If a car driver falls asleep at the wheel of his car, do we say they caused the accident that follows? Of course we do: it would be absurd to say otherwise. We take it as given that it is the driver’s responsibility to keep control of the car.
Now imagine that the Fed or the MPC had kept interest rates at their pre-recession levels from 2008 onwards. Would we say that monetary policy had made the recession worse. Of course we would. We expect monetary policy to do everything it can to bring the recession to an end. That is exactly what Milton Friedman thought about the Great Depression.
Yet when it comes to fiscal policy, it seems people suddenly take a different view. Some ‘neutral’ path for government spending and taxes is defined, and only if they differ from these paths do we say fiscal policy made the recession worse. Has austerity reduced UK GDP by 2.5%, as the IMF suggest, or by 1.4%, as the OBR suggest? But this asks the wrong question. The right question is why has fiscal policy not been used to help end the recession. That is the question Keynes posed in the General Theory following the Great Depression.
The moment that monetary policy hit the zero lower bound, fiscal policy should have been used to first limit the size of the recession, and then bring the recession to an end. The former happened under the previous Labour government in the UK and Obama in the US, and it worked. My quarrel with what happened afterwards is not that fiscal policy was restrictive compared to some neutral path, but that it did not continue to do whatever was necessary to sustain the recovery. Quite simply, when monetary policy could no longer do the job, fiscal policy should have taken on the stabilisation role. 
I’m reminded of this point by Robert Chote’s letter to the Prime Minister. Stephanie Flanders says that “in the most important arguments with Labour - over the role of austerity in thwarting recovery, and the scope to boost growth in the short term with higher borrowing - the OBR is still on the coalition's side.” If you were to take from this statement that the OBR had sided with the government on the policy debate over austerity, then I think you would be dead wrong.
Why do I think you would be dead wrong? Why I am pretty sure that the OBR have never said anything about ‘the scope to boost growth in the short term with higher borrowing’ in such an unqualified way? I can be pretty sure of this, because the OBR are not allow to examine alternative policies to those of the government. So they cannot take sides in the way suggested.  I know this because, when the OBR was set up, I argued strongly - with Treasury officials, the Treasury Select Committee and others - against this restriction on what the OBR can do. (The argument is set out here.)
While I disagree with this restricted OBR remit (which I hope will change in time), it does have a silver lining - it allows the OBR in its infancy to focus on the other things it has to do, and avoid getting sucked into a political debate. It is unfortunate that Stephanie Flanders in this post suggests the OBR is taking sides on policy when its mandate precludes it from doing so. 
Often the questions we ask are more revealing than the answers we give. Questions like “was it the Eurozone crisis rather than fiscal policy that really caused the UK double dip”, or “is the weak US recovery down to greater uncertainty or restrictive fiscal policy”, or “budgets were in surplus in Spain and Ireland before the recession so what more could they do” in my view miss the point, much as the statement “it was oil prices rather than monetary policy that caused 1970s inflation” would miss the point. Whatever shocks have caused weak demand in this recession, if monetary policy is constrained, fiscal policy should be trying to offset these shocks.  In these situations, the presumption should be that fiscal policy is countercyclical. If it is not, that is a failure of policy. The driver is falling asleep at the wheel.
 Inflation could well have been higher for a while as a
result, but as I argued here for the UK, that would have been an
 They can of course comment on the scope for additional borrowing while maintaining the government’s fiscal mandate, but that is quite a different thing.
 I hesitate to suggest that such a good journalist as Stephanie Flanders might have been misleading here, but I'd also hate to think she was only criticised from one side, and hopefully I'm being a little more polite. In addition, when the government criticised her for not celebrating the slow growth in UK productivity, she was of course completely right and they were completely wrong.
 Of course I also understand that fiscal policy can be incapacitated just like monetary policy can be. If you cannot sell government debt, or interest rates on that debt are high and rising, then debt financed fiscal expansion is just not possible. But fiscal policy is potentially a lot more flexible than monetary policy: there is balanced budget fiscal expansion, or changing the tax mix to create intertemporal incentives. If monetary policy cannot do the job, fiscal action is second best, but it is a quite versatile second best.