Matt Yglesias observes that conservative critics of the stimulus have been acting rather nutty:
How hard would it be for a conservative- or libertarian-inclined economist to just say “the idea of a fiscal stimulus makes some sense, insofar as it's attempted my preference would be to work as much as possible through tax side measures lest a ‘temporary' stimulus become a permanent expansion in the size of government”? That's totally coherent. Instead we're getting nutty resurrections of the Treasury View, people downplaying the catastrophic nature of the 19th century business cycle, Alan Reynolds, bizarre revisionism about the New Deal, etc.
In general, that's true. But today Mike Gerson more or less made the sensible conservative point:
But while the legislation was deeply flawed, there was little alternative to action. The usual recession remedy -- the lowering of interest rates by the Federal Reserve to loosen up credit and spending -- is of little use when the credit system itself is broken and rates are already near zero. The president and Congress were left with one option: attempting a fiscal jolt to counter the economic cycle. Such efforts in the past have often been mistimed, with the cavalry arriving just after the settlers have been massacred. But one has to try. In this case, necessity was the mother of excess. ... the stimulus does have a hidden virtue. A good portion of the funding is channeled to the poor through programs such as food stamps, unemployment insurance, the child tax credit and the earned-income tax credit.
So that's a pretty reasonable place to be. But of course Gerson goes on to say that the stimulus is also undermining welfare reform, an argument also made in the Wall Street Journal. Those arguments aren't true, and here's a timely and wonkish rebuttal for your arguing needs.
Essentially, with unemployment rising and the economy tanking, more and more people need to access the Temporary Assistance for Needy Families (TANF) program, and it's harder and harder for people on welfare to find the jobs they are required to have under welfare-to-work. Under present conditions, the costs of TANF to states are going to increase -- the contingency fund could run out this year -- and they could be required to put a larger percentage of the recipients in work programs, both of which are increasingly difficult tasks. The stimulus legislation temporarily increased funding for TANF to address the benefits side of the problem, and stops increases in the rate of welfare-to-work participation (but the actual percentages of participants in work-to-welfare remain the same). Basically, the stimulus alleviates the hardship on states so that the TANF program can continue to function when it is most needed, rather than changing its structure in any way. Welfare reform remains intact; whether or not that's a good thing is a whole different discussion...
-- Tim Fernholz
