Apropos of Andy’s thoughts concerning the stimulus negotiations, I suppose that the real policy question at this stage is: what are the economic effects of delaying any stimulus until October 1st?
That is the date by which a new budget must be passed: I am assuming that the Republicans will use any and every dilatory and destructive tactic possible. Budget reconciliation bills cannot be filibustered.
So if the House decides to call the Senate’s faux-moderates’ bluff, and so the Senate then fails to achieve cloture on the stimulus package, we won’t get new spending for 7 more months. That will surely hurt, and drive the recession deeper. The question is whether it will put the national and the world economy into a deflationary spiral.
Paul Krugman suggests in the terrific new edition of his book The Return of Depression Economics that one reason why Japanese fiscal stimulus might not have worked (and it is a “might”, because it still might have avoided a Japanese depression) is that Tokyo responded too slowly. Will seven months make that difference?
A superb overview of the federal budget process can be found here.