The $800 Billion Dollar Gamble

[katty]

more:

http://www.alternet.org/blogs/peek/125977/_the_%24800_billion_gamble%3A_economists_say_stimulus_cuts_could_be_%27disastrous%27/

EXCERPT:

Jeffrey D. Sachs, Quetelet Professor of Sustainable Development at Columbia -- considered one of the world's foremost economists and a leading advocate of "shock therapy" as applied to former Eastern bloc countries -- said that "comparing the House and Senate versions, the Senate version is clearly worse: more tax cuts, less infrastructure, and less in transfers to state and local governments." Instead, Sachs said, "Immediate and sizable spending increases in the stimulus package should be directed to a few areas: significant support for our crisis-ridden state and local governments , especially for health (Medicaid), education, and other urgent public services; income support (unemployment, anti-poverty including food stamps and child nutrition); health care coverage for the uninsured (as well as adequate Medicaid funding mentioned earlier); and a significant multi-year rollout of infrastructure of all sorts (roads, rail, other mass transit, ports, water, energy, broadband, etc.)."

University of Texas economist James Galbraith was more outspoken: "The behavior of the so-called bipartisan group has been outrageous. On the economics, they are pretending to know things they can't possibly know: specifically, (a) how deep and serious the crisis actually is, and (b) what is 'stimulus' and what is not. The reality is, professional economists have no clear idea how bad things can get..... The cutbacks to state aid have every potential of being disastrous. What they really reflect is the indifference of people who represent places like Nebraska and Maine to what goes on in New York or California."

Menzie D. Chinn, professor of Public Affairs and Economics at the University of Wisconsin, said about the Senate bill, "I don't understand the direction of the movement toward cutting spending. Cutting the transfers to the states seems particularly ill-advised, as we have a good feeling that the propensity to spend out these funds will be high and relatively quick."
Chinn said he would prefer more "direct infrastructure spending, more transfers to states, and fewer tax cuts than in either bill. As a person, I think a lot of these cuts out of the original Senate bill were pretty mean-spirited, including cutting $1 billion from Head Start/Early Start, or bone-headed, like eliminating $200 million from the National Science Foundation.