On the November 16 edition of Fox News Sunday, host Chris Wallace did not challenge the false assertion by Sen. Jon Kyl (R-AZ) that Republican economist “Marty Feldstein says we shouldn't” enact a new economic stimulus plan. But Feldstein wrote in an October 30 op-ed in The Washington Post that "[t]he only way to prevent a deepening recession will be a temporary program of increased government spending."

During a discussion about the economic crisis, Sen. Byron Dorgan (D-ND) asserted that “we can't proceed without some sort of a significant stimulus plan” and that “Marty Feldstein, top Republican economist, says we should.” Kyl replied: “Marty Feldstein says we shouldn't. As a matter of fact, he testified before the Finance Committee in favor of the last stimulus package. He's now written that, of course, it didn't work. They never do.”

However, while Feldstein, a former adviser for Sen. John McCain's presidential campaign, wrote in an August 6 Wall Street Journal op-ed that “the tax rebate was a flop,” and “one-time tax rebates are not a cost-effective way to increase economic activity,” Wallace did not point out that in his October 30 op-ed, titled “The Stimulus Plan We Need Now,” Feldstein wrote:

The only way to prevent a deepening recession will be a temporary program of increased government spending. Previous attempts to use government spending to stimulate an economic recovery, particularly spending on infrastructure, have not been successful because of long legislative lags that delayed the spending until a recovery was well underway. But while past recessions lasted an average of only about 12 months, this downturn is likely to last much longer, providing the scope for successful countercyclical spending.

A fiscal package of $100 billion is not likely to be large enough to revive the economy. The fall in household wealth resulting from the collapse of the stock market and the decline of home prices may cut aggregate spending by $300 billion a year or more.

The president-elect should focus on developing a mechanism for identifying and funding spending initiatives that can occur quickly and that would otherwise not be done. While it would be good if some of the increased spending also contributed to long-term productivity, the key is to stimulate demand. Any plan to finance this spending by raising taxes, even if postponed, as Sen. Barack Obama has suggested, would hurt the recovery by causing affected taxpayers to cut their spending now.

The increased government spending should include not only money for infrastructure such as bridges and roads but also for a wide range of equipment. Rebuilding some of the military capacity that has been depleted by the wars in Iraq and Afghanistan could be done relatively quickly and should be part of the overall package.

Although the economy is facing severe challenges, the president-elect can turn the situation around by introducing legislation to deal with the downward spiral in home prices and with the declining level of aggregate demand. It is important that such legislation be enacted as quickly as possible.

From the November 16 edition of Fox News Sunday:

WALLACE: Senator Dorgan, there does seem to be a sense on Capitol Hill that, at least in this lame duck session, all you're gonna be able to pass is a much smaller plan, perhaps $6 billion dollars for expanded unemployment benefits. Is that how you read it?

DORGAN: It appears that might be the case. I mean, we're gonna try to do more. But, you know, we've been through this. Will Rogers said back in the 1930s, he said, “The unemployed around here haven't been eating regularly, but we'll get to them as soon as everybody else gets fixed up.” The question is: What do you do about the unemployed? What do you do about the people about to lose their jobs? The number that I used earlier -- 3 to 5 million jobs at risk as a result of the auto sector -- that's not my number. That's the Chamber of Commerce number, which very strongly supports that something should be done.

But, you know, my point is this. There is a time when you have to make significant investments, and those investments would produce assets. Building roads, building bridges, building schools, libraries -- repairing all those things. All of that puts people to work immediately. Now, last month there was an apoplectic seizure over the notion that consumer spending was down. Well, you know what? Consumer spending is not gonna go up if people are out of work. You've gotta put people back on the payroll. That's when you get consumer spending that begins to drive the economy again. So, I don't -- we can't proceed without some sort of a significant stimulus plan, and when you finish that spending you ought to have an asset to show for it. Marty Feldstein, top Republican economist, says we should -- the Chamber of Commerce. I mean, this is not a Democratic plan. Most people believe that we ought to do something to put people back to work.

WALLACE: All right. OK.

KYL: Marty Feldstein says we shouldn't. As a matter of fact, he testified before the Finance Committee in favor of the last stimulus package. He's now written that, of course, it didn't work. They never do.

WALLACE: All right, gentlemen. I -- we can - we can debate this. And you will debate it on the floor of the Senate. I want to move to some other business.