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Public Won't Oppose More Stimulus, if It's Useful: Echoes

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By Joseph J. Thorndike

U.S. President Barack Obama might like to call it a "jobs bill," but opponents of his $447 billion recovery measure prefer a different label: stimulus.

And why wouldn't they? Over the past two years, the notion of using government spending to jump-start a recovery has been thoroughly discredited with voters, if not with most economists.

But if stimulus has few defenders today, it used to have a lot more. As Ezra Klein, a Bloomberg View columnist, pointed out recently, it was popular with Republicans through at least the early 2000s.

Various luminaries in the pantheon of conservative thought have also endorsed the idea. As I noted a few months ago, President Calvin Coolidge defended the use of public works to encourage hiring during a recession. And even Frederic Bastiat, of "Broken Window" fame, was open to a certain sort of stimulus spending.

As Amity Shlaes wrote this week, Bastiat was a powerful critic of government-sponsored jobs. But he wasn't opposed to using "appropriate public works" for the employment of "idle hands."

"As a temporary measure in a time of crisis, during a severe winter, this intervention on the part of the taxpayer could have good effects," he wrote in "What Is Seen and What Is Not Seen." "It acts in the same way as insurance. It adds nothing to the number of jobs nor to total wages, but it takes labor and wages from ordinary times and doles them out, at a loss it is true, in difficult times."

Even during a crisis, Bastiat suggested, public works were only defensible when they were inherently valuable. Make-work projects were a "cruel hoax," promising more than they could ever deliver. But valuable government spending was fine.

American voters seem to be channeling that sentiment. Popular opposition to government spending is partly rooted in a widespread conviction that Obama's 2009 stimulus was filled with pork. The congressional free-for-all surrounding its enactment certainly made it look that way.

From a Keynesian perspective, how government spends stimulus money may be less important than simply getting it spent in the first place. But from a political perspective, value is vital.

Canny politicians have always understood this. President Franklin D. Roosevelt, for instance, was deeply committed to spending for relief in the early 1930s, and he was eager to get people back to work quickly.

But FDR also understood that spending would be better tolerated if it focused on projects of obvious worth. As a result, the New Deal's early public-works spending went to high-profile, big-ticket items like dams and bridges.

Managed by the new Public Works Administration, these construction projects were clearly valuable, but they also proved maddeningly slow. Frustrated, Roosevelt eventually turned to less weighty initiatives, including many overseen by the famous Works Progress Administration.

Predictably, critics derided many of these WPA projects as make-work. But they survived, at least partly, because FDR could always point to his bridges and dams -- public works of undeniable and lasting value.

In his recent proposal, Obama seems to be taking a page from the New Deal playbook. The president's focus on public-works spending -- and on school construction in particular -- seems calculated to rescue the beleaguered reputation of countercyclical spending.

And none too soon. If the Keynesian prescription for recovery is ever going to be followed, Americans need to be convinced that their tax dollars are buying something useful.

(Joseph J. Thorndike, a contributor to the Echoes blog, is the director of the Tax History Project at Tax Analysts and a visiting scholar in history at the University of Virginia. The opinions expressed are his own.)

To contact the author of this blog post: Joseph J. Thorndike at

To contact the editor responsible for this blog post: Timothy Lavin at



-0- Sep/14/2011 16:00 GMT