by Mario Rizzo
Paul Krugman is right. David Broader recently said that we need “the best ideas from both parties.” We could of course interpret this trivially. I too want the best ideas to predominate. But Krugman sees an important point:
You see, this isn’t a brainstorming session — it’s a collision of fundamentally incompatible world views. If one thing is clear from the stimulus debate, it’s that the two parties have utterly different economic doctrines. Democrats believe in something more or less like standard textbook macroeconomics; Republicans believe in a doctrine under which tax cuts are the universal elixir, and government spending is almost always bad.
Obama may be able to get a few Republican Senators to go along with his plan; or he can get a lot of Republican votes by, in effect, becoming a Republican. There is no middle ground.
While I do object to the idea that opposition to spending stimulus is characterized by the idea that “tax cuts are the universal elixir,” I do think that the pro-spending crowd is adhering to textbook simplicities (my term). I would hate to have an even-excellent intermediate macroeconomics student in charge of the stimulus package. He is not smart enough and neither are those who are acting as if they were such students. The fundamental problem is that what is passing for stimulus is a vast scheme to prevent the reallocation of resources created by the previous bubbles and other bad policies.
So, yes, the differences are fundamental.