More U.S. stimulus? Really?
Morgan Stanley economists Richard Berner and David Greenlaw on whether the U.S. stimulus package should have been bigger:
Clients are asking whether the American Recovery and Reinvestment Act of 2009 was too small. We don’t think size is the issue; rather, the problem is one of timeliness and bang for the buck. It is heavily back-loaded and full of spending that is unlikely to be stimulative. Moreover, some of the spending programs will be difficult to unwind, leaving structurally larger deficits and debt. What happened to ‘timely, targeted and temporary’? The payroll tax cut of US$400 billion that we advocated last fall, if enacted in February, would likely have pushed us out of recession by now.