Monday Morning Quarterbacking

That title is painful thanks to the disastrous Steelers game Sunday, but it's apropos.

One big thing happened to the American economy over the weekend, and it happened in China. The huge Chinese stimulus spending plan immediately sent Asian and European markets higher. But it also stole the thunder on the U.S., and ought to be getting wide-eyed attention from U.S. officials, particularly Congress.

About the only comfort the U.S. had was that this economic crisis is shared, especially by China. But such an early and massive step could change that. It should put a lot of pressure on Congress to pass a meaningful and hefty stimulus package, real soon.

As for the general proposition, Monday morning quarterback and Nobel laureate Paul Krugman strongly advises President Obama not to repeat the mistakes of FDR during the Great Depression, which--contrary to CW-- was to create too modest a net stimulus to the economy. While FDR increased federal spending on what we now call infrastructure, for instance, he also increased taxes and didn't help state and local government meet their responsibilities without increasing taxes on their levels.

"My advice to the Obama people is to figure out how much help they think the economy needs, then add 50 percent," Krugman concludes. "It’s much better, in a depressed economy, to err on the side of too much stimulus than on the side of too little. In short, Mr. Obama’s chances of leading a new New Deal depend largely on whether his short-run economic plans are sufficiently bold. Progressives can only hope that he has the necessary audacity."