Happy Stimulus Day, New Orleans

Thanks to the American Recovery and Reinvestment Act of 2009, you will receive a neat new train set.

The Regional Transit Authority didn't win the lottery Wednesday, but the agency did beat some long odds by landing a $45 million federal grant that will pay the full cost for a new streetcar line along Loyola Avenue from the Union Passenger Terminal to Canal Street.

Yesterday, the Obama Administration spent the day talking up the Stimulus bill while announcing a number of new projects around the country which, like the new streetcar line, will also be funded through the act. We're going to spend much of this election year arguing over the impact of the stimulus bill. Partially because the unemployment situation continues to be as crappy as it is, the argument we're about to have is going to be predictably stupid. It doesn't have to be as stupid as it's going to be but Obama and the Democrats will see to it that it is because 1) they failed to argue for an original stimulus bill as robust as it should have been, 2) they will spend the Summer aruguing that the half-assed bill they did pass made the shitty situation less bad than it could have been.

This argument will be correct, of course, but it's a lame thing to try and sell to voters who are still looking at stagnated job growth and listening to the simpler sounding but economically unsound argument from conservative deficit hawks. "Too much spending!" They will say, "How can we be spending all this money while we're in a recession?" Via Oyster we find Ritholtz exploding the illogic of counter-cyclical deficit hawkism.

The current group of anti-deficit spenders are pro-cyclical, rather than counter-cyclical. This means that during an expansion, they have no problem with expanding deficits, running big spending programs, giving generous tax cuts. During a recession is where they suddenly rediscover fiscal prudence.

This is ass backwards. During an economic expansion, with employment gaining and GDP growing is when you should be thinking about saving for the next rainy day. Counter-cyclical spending means that governments should watch the budget carefully during the good times, but spend spend more freely during the downturns. What we are hearing from this crowd is the exact opposite of what should be.

You can read both of those YRHT and TBP posts for more ranting on the subject. It's pretty much just textbook macroeconomics. But policy is not determined by sound economics alone. Republicans aren't harping on deficit reduction simply because they don't understand theory. Rather, they fundamentally believe that government shouldn't be spending any money on things that poor and working people use at all. With conservatives in charge, none of these transportation infrastructure projects, including the new streetcar, would be funded recession or no recession. Keep in mind, it's fine for them to hold these positions but I doubt that any of it truly reflects what most of us want. And so they will continue to make a simple sounding but absurd argument. And the Democrats will continue to let them make it.