Stiglitz: more stimulus needed

Optimists argue that the short-run macroeconomic
impact of the deal to raise America's debt ceiling and
prevent sovereign default will be limited-roughly $25
billion in expenditure cuts in the coming year. But the
payroll-tax cut (which put more than $100 billion into
the pockets of ordinary Americans) was not renewed, and
surely business, anticipating the contractionary
effects down the line, will be even more reluctant to
lend.

'The end of the stimulus itself is contractionary. And
with housing prices continuing to fall, GDP growth
faltering, and unemployment remaining stubbornly high
(one of six Americans who would like a full-time job
still cannot get one), more stimulus, not austerity, is
needed-for the sake of balancing the budget as well.
The single most important driver of deficit growth is
weak tax revenues, owing to poor economic performance;
the single best remedy would be to put America back to
work. The recent debt deal is a move in the wrong
direction.'

Economist Joseph Stiglitz
Sydney Morning Herald
August 9, 2011
http://tinyurl.com/3jgxg4r