Friday, February 13, 2009

Addicted To Speed

In "Fortune," a couple of stimulus skeptics, including the smart John Taylor:
Are there unforeseen consequences to this rush to expand the federal government's presence in a free- market economy? "I know of no evidence that more speed is the answer," says Stanford economist John B. Taylor, author of a forthcoming book critical of past government interventions. "Just last year the government acted as speedily as possible with a big stimulus package sending $115 billion worth of checks to people. It did no good. So the idea that 'all we need is speed' should be questioned based even on very recent experience."

Vincent Reinhart, former director of monetary affairs at the Fed and now a fellow at the American Enterprise Institute, warns against the lasting effects of hasty actions. "We have limited resources," he says. "Everything we spend has to be financed and the interest paid. A dollar spent inefficiently is a dollar too much. Changes to entitlements tend to stick. A bridge can be built in the wrong place. These are long-term decisions that affect the budget baseline for years to come."

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