The Obama New Deal

By Aziz P. -
Paul Krugman writes about the prospect of Obama doing a grand FDR-style New Deal to stimulate the economy, then does some back of the envelope calculations on his blog, and frets that an Obama stimulus package might be too small (by design), and explains why that's a bad thing. In a nutshell, you don't want to lowball a stimulus - you need to err on the side of caution by being bold. As Krugman notes, you need about $600 billion to close a 7% output gap, but the Obama people seem ot be leaning towards a stimulus package half that size.

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