From Senator Charles Schumer’s (D-NY) 1-16-08 Opening Statement to the Joint Economic Committee:

• [Ominous Subtitle:] “What Should the Federal Government Do to Avoid a Recession?”
• [Economic Fear-mongering:] The discussion of economic stimulus is no longer an academic exercise. In fact, real economic stimulus measures, enacted quickly, could be the last thing between us and a deep or protracted recession.”
• [Endorsement from Non-Endorsement:]On Monday I called Chairman Bernanke personally to get his thoughts on the economy. And he said that fiscal stimulus is certainly needed and he would be generally supportive of the Congress and the President enacting such a stimulus. He said that while he wasn’t going to endorse a specific plan, if an economic stimulus package was properly designed and enacted so that it enters the economy quickly, it could have a very positive effect on the economy.
• [Obligatory In-Hindsight Partisan Jab:] Because of presidential inaction to mitigate the effect of the subprime mortgage meltdown, the economy is now on the edge of recession.
• [Government > Free Markets:] An effective stimulus package, which includes both expenditures and tax cuts in combination with monetary policy, is the best way to avert a recession.
• [The Most Opaque Way to Say Deficit Spending:] On the question of pay-go – […] paying for stimulus now would take away from the economic boost we are seeking to create. The stimulus, by definition, must have a net of spending over income.
• [”Non-Partisan” Now Equals “Authoritatively Correct”:] Fortunately, because of the important work of economists across the ideological spectrum and most recently yesterday by the non-partisan Congressional Budget Office, we know what works and what doesn’t when it comes to economic stimulus.
• [I Simply Don’t Believe This Is True:] We know that extending unemployment insurance is one of the most effective stimulus proposals because we’ve deployed it successfully in the past and it gets a lot of “bang for the buck.”
• [Drawing the Line in the Sand:] Renewing the Bush tax cuts, which don’t expire until the end of 2010, should be off the table, because they will thwart any chance of passing a stimulus package.

And a somewhat more rationed take (though the first quote sounds like a joke) from the JEC testimony of Bill Beach, director of the conservative Heritage Founadation’s Center for Data Analysis:

• [If That’s What Congress Does “Best”… :] Congress should take this moment of slow growth to do what it does best: set broad economic policy.
• [I Thought Everyone Agreed About a Congressional Stimulus:] I am convinced the Congress is not the best policy making body for addressing the short run challenges of the economy. That role is better played by the Federal Reserve System.
• [Stepping Across Schumer’s Line in the Sand:] The decision makers in business and investment are watching Washington closely to discern the direction Congress will take in responding to this crisis. If that direction includes tax increases, then investors will find more favorable economies to support and business owners will, as much as they can, locate their expanded activities in places with more favorable tax regimes. […] For my part, I urge the Congress to make permanent the key provisions of the 2001 and 2003 tax law changes.

I’m guessing this will all work out to a compromised stimulus package that both extends Bush tax cuts and provides temporary subsidies for unemployment-extension/home-heating/food-stamps/state-aid. That would be a firm step in the opposite directions of both smaller and bigger government.  Perfect.  Good thing everyone likes to buy American Debt and US Dollars…

All this reminds me of the old adage about taxes: “Defer, Deny, Delay.” (ordering?)  The same goes for recessions, too.

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