In his prepared testimony for the Senate Budget Committee today, Fed Chairman Ben Bernanke, a Bush appointee, voices support for the stimulus:
As you are well aware, the Congress recently passed a major fiscal package, which is aimed at strengthening near-term economic activity. The package includes personal tax cuts and increases in transfer payments intended to stimulate household spending, incentives for business investment, federal grants for state and local governments to reduce their need to cut services or cancel building projects, and increases in federal purchases. By supporting public and private spending, the fiscal package should provide a boost to demand and production over the next two years as well as mitigate the overall loss of employment and income that would otherwise occur.
Also, Bernanke deals head on with the ludicrous argument, put forth by such economic sages as Karl Rove, that the economy would have recovered on its own before too long, and that the stimulus will delay the recovery:
Of course, all else equal, this [large deficits] is a development that all of us would have preferred to avoid. But our economy and financial markets face extraordinary challenges, and a failure by policymakers to address these challenges in a timely way would likely be more costly in the end. We are better off moving aggressively today to solve our economic problems; the alternative could be a prolonged episode of economic stagnation that would not only contribute to further deterioration in the fiscal situation, but would also imply lower output, employment, and incomes for an extended period.
Over to you, Mr. Architect...
--Noam Scheiber