Asthe world’s economy has entered a dramatic slowdown, there has been aninteresting policy revolution. Up until recently, there was wideconsensus among macroeconomists that activist fiscal policy wasinadvisable. Blinder (2004), in a now prescient piece, began hisreconsideration of the case against fiscal policy with the statementthat "virtually every contemporary discussion of stabilization policyby economists--whether it is abstract or concrete, theoretical orpractical--is about monetary policy, not fiscal policy." Taylor (2009)alludes to a similar consensus, referring to his own earlier work(Taylor 2000), to Feldstein (2002), and to Eichenbaum (1997), who quitepointedly added that, "there is now widespread agreement thatcountercyclical discretionary fiscal policy is neither desirable norpolitically feasible." These reviews generally found that stimulus hadnot been effective in the past and usually appeared at the incorrecttime.

Despite these admonitions, there is one thing that appears certainas of this writing: Countercyclical discretionary policy is nowpolitically feasible. In the United States, and around the world,significant temporary stimulus packages are being drawn up. In theUnited States, government economists have even gone so far as to assertthat stimulus actions have the consensus support of economists. In arecent article in the New York Times, for example, Christina Romer,chairwoman of the Council of Economic Advisors, said that "aggressive,well-designed fiscal stimulus is critical to reversing this severedecline." The article then continued "that the vast majority of thenation’s economists agree that one is necessary, and soon."

The purpose of my testimony is to argue that this, along with manyother statements concerning the "majority of economists," is at thevery least an interpretation that is subject to debate.

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Kevin A. Hassett is a senior fellow and the director of economic policy studies at AEI.