It was also easy to see that the stimulus approved by Congress was inadequate. Demand siders rely on something called "arithmetic" to reach this assessment. After pulling out the $80 billion fix to the alternative minimum tax, which had nothing to do with stimulus, and the $100 billion or so designated for later years, the stimulus provided for roughly $600 billion in spending and tax cuts over the years 2009 and 2010. This comes to $300 billion a year. Roughly half of the federal stimulus was offset by cutbacks and tax increases at the state and local level, leaving a net stimulus from the government sector of roughly $150 billion a year.Oh, there's more--including a clear explanation of why your pants-wetting fears of additional deficit spending are unfounded paranoia and a robust defense of the kind of real stimulus measures some of us demanded, and did not get, last year.
Demand siders did not believe that $150 billion in annual stimulus from the government could offset the contractionary impact of a reduction in annual spending by the private scctor of $1.2 trillion.
It also continues to baffle me that there's not enough support for extending the unemployment benefits, as pulling additional demand out of the economy helps exactly no one. Never before have we cut benefits off with unemployment still this high, even at times when our debt-to-GDP burden was higher than it is right now.