Good. Fast. Expensive. Pick Two.

It is a commonplace among conservatives that liberals just want to spend government money, as much as possible on almost anything they can find.  This is, of course, not true.  Liberals want to spend money on projects that they think will be more valuable than the equivalent usage in the private sector.

This is presenting some problems now that the actual aim should, by the theory of Keynesian stimulus, to spend money as fast as possible on almost anything you can find.

It is very obvious, now that we have the stimulus plans, that the Democrats are using stimulus as an excuse to spend money on things they want to spend money on.  Their demand for things like alternative energy programs is inelastic; it's just that it happens, right now, to be convenient to bill them as stimulus.

The problem is, that contra the Republicans, Democrats do care that money spent on these important projects is spent well.  And spending a lot of money well takes time.  It's an inversion of the old engineering aphorism:  good.  fast.  expensive.  You can only have two of the three.

Because the bill is massive, because it's focused on pre-existing Democratic spending priorities, it is going to be slow.  Matt Yglesias defends it, saying:

With the whole thing done, it seems that two thirds of the funds will flow within 18 months of enacting the plan. Of course it's true that 100 percent would be better. And even truer that if we had passed a stimulus plan back last September rather than experiencing months of delay thanks to conservative intransigence this problem wouldn't be so severe.

But in the context of stimulus, eighteen months is a long damn time.  Eighteen months is, in fact, about how long it takes a stimulus to work through the system.  If for no other reason, that ought to be a little worrisome for progressives because that means the stimulus won't have even 2/3 of its full effect until after midterms.  It is simply not "even truer" that conservative intransigence is causing worse delays than the focus on spending the money on massive new projects.  It's not even as true. It's not true at all.  No matter how you assess the relative benefits of spending to tax cuts, tax cuts could be 95% out the door in April.  So could many other kinds of rapid government spending--preventing fare cuts on transit systems, sure, but also repainting all the faded yellow lines on highways, or repairing park benches, redecorating government offices, etc.

Why does speed matter so much?  Because the primary argument for fiscal stimulus right now is not that we need to alleviate the pain of a temporary economic contraction--that's what things like beefier unemployment insurance, food stamps, and housing assistance are for (the first and the last are very good ideas, by the way.)  The argument is that we're in danger of a liquidity trap--that we could end up at a permanently lower level of output, as described by Keynes and popularized by Paul Krugman in the story of the Capitol Hill Baby Sitting Collective.  (Though it's worth noting that the ultimate solution was to double the money supply...)  

Presented by

Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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