Stimulus, Pro And Con

David Leonhard defends the stimulus bill in today's NYT. Reihan returns fire:

If Leonhardt intends to knock down a straw-man argument ARRA has had no impact and the economy would be in the same shape without any fiscal stimulus program he succeeds. But of course economists like Michael Boskin, who is also affiliated with Hoover, argued that there were cheaper alternatives that would yield better overall employment outcomes.

Boskin could be wrong. Yet his argument is one that deserves to be taken seriously. Note that Boskin's argument does not "revolve around the idea that the economy would be no worse off without" the stimulus. Rather, he suggests that it had less impact than the business cycle, the Fed's zero interest rate policy, and the automatic stabilizers in the tax code. That there is an important different between this argument and the argument that the economy would be no worse off without the stimulus should be obvious. 

Leonhardt admits that "program has had its flaws" and that "many of the criticisms are valid." He is addressing the perception that the stimulus did nothing – a view shared by a huge percentage of the population. Yglesias also reads the column:

Douglas Holtz-Eakin not only thinks the stimulus is working, but he’s in denial about the conservative movement’s view on this and says that “no one” thinks “stimulus has done nothing” even though it’s become mainstream on the right to make this view. Heck, even though Tim Pawlenty is relying on ARRA to fund one-third of his budget for Minnesota he’s out there pretending that it’s not making a difference.