Media cite Japan's "lost decade" to criticize Obama's economic stimulus plan, but economists disagree

Summary: Numerous media figures have cited Japanese fiscal policy during the "lost decade" of the 1990s to criticize President-elect Barack Obama's plan to undertake a large-scale stimulus program. These media figures ignore evidence that, according to prominent economists, economic conditions were improving in Japan before the Japanese government temporarily abandoned stimulus spending in an attempt to reduce the deficit.

In recent weeks, numerous media figures have cited Japanese fiscal policy during the "lost decade" of the 1990s to criticize a plan announced by President-elect Barack Obama to launch a large-scale economic stimulus plan that includes extensive spending for public works. These media figures ignore evidence that, according to prominent economists, economic conditions were improving in Japan before the Japanese government temporarily abandoned stimulus spending in an attempt to reduce the deficit. Nobel laureate and New York Times columnist Paul Krugman, for one, points to Japan's fiscal stimulus packages as having "probably prevented a weak economy from plunging into an actual depression."