Check out the interview with Harvard economist Robert Barro. He makes some excellent points, one of the main ones being the important difference between a tax rebate and a cut in tax rates. I made this point in my Forbes.com article last month.
Questioner: Oh, well he [Krugman] wrote a series of posts saying he thought the World War II spending evidence was not good, for a variety of reasons, but I guess...
Barro: He said elsewhere that it was good and that it was what got us out of the depression. He just says whatever is convenient for his political argument. He doesn't behave like an economist. And the guy has never done any work in Keynesian macroeconomics, which I actually did. He has never even done any work on that. His work is in trade stuff. He did excellent work, but it has nothing to do with what he's writing about.
On the "stimulus" bill:
This is probably the worst bill that has been put forward since the 1930s. I don't know what to say. I mean it's wasting a tremendous amount of money. It has some simplistic theory that I don't think will work, so I don't think the expenditure stuff is going to have the intended effect. I don't think it will expand the economy. And the tax cutting isn't really geared toward incentives. It's not really geared to lowering tax rates; it's more along the lines of throwing money at people. On both sides I think it's garbage. So in terms of balance between the two it doesn't really matter that much.
I disagree strongly with his last two sentences. At least the money going to tax cuts to people who pay taxes is a tax cut. It has none of the good incentive effects that cuts in marginal tax rates have. But we can be assured that people who get them will use them in the ways they find most valuable. Most of the government spending, by contrast, will be hugely wasteful and, possibly more important, some of it will be in new government programs that, if passed, are unlikely to disappear. In my view, Bryan Caplan has already lost his bet that Obama will not be another FDR.
On Larry Summers and Christina Romer:
They've brought in some reasonable people in terms of economic advisors. I don't know what impact they're having, and I suppose they have different views on Keynesian macroeconomics than I have. But I'm giving you my opinion about it.
My own view is that Summers was an excellent economist who quit being an excellent economist some years ago. I doubt that he likes the awful bill, but what I'm pretty sure of is that he likes being on the inside. My guess is that Christina Romer is holding her nose for the same reason: she likes being in the White House (actually she's in a different building) near a charismatic president. But I know Christina only by e-mail and a phone call or two. So I'm less sure of my judgment about her.