Why Has There Been So Much Opposition To Government Stimulus In The US?

This article raises an interesting question. That is, why has there been so much opposition to the use of government stimulus to moderate the effects of the recession in the US? Paul Krugman and Robin Wells argue that it is the result of income inequality in the US. Income inequality increases political inequality. and the elite have opposed the use of Keynesian policies. That does not ring true to the authors of this article, and they explain why. They provide some interesting references to the use of Keynesian stimulus by right wing governments, and they don't understand why the elite should oppose government interventions that would increase demand for their products. Moreover, they argue that the elite has always favored government intervention in the economy when it enabled them to extract rents. They don't really prefer laissez faire economic policies. Even republican presidents have used Keynesian arguments when it served their purposes. Nixon, Reagan, and more recently, George Bush used Keynesian arguments to sell tax cuts during slow economies.

The evidence is against the explanation given by Krugman and Wells. Two other arguments make more sense. In the first place, conservative economists, since Milton Friedman, have worked hard to reverse the dominance of Keynesian theory in economics. They have been trotted out by republican politicians whenever it has been useful to them. The Senate Minority leader said that the main objective of the Republican Party was to insure that Obama was a one-term president. Much of their opposition, and rhetoric against stimulus was in support of their goal. They want to run against a president who they can label as a socialist, whose economic policies have slowed down the recovery from the recession. Moreover, they can run as the fiscally responsible party, in opposition to the "tax and spend" democrats. They have accomplished their objective.