Double Dip Recession?

Josh Marshall sounds a warning about the current trend toward fiscal austerity among political and policy elites on Talking Points Memo.

But we do seem to be seeing more and more evidence that the recovery is at risk of stalling, if not falling back into recession, which seems possible too. And as that is happening, both the elite and the popular/political policy debate seems to be going to those who believe we should ramp back government spending even though history suggests that is the best way to choke off the recovery and toss the economy into a double dip recession or worse. What's particularly chilling is that the elite and popular policy debates are moving in the same direction. The professional economists, international financial agency types, etc are pushing for retrenchment. They seem to have won the argument at the G20 meeting.

And at the same time, Republicans are pushing the argument that the stimulus spending which probably forestalled a Depression actually didn't do anything or even caused the problem. And the public seems open enough to that interpretation of events that Democrats have written off any new stimulus spending because they're scared off by the mid-term election. And because the Democrats have, Obama has. None of this is anything that Krugman and Yglesias and a million other people haven't been saying for months. And hopefully everybody making this argument is wrong and the economic recovery is more robust than they think; it's certainly possible. But the economic and political repercussions seem both vast and perverse -- perverse because the people pushing the policies that could kill the economy seem most likely to gain from the damage politically. It all has the look of watching a car head off the edge of a cliff in slow motion.

UPDATE: Conservative blogger David Frum fears Krugman's observation may be correct (h/t Andrew Sullivan). He disagrees with Krugman's prescription (a second stimulus) but fears the conservative alternative (tax cuts) would be ineffective as well.

But if Krugman’s direct government expenditure is not a very good policy answer, his dire economic warning remains a haunting policy question. What can we do to accelerate economic growth and job creation? For those of us on the free-market side of the debate, the question is even more haunting: What’s our countervailing idea? And if our countervailing idea is tax cuts, what is our reply to the obvious rebuttal that the Bush tax cuts have been in effect through the whole of this crisis, seemingly without effect?

--Ballard Burgher