The Agenda

Jim Manzi on the Stimulus and Epistemic Humility

I take great pleasure in reading Jim Manzi engage with his critics. When you compare Jim’s writing to that of his interlocutors, you soonn realize that he is taking part in a very different kind of intellectual exercise. My impression is that Jim is less interested in political combat than in getting the questions and, to the extent possible the answers, right. 

In his latest post at TNR, Jim also links to his thoughts on fiscal stimulus from February of last year, which I enthusiastically endorse. Briefly, Jim endorsed Alice Rivlin’s call for a targeted stimulus effort that leave long-term public investment to a separate bill; he called for off-setting entitlement reforms and cuts in military commitments and expenditures; a deregulation effort focused on enhancing economy-wide productivity; and, most interestingly, a very tough program of conditional transfers to state governments:

The U.S. government should have authority to seize sales tax and other tax revenues until the debtis repaid. In order to prevent this from simply becoming a driver of yet more state deficits, the federal government should also have the authority to hire, fire and make all spending cuts that it chooses in California’s budget until the debt is repaid. Ultimately, the debtshould have recourse to state assets. You don’t want the taxpayers of the other 49 states to start selling oil drilling rights to the area off your cost, or selling off your state beaches to build condos? Then pay back your debt. If you don’t want these conditions, then don’t come to me with your begging bowl. This would have the effect of mitigating the moral hazard of this part of bailout in a very direct way: by humiliating the governors and legislators of states who have gotten themselves into this position.

We’ve talked about conditional transfers to the states before, but this is the first time I’ve encountered the idea of such stiff penalties. I like it.

Reihan Salam is president of the Manhattan Institute and a contributing editor of National Review.

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