"You'll wish you listened," says the angry ghost of John Maynard Keynes.
Tim Fernholz darkens my day by reminding me of one of the annoying questions that's been laced into both debates. Last night, Ifill asked Biden and Palin, "there's nothing that you have promised as a candidate that you would -- that you wouldn't take off the table because of this financial crisis we're in?" And last week, Lehrer asked Obama and McCain, "As president, as a result of whatever financial rescue plan comes about and the billion, $700 billion, whatever it is it's going to cost, what are you going to have to give up, in terms of the priorities that you would bring as president of the United States, as a result of having to pay for the financial rescue plan?"These are nonsensical questions. They rely on assumptions that seem true, but aren't. First, the rescue plan will not cost $700 billion. It will not cost near that. The government is buying up to $700 billion in assets, selling them for what it hopes will be a profit. If that fails, the bill forces the president to submit legislation recouping the losses by basically taxing the financial sector. More on that here. In any case: It is factually untrue that the government is likely to lose anything even in the neighborhood of $700 billion on this deal, and questions that presume otherwise are, similarly, factually untrue. The moderators should stop asking them.Second, the underlying presumption here is that during a recession, faced with heavy spending, the president will have to cut his investment agenda. It makes a certain amount of intuitive sense. In hard times, families cut back. But the government is not a household. In hard times, it should spend more in order to stimulate the economy. That's part of the utility of having a government: When consumers and businesses fall on hard times, they cut spending. Which cuts demand. Which cuts economic activity. Which deepens your recession. All that is a Bad Thing. So it's useful indeed that we have an institution able to amp up deficit spending in order to increase demand. Just ask this guy. Or, if you want to ask someone more alive, ask this guy. Or just read up on countercyclical fiscal policy. But stop cementing the idea that recessions imply government austerity. That's a bad idea that can hurt a lot of people.A better question would take Keynesian economics a bit more seriously. Rather than asking what spending the candidates should give up, the question is which items they should prioritize. In theory, you now want to focus on policies that will create a rapid, short-term boost. This might cut towards a tax rebate and against infrastructure development, or towards green investment and away from health reform. But a recession does not cut against government spending. In fact, it does quite the opposite, and it's a real problem that our political system seems content to lazily assume otherwise. 
