Econ 101

There is a relationship formula familiar to all economists and it goes like this:
Entire demand for goods and services in the economy = C(consumers) + I(investment) + E(exports) + G(government).
When C, I and E are going up, it is a time for fiscal conservatism since G can be cut back without damaging the economy.
When C, I and E are crashing as they are now, G must be increased to compensate for the declines elsewhere and pull the economy out of a nosedive.
A little history is in order.  After the crash of 1929, Hoover responded by cutting government spending which was exactly the opposite of what should have been done. This policy made the Great Depression much deeper and longer than   it should have been. It wasn’t until over three years later when FDR came to power in 1933, after the damage had already been done, that G was increased and the economy started a long slow recovery. FDR underestimated the amount of government spending needed to pull the economy out of the depression since it wasn’t until WWII, when G spending was increased much, much more, that the Great Depression finally ended.
We are again standing on the edge of a great depression as C, I and E are plunging; Obama’s massive government spending on infrastructure is the correct response (provided that it is massive enough) to pull the economy out of a tailspin. Thankfully for our country McCain didn’t win, because his response was just like Hoover’s; he campaigned to cut government spending and balance the budget which would have assured us of a Great Depression Two. I bring this up because the Republicans in the Senate and House (priming themselves to oppose Obama) have just discovered that they are fiscal conservatives after years of profligate government spending. For most of the last eight years, when C and I  were going up, the Republicans increased government spending like there was no tomorrow. Now that C, I and E are going down, the Republicans respond by deciding that now is the time for fiscal conservatism. Again, just as in the early 1930’s, they have this completely backwards.