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To some extent we may be looking at reverse causation, with troubled economies forced into harsh austerity while those doing well (e.g., Poland) can keep expanding spending.
"When the Fed has reached the limits of expanding U.S. demand and monetary policy works primarily on the exchange rate, rather than on expanding spending, then it comes dangerously close to direct exchange-rate intervention," Mr. Rajan said.
The economy was booming and revenues poured in from Wall Street at record levels, allowing him to cut taxes while expanding spending on popular government programs like health care, education and the environment.
But Mr. Bush said today that he was expanding spending in some critical areas and pursuing measures, like allowing taxpayers who do not itemize their returns to deduct charitable contributions, that would prompt more private help for the poor.
While the Saudis weigh loosening their spigots, others were expanding spending on oil exploration and production and actually finding new resources.
Neo-Keynesians hold that it is the demand side of the economy that is most responsible for spurring growth, and that the most important role for government is to spur demand by expanding spending and public investment.
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They have expanded spending from 2006 of $7.33bn and $14.67bn.
Given that everyone else is cutting back, normal or expanded spending on my part alone won't save the economy.
The economic boom of the late 1990's made revenue soar, and he expanded spending on education and health care significantly.
Legislators said that it was responsible and that the new taxes and fees would pay for the expanded spending.
Discretionary spending caps, the deficit and probable continued Republican control of the House of Representatives stand in the way of new or expanded spending programmes.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com