Public spending, American style, has worked best in good times, when people have jobs and executives are eager to invest. A new public highway is soon lined — in good times — with stores and malls filled with consumers. A dollar spent by government generates three or four from the private sector.
That symbiosis makes a humming economy hum more, as it did in the 1950s and ’60s. But it may not work that way when the American economy is in full retreat, as it was in the 1930s and seems to be today…
By January, Congress will probably be asked to approve an outlay of more than $700 billion. Spent in one year on construction, research or equipment, it might well offset the contraction at first. But unless it also revived general confidence, the economy could collapse again, once the money was gone.
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