Some experts argue the United States needs more fiscal stimulus to sustain the tepid economic recovery. Harvard economist Ken Rogoff isn’t one of them.
“As it becomes increasingly evident that the recovery will remain subdued in Europe and the U.S., there is a growing chorus for indefinitely sustaining aggressive post-crisis fiscal stimulus,” he wrote in the Financial Times.
“There is no question that huge uncertainty hangs over the global economy, but is the case against commonsense fiscal conservatism so compelling? I don’t see it.”
Paltry growth and continuing high unemployment are normal symptoms of a postfinancial crisis economic recovery, Rogoff says.
“Worrisome as the current conjuncture may seem, the normality of the crisis trajectory to date hardly suggests the need for a panicked fiscal response,” he wrote.
“Indeed, it is folly to ignore the long-term risks of already record peace-time debt accumulation.”
The U.S. budget deficit has risen to about 10 percent of GDP, with the government debt burden standing at 53 percent of GDP.
Robert Reich, Labor secretary in the Clinton administration, sees things differently. He says the United States already has entered a 1.5-dip recession and needs fiscal stimulus to get out of it.
“The 1.5-dip recession should cause deficit hawks to stop squawking about future debt, blue-dog Democrats to stop acting like Republicans, and mainstream Democrats to get some backbone,” he wrote on Business Insider.
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