"I'm not going to discuss numbers right now," Barack Obama said this morning at his press conference, where he introduced his economic team but held off on providing details of their plans to respond to the deepening recession. In fact, the devil will be in those details. They will be a test of the president-elect's willingness to take bold action, as well as of his basic ideological approach to economics and social justice.
While various experts have projected a stimulus package costing anywhere from $600 billion to $1 trillion, Obama would only say that "we need a big stimulus package." At the same time, he declared, "95 percent of workers will receive a net tax cut," with those earning over $250,000 a year eventually paying "a little bit more." He has also indicated that he may take no immediate action to roll back Bush's tax cuts to the rich, but simply let them expire in 2010. So how will the Obama administration pay for a big stimulus program? For the most part through Keynesian style pump-priminggovernment spending that increases the huge deficit over the short term, in hopes of reducing it later under a recovered economy. It's the approach taken, most famously, by FDRthe man to whom the Obama is now being compared on a daily basis.
In fact, deficit spending has long been undertaken not only by New Deal Democrats, but by Republicans from Ronald Reagan to George W. Bush. These so-called fiscal conservatives have been only too happy to run up the national debt when it suits their ideological goals, whether they be military buildups or corporate handouts. Obama and his team will need to decide which larger goals their deficit spending will servewhat pumps they want to prime, and how. In particular, will their program to stimulate the economy reject the discredited "trickle down" approach, and address the extremes of wealth and poverty created over the last 30 years?