This is the reason I'm less concerned about the spending in the stimulus package than some. At some point, the kitchen sink may be necessary. It can always be scaled back later. Krugman is arguing that $800 billion is not enough:
According to the CBO’s estimates, we’re facing an output shortfall of almost 14% of GDP over the next two years, or around $2 trillion. Others, such as Goldman Sachs, are even more pessimistic. So the original $800 billion plan was too small, especially because a substantial share consisted of tax cuts that probably would have added little to demand. The plan should have been at least 50% larger.
This graph sure does concentrate the mind and reveals, to my mind, the surrealism of the current GOP. They spent the last eight years spending like FDR in a boom and now they're born again fiscal conservatives?
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