Martin Feldstein supported the stimulus package in October. He is now against it.
washingtonpost.com
And Feldstein is not alone.
http://www.cato-at-liberty.org/2009/01/28/economists-against-the-stimulus/
Feldstein was just appointed to the Obama Economic Recovery Team on Friday along with Penny Pritzker and a bunch of wealthy Wall Streeters.
“We’re tapping a broad and diverse range of opinion from across the country, because an historic crisis demands an historic response,” Obama said according to a posted transcript of the Friday press conference.
Feldstein will maintain his Harvard teaching duties while advising the president.
He is one of several board members whose economic views may conflict with dominant policy-makers in the Democratic administration.
“Not everyone is going to agree with each other, and not all of them are going to agree with me—and that’s precisely the point,” said Obama, according to his transcribed remarks.
Feldstein also serves as a director of American International Group, an international insurance company which received billions in government funding from the TARP bailout approved by Congress last summer.
if he didn't have ties to AIG, I wouldn't be leery of his motivations, but I do agree with some of what he is saying, especially about moving too fast. I do not agree with this partof Feldstein's commentary, though:
"The largest proposed outlays amount to just writing unrestricted checks to state governments. Nearly $100 billion would result from increasing the "Medicaid matching rate," a technique for reducing states' Medicaid costs to free up state money for spending on anything governors and state legislators want. An additional $80 billion would be given out for "state fiscal relief." Will these vast sums actually lead to additional spending, or will they merely finance state transfer payments or relieve state governments of the need for temporary tax hikes or bond issues?
The plan to finance health insurance premiums for the unemployed would actually increase unemployment by giving employers an incentive to lay off workers rather than pay health premiums during a time of weak demand. And this supposedly two-year program would create a precedent that could be hard to reverse."
Restrictions? It should be only related to stimulus and proven by statistics, IMO, but many State budgets are being cut dramatically resulting in a huge loss of jobs. Police, Fire Departments, teachers, are all losing jobs due to these budget cuts. Also, States start selling assets to the highest bidders, like parking lots and in the long run, it can add up to higher costs to the consumers and lost revenues to the States. Giving money to the States is like instant stimulus vs. infrastructure spending, which takes much longer to get rolling due to the oversight and bidding processes.
I also do not agree that giving unemployed health insurance would be enough of a motivator for a company to lay someone off. They are doing it for reasons other than the shared costs of health insurance. A friend of ours, who worked for the same union for 20 years, just lost his job right after he had to lay someone off whose wife had cancer. It didn't stop the union.
I think Obama knows that this isn't going to happen overnight. He is just trying to stem the political jockeying that occurs because everyone wants to look like a hero to their constituency. These are tough times and it warrants putting that aside and really understanding some of the economic ramifications vs. the schoolbook party politics.
I'll bet these numbers are staggering, too.
