I was at the Peterson Institute the other day. There I heard a very good panel discussion of the financial crisis, featuring Fred Bergsten, Adam Posen, Morris Goldstein and others. All agreed that the deficit would exceed one trillion dollars next year. All agreed on the need for the expansionary and stabilizing steps outlined above. Nobody was defending, in any serious way, the Walker-Steuerle line.
I found this greatly encouraging.
His broader point is that fiscal expansion is necessary, that despite it being a big and scary number, people will be more than happy to lend the government money at very favorable rates so that it can do necessary things.