NY Times columnist David Brooks today takes on his colleague Paul Krugman in his column today on whether its wiser to to continue to spend money to stimulate the economy, vs. pulling back to make a stand against the escalating federal deficit.
The issue has become very real over the past few weeks, as the U.S. Senate has continued to filibuster such proposals to extend unemployment benefits, the latest last Wednesday night.
According to the Labor Department, a little more than 1.3 million people have already lost benefits since the last extension ran out at the end of May, and by Friday it will jump to 1.7 million. By the end of this month, it would top 3 million.
With polls showing more Americans concerned about the deficit, now some Democrats are supporting Republicans in believing that paying for extending unemployment benefits needs to be paid for, and should not come from the Treasury. They've been arguing that there's money left over from the $862 billion stimulus plan to do that.
The Times' Brooks argues in today's column that so called "Demand Siders" are arrogant in assuming they're correct that only a new stimulus of some sort from the government will prevent the economy getting worse.
These Demand Siders have very high I.Q.’s, but they seem to be strangers to doubt and modesty. They have total faith in their models. But all schools of economic thought have taken their lumps over the past few years. Are you really willing to risk national insolvency on the basis of a model?
Moreover, the Demand Siders write as if everybody who disagrees with them is immoral or a moron. But, in fact, many prize-festooned economists do not support another stimulus. Most European leaders and central bankers think it’s time to begin reducing debt, not increasing it — as do many economists at the international economic institutions. Are you sure your theorists are right and theirs are wrong?
This article appears in Jul 1-7, 2010.