Joe Stiglitz, Robert Reich and Paul Krugman are all beating the drums for a second stimulus, more spending, and no current fiscal re-trenchment.
Let me politely as possible say that these drumbeats have everything to do with politics and nothing much to do with economics.
(1) GDP growth has turned the corner and job growth will follow. Job growth almost always lags GDP growth coming out of a recession. According to Jeff Frankel, a member of the NBER business cycle dating committee, this recession is not unusual in that regard.
(2) I cannot help but laugh when I read people saying the first stimulus was too small or that we need a second stimulus. People, something like $500 billion of the first stimulus (i.e. more than half) has not even been spent yet. What the first stimulus definitely was is TOO SLOW! This is not surprising because the stimulus bill enacted had a lot more to do with politics than with economics.
(3) As we look at the world scene today, the problem of excessive sovereign debt seems to be at least as big of an issue as does the problem of insufficient aggregate demand.
(4) Yes, unemployment is bad. Yes, people are out of jobs due to no fault of their own, victims of bad corporate management, short sighted unions, and financial hijinks. If we had a program that would increase employment at a cost that was less than what the people employed in the program would earn, I would have favored it a year ago.
But no matter how much evidence we see, somehow we still can't face up to the fact that, while in theory it may be possible to do so, our government as currently constituted cannot create jobs in anything resembling a cost effective manner.
(5) One of the last things we need right now is more cost-ineffective pro-cyclical fiscal policy.