In a recent interview on Larry King Live, featured today on the site as “Larry King’s Podcast,” there is an interview with Bill Clinton. King asked Clinton whether the stimulus bill would work. Clinton responded that “I think it will do what it is designed to do,” and then he talked about the three things it would do. Only one of them, the third point, was “creating jobs,” and was the only one with a whiff of Keynes about it, it seemed to me. He said that the bill “was sort of our bridge over troubled waters,” and that the real issue was declining asset values, which the bill did not address.
This doesn’t sound like Keynesian stimulus. It’s not giving Keynesian programs “their first real test” as ballyhooed about on This American Life (a radio program featuring Tyler Cowen and Alan Binder; podcast #373: “The New Boss”). The business about declining asset values seems very non-Keynesian, doesn’t it? How could it be Keynesian? It doesn’t stress fiscal policy as a solution to insufficient demand.