebates would serve some progressive end or reach optimal stimulative multipliers, but since it’s hard not only to spend $800 billion in 2 years, but hard also to agree what to spend it on, you’re going to have take the good with the bad.
I’m not sure whether Ezra or Ryan Avent would rather have the tax rebate or not — I’m inclined to think so — but it seems to me the bottom line is that the more spending the better, understanding there’s going to be some suboptimal stuff going on.