ProPublica‘s factcheck of seven economic myths facing the country makes some good points: Taxes aren’t going up, for instance. Some of the “myths” are a bit muddled: “The stimulus has been full of/free of fraud, waste and abuse.” Is someone really saying the latter?
But overall the piece tries vainly to balance myths that will please both the right and the left.
For instance, Myth #3 doesn’t appear to be a myth at all, but a difference of opinion between economists. But labeling it a myth serves the conservative perspective:
The stimulus should have been bigger.
This is a red herring. Politically, the initial stimulus package almost certainly couldn’t have been bigger because the moderate senators who provided the key votes wouldn’t stomach a package over $800 billion. Indeed, late in the game, Sen. Susan Collins, R-Maine, and others were looking to trim the bill to $650 billion.
Regardless of the politics, many economists, including New York Times columnist Paul Krugman, insist the stimulus was too weak to deal with the crisis. Other economists, including John F. Cogan and John B. Taylor at Stanford University and the Hoover Institution, argue that the amount of stimulus spending wouldn’t have mattered because it mainly reduced borrowing by state and local governments rather than increasing spending. So, they contend, the predicted benefits were washed out.
In any case, the total stimulus is bigger than you might have thought. Since the Recovery Act, Congress has approved hundreds of billions of dollars in additional stimulus measures, including the renewal of unemployment benefits, this year’s payroll tax cut and the extensions of the education jobs fund and the homebuyer tax credit. The total is now well over a trillion dollars.
But even that isn’t sufficient knowing what we do now, according to Romer. As she recently told the Washington Post‘s Ezra Klein, the economy “probably needed about $2 trillion given what we were actually up against.”
It’s hard to see how the political viability of a larger stimulus has any bearing on the question of whether one was needed. And if the proposition “The stimulus should have been bigger” is false, as ProPublica seems to be saying, they offer no evidence for the claim.