Dean Baker decided to comment on this article, which was sent to me yesterday, so I figure I will as well.
Thomas Edsall asks the question in the Huffington Post: should Barack Obama fess up and say he can’t do the things he wants to or should he just be quiet and win the election? The implication being that Barack Obama has been promising everyone their own theme ride at Disney World, but that the growing economic crisis may not allow him to give this stuff away.
Here’s a question for Thomas Edsall: when the government spends money, does it just fly up into the air – dissolving into ether, ne’er to return again? Here’s another question for Thomas Edsall: what were the Alphabet Agencies during the Great Depression and what did they do?
The answer to the first question is no, money spent by the government does not disappear. It goes into the economy in the form of pure, liquid cash. The very thing that the financial markets lack at the moment. For an avowed liberal writing for a progressive website to advocate cutting programs – proposed or otherwise – in the face of an economic crisis is for a liberal to completely lose his morings in American history.
To whit, the Alphabet Agencies of the Great Depression. They spent money like it was going out of style and ran up deficits to boot. They built the Hoover Dam and brought electricity to the Tennesee Valley, cleaned up parks and replaced lights on street lamps, spending money the whole time. And had it not been for that massive injection of government money, we might have been another decade in the Depression besides.
Barack Obama wants to provide every citizen health care, make it easier for them to go to college and foster volunteerism by revitalizing the Americorp. I can hardly think of better programs to go full-steam ahead with than these if we’re to quickly rebuild after this most serious of downturns. . . possibly another Depression.