Thursday, October 30, 2008

Martin Feldstein Is Against Affordable Housing and in Favor of Keyenesian Type Deficit Spending

From micromanager Feldstein's Op-Ed today at WaPo:

Although home prices must get back to pre-bubble levels, Congress should enact policies to reduce defaults that could drive prices down much further...

The only way to prevent a deepening recession will be a temporary program of increased government spending...A fiscal package of $100 billion is not likely to be large enough to revive the economy. The fall in household wealth resulting from the collapse of the stock market and the decline of home prices may cut aggregate spending by $300 billion a year or more... Any plan to finance this spending by raising taxes, even if postponed, as Sen. Barack Obama has suggested, would hurt the recovery by causing affected taxpayers to cut their spending now.

With the government borrowing $800 billion in recent weeks and the private sector having trouble borrowing, Feldstein wants to crowd out private sector borrowing even more. It is real difficult to understand how any person could think this is a good idea.

No comments:

Post a Comment