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The crisis has led to some expectation that free market reforms around the world may pause or even reverse in the near term. If so, what does this portend for the spread of democracy? Roger Altman tackles this subject in Foreign Affairs here. Is the link between capitalism and democracy as strong as it seemed in the 1990s?
-- John Maggs, NationalJournal.com
Some economists are now suggesting the idea of a temporary or permanent reduction in FICA taxes as a primary form of economic stimulus. Michael Kinsley takes it a step further and recommends an offsetting increase in the gasoline tax to curb consumption. Martin Feldstein, among others, has argued that tax rebates would be an ineffective form of stimulus now, so would the forgoing be better? Should Barack Obama also follow through on his proposal to raise the ceiling on Social Security tax contributions?
5 responses: Ryan Ellis, Mark Bloomfield, Gary Burtless, Jeffrey Frankel, J.D. Foster
Assuming that a bankruptcy filing would result in the breakup of General Motors and/or Chrysler, would that be a catastrophe for the U.S. economy? Would the likely damage in Michigan and other auto-dependent areas alone justify a $34 billion bailout now? Would the overall damage be systemic and large enough that the car companies are too large to fail? Is this episode comparable to past moments when an iconic U.S. industry died without triggering an economic meltdown?
-- John Maggs, NationalJournal.com
4 responses: Edward Leamer, Gary Burtless, Alan J. Auerbach, William Niskanen
President-elect Barack Obama has said that he plans to cut some government programs, while raising spending overall, out of concern for the surging budget deficit. In today's New York Times, Paul Krugman takes on the idea that deficits always crowd out private investment, arguing that stimulus is good for short term and long-term growth. He says that it would be a mistake to curtail the stimulus to help control the deficit, pointing to two episodes in history when doing this led the United States and Japan into even deeper recessions. Krugman says that cutting the deficit can come later, after a strong recovery has taken place. Is he right?
-- John Maggs, NationalJournal.com
12 responses: John S. Irons, Martin Regalia, James K. Galbraith, John Maggs, Gene Steuerle, Gary Burtless, Brian Riedl, William Niskanen, Isabel Sawhill, Jeffrey Frankel, Alan J. Auerbach, Edward Leamer
