Should you be in favor of really big spending bill now, or not?

I think the answer is pretty simple: if you care that inequality in the United States has risen and that many, many people are being “left behind” then you should be in favor. The pundits, including many prominent economists who are associated with the Democratic Party, and many reactionary economists associated with Republican party and libertarian-y types, will say this is “irresponsible” because the large transfer will be inflationary. The solution to the inflation possibility is very simple: raise taxes on the wealthy and reduce military spending and stop the giveaways to the corporate farm sector to ensure interest rates do not rise dramatically and that the increase in spending by the bottom half of the income distribution is not putting pressure on prices. Maybe while you are at it reform housing regulations (allow fourplexes in every single family zoned neighborhood) so that the bottom half of the income distribution in expensive urban areas is more likely to invest/consume better housing stock.

About mkevane

Economist at Santa Clara University and Director of Friends of African Village Libraries.
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1 Response to Should you be in favor of really big spending bill now, or not?

  1. wasundstrom says:

    Aside from the economic justice and precautionary arguments for generous direct assistance to lower-income Americans, there is also a macroeconomic argument that what some call an “overheated” economy pushes unemployment rates down, tightens the labor market, and fosters real wage growth, especially for lower-wage workers (as has been consistently argued by the Economic Policy Institute e.g.: And from a political point of view, one can’t help thinking that the (hypocritical) Republican opposition to budget deficits right now is aimed at causing a more anemic recovery going into the midterms.

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