More from Paul Krugman:

Start with economics: last winter the economy was in acute crisis, with a replay of the Great Depression seeming all too possible. And there was a fairly strong policy response in the form of the Obama stimulus plan, even if that plan wasn't as strong as some of us thought it should have been.

At this point, however, the acute crisis has given way to a much more insidious threat. Most economic forecasters now expect gross domestic product to start growing soon, if it hasn't already. But all the signs point to a "jobless recovery": on average, forecasters surveyed by The Wall Street Journal believe that the unemployment rate will keep rising into next year, and that it will be as high at the end of 2010 as it is now...

To head off this outcome - and remember, this isn't what economic Cassandras are saying; it's the forecasting consensus - we'd need to get another round of fiscal stimulus under way very soon.

There is absolutely no evidence that stimulus had any net positive effect on GDP. None. There is also no coherent theory about why stimulus spending coming in 2010 (which most of it is) would have an effect in 2009. None. But for the same of argument, I will assume Krugman is right about the positive effect of stimulus spending.

What Krugman is basically saying is that the last stimulus package raised real GDP but did nothing for employment. So in order to do something about employment we should have... another stimulus package!

A number of my non-economist friends have lately said to me things like, "no offense Mike, but economics doesn't make any sense and you guys seem to be making it up as you go along". It has become difficult to argue against that position, thanks to arguments like Krugman's.

He believes that they are not:

Why do I think this is unnecessary? The entry and exit of firms driven by innovation and the development of new products can be part of a full employment equilibrium, that is, cycles are not needed to clear out old firms and spur innovation.

I think he's right. I examine the data and discuss the argument in more detail here: Are recessions good for the economy?

Great paragraph from Winterspeak:

I think they oppose the stimulus because it does not "stimulate". When the "stimulus" was first touted, it was rejected because it was too slow, and the money was targeted towards political interests, not households, and therefore would not help the economy. Here we are months later, and the stimulus has come too slowly, and has gone to political interests, not households, and how not helped the economy. Unemployment is nearing 10%, and continuing to rise. If the Obama tries to get another stimulus, it again will be too slow, and send money to political interests, not households. Critics were right the first time, and they are still right.

But don't tell that to Paul Krugman:

Fiscal expansion bothers people because it violates the dogma that government is the problem, not the solution, whereas monetary policy has become accepted as a mainly technocratic thing without political implications.

That must be it Paul. It would explain why that folks in favour of a "statist" policy such as raising gas taxes are also in favour of stimulus. Well, that is except for me and Mankiw and dozens of other economists.

I sometimes wonder how on earth did this guy win a Nobel prize? But then I re-read his early work - it is truly Nobel worthy. Has Paul Krugman become the economics equivalent of Willie Mays with 1973 Mets, falling down in the outfield while trying to make a play?

From Justin Fox:

I wonder if Congress could enact some sort of contingent stimulus legislation: If the unemployment rate passes 11%, then $XXX billion goes to some predetermined range of programs. If it doesn't, then the money remains unspent.

Naaah, that'd be too sensible.

I am always hesitant to disagree with people who are likely smarter than me, but I think Justin's idea is far from sensible. It gets the timing of the issue wrong - he might as well be saying "If we get into a car accident, then we'll put on our seatbelts". Stimulus spending needs to be made well before the economy bottoms out. That is, it needs to be based on leading indicators. Unfortunately, the unemployment rate is a substantially lagging indicator.