Japan's Huge Stimulus Spending Led to Economic Stagnation
(p. A2) Rep. Paul Ryan of Wisconsin, a young and economically astute Republican leader, has numerous problems with the economic-stimulus package working its way through Congress, but essentially they boil down to this: He fears the U.S. is repeating the mistakes Japan made trying to get out of its own economic ditch in the 1990s.The Ryan critique is important in part because it's popping up with increasing frequency among congressional Republicans.
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Here's the critique in a nutshell: Japan in the early 1990s, like the U.S. today, saw a real-estate bubble burst, spawning a banking and credit crisis that drove the whole economy down, hard. The Japanese then tried stimulating the economy with giant doses of government spending, which didn't pep things up -- but did bring on deficits that required tax increases later, dragging out Japan's problems for years.
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