The Case for Another Stimulus

By Arnold Kling

The unemployment rate is higher than the Administration forecast.  From a Keynesian perspective, this suggests that the need for a stimulus is even greater than when President Obama took office.


I would score one point for those of us who argued for a stimulus that takes effect in 2009 rather than in 2010 and beyond.  We could still do that, by enacting a payroll tax cut, effective immediately.

However, if a "second stimulus" means piling on more spending in 2011 and beyond, that might prove counterproductive by raising interest rates and depressing the economy in the short run.

This article available online at:

http://www.theatlantic.com/business/archive/2009/07/the-case-for-another-stimulus/20764/