Democrats Are at Odds on Relevance of Keynes, Say Historians





WASHINGTON — A rift has emerged within the Democratic Party between liberal economists, who generally view the 2009 stimulus package as a success and say that Keynesian economics should remain the heart of the party’s economic policy, and elected officials, who in growing numbers have shunned affiliation with the $787 billion effort and are expressing doubts about the effectiveness of fiscal intervention....

Ambivalence about using government borrowing and spending to spur the economy is longstanding. During the Depression, President Franklin D. Roosevelt wavered repeatedly over the size of the New Deal; budgetary retrenchment helped set off a second deep recession in 1937-38.

“Not until World War II, with the need for revenue so large and the unity around winning the war so strong, was that ambivalence pushed aside,” said Gary Gerstle, a historian at Vanderbilt University....

“The president has this year been proposing historically bipartisan policies that would help stand up the private sector and accelerate our recovery,” said Austan D. Goolsbee, who succeeded Ms. Romer as chairman of the council. “I hope that at some point opposition, for the sake of opposition, is going to lessen.”

But that seems unlikely, as long as the recovery plods along slowly. “It would be a mistake to attribute the distancing from Obama’s stimulus entirely to political caution or opportunism,” said Robert S. Weisbrot, a historian at Colby College. “As much as those factors may be important, it is dismaying how little evidence there is to show for it. Maybe we need even more, but surely $800 billion should have counted for something.”


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David E. Pike - 10/20/2010

How does one determine that Obama's stimulus did not count "for something"?
What would be the conditions had the stimulus not been effected?