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To: curiosity
"short economic fluctuations"

But that's the key here, short-term. The spending multiplier effect still creates spending for the sake of stimulating short-term employment. Later, the piper must be paid by either raising taxes or running budget deficits. There are better ways to stimulate employment besides digging holes that you'll just have to fill at a later date.

85 posted on 11/20/2004 5:06:56 PM PST by LowCountryJoe (Willie Green after a chemical attack would make an excellent selective unmasking candidate.)
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To: LowCountryJoe
But that's the key here, short-term. The spending multiplier effect still creates spending for the sake of stimulating short-term employment. Later, the piper must be paid by either raising taxes or running budget deficits. There are better ways to stimulate employment besides digging holes that you'll just have to fill at a later date.

If you stimulate spending, you stimilate economic growth which generates tax revenue which can be used to pay down the debt in the future.

And that's ignoring the positive supply side effects if tax cuts are part of your stimulous. If you cut taxes, you do two things: you stimulate spending by putting more money in people's pockets (the demand side or Keynesian effect) and 2) you increase peoples' incentives to work harder and take risksm, which also helps growth (the supply side effect).

No serious economist denies either effect is important.

But this is supposed to be a discussion about trade, not macroeconomics.

90 posted on 11/20/2004 9:11:43 PM PST by curiosity
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