President-Elect Obama just spoke at GMU. I was fortunate to have an invite. He had a number of good lines including as good a one-line explanation and justification for Keynesian economics as you will find:
Only government can break the cycle that is crippling
our economy, where a lack of spending leads to lost jobs, which leads
to even less spending, where an inability to lend and borrow stops
growth and leads to even less credit.
He emphasized that jobs would be created in the private sector and saved in the public sector. Nicely put.
His goal is "not to create a slew of new government programs, but a foundation for long-term economic growth." Very good.
Overall, my view is that the Obama fiscal stimulus plan is evolving in a sensible direction. As promised, he is a pragmatist who is listening to a wide variety of well-qualified, centrist economists.
A substantial fraction of the fiscal stimulus is tax cuts, a substantial fraction is preventing state and local funding from plummeting, a modest but reasonable fraction is on maintenance and improvements of old infrastructure (projects that are mostly already on the books), and a modest (but increasing over time) fraction is on longer term projects which are likely to pay off in future returns.
At present, I see very little in the way of Keynesian pyramid building. Nor do I see an attempt to grab the revolutionary moment by the horns and push the U.S. in a new direction. Thus, thankfully, No New Deal. There is plenty of uncertainty in the economy but it’s not regime uncertainty.
Addendum: Do note that I am
evaluating Obama relative to what we can expect given the situation and
our current politics and also relative to say the New Deal.