The central economic policy issue concerning stimulus negotiations

How much can the economy stand 7 more months of GOP destructiveness?

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.

Author: Jonathan Zasloff

Jonathan Zasloff teaches Torts, Land Use, Environmental Law, Comparative Urban Planning Law, Legal History, and Public Policy Clinic - Land Use, the Environment and Local Government. He grew up and still lives in the San Fernando Valley, about which he remains immensely proud (to the mystification of his friends and colleagues). After graduating from Yale Law School, and while clerking for a federal appeals court judge in Boston, he decided to return to Los Angeles shortly after the January 1994 Northridge earthquake, reasoning that he would gladly risk tremors in order to avoid the average New England wind chill temperature of negative 55 degrees. Professor Zasloff has a keen interest in world politics; he holds a PhD in the history of American foreign policy from Harvard and an M.Phil. in International Relations from Cambridge University. Much of his recent work concerns the influence of lawyers and legalism in US external relations, and has published articles on these subjects in the New York University Law Review and the Yale Law Journal. More generally, his recent interests focus on the response of public institutions to social problems, and the role of ideology in framing policy responses. Professor Zasloff has long been active in state and local politics and policy. He recently co-authored an article discussing the relationship of Proposition 13 (California's landmark tax limitation initiative) and school finance reform, and served for several years as a senior policy advisor to the Speaker of California Assembly. His practice background reflects these interests: for two years, he represented welfare recipients attempting to obtain child care benefits and microbusinesses in low income areas. He then practiced for two more years at one of Los Angeles' leading public interest environmental and land use firms, challenging poorly planned development and working to expand the network of the city's urban park system. He currently serves as a member of the boards of the Santa Monica Mountains Conservancy (a state agency charged with purchasing and protecting open space), the Los Angeles Center for Law and Justice (the leading legal service firm for low-income clients in east Los Angeles), and Friends of Israel's Environment. Professor Zasloff's other major activity consists in explaining the Triangle Offense to his very patient wife, Kathy.