Martin Feldstein — a conservative Harvard economist and adviser to the McCain campaign — joins the call for stimulus spending:
The president-elect should focus on developing a mechanism for identifying and funding spending initiatives that can occur quickly and that would otherwise not be done. While it would be good if some of the increased spending also contributed to long-term productivity, the key is to stimulate demand. 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.
The increased government spending should include not only money for infrastructure such as bridges and roads but also for a wide range of equipment. Rebuilding some of the military capacity that has been depleted by the wars in Iraq and Afghanistan could be done relatively quickly and should be part of the overall package.
I would quibble: the money should be targeted in ways that stimulate demand and increase long-term productivity. Military spending certainly does not do the latter. An argument could be made that bridges and roads don’t either, not any more — sometimes new roads can reduce productivity. What does both, and can get started quickly? The electrical grid and public transportation.
Still, it’s good to have another voice in the chorus. As Matt notes, perhaps Feldstein could have a chat with the candidate he’s working for, who’s out on the stump proposing a spending freeze.
