We should begin by strengthening the unemployment insurance system, because money received by the unemployed would be spent immediately.
The federal government should also provide some assistance to states and localities, which are already beginning to feel the pinch, as property values have fallen. Typically, they respond by cutting spending, and this acts as an automatic destabilizer. Federal assistance should come in the form of support for rebuilding crucial infrastructure.
More federal support for state education budgets would also strengthen the economy in the short run and promote growth in the long run, as would spending to promote energy conservation and lower emissions. It may take some time to put these kinds of well-designed expenditure programs into place, but this slowdown looks as if it will last longer than some of the other downturns in recent memory. Housing prices have a long way to fall to return to more normal levels, and if Americans start saving more than they have been, consumption could remain low for some time.
All of these measures might be great ideas, but most of them shouldnt be part of a stimulus package. Education and alternative energy research are long-term structural fixes, the extension of unemployment benefits would take too long to have an impact as would picking out infrastructure projects (though giving money to municipalities might make a difference).
The point of a stimulus package is to get money into the hands of those who will spend it and to do so quickly. Bush's tax refund proposal is a good idea, but of course, he has to screw it up by only including those who pay income taxes. They should it based on SS taxes so the majority of the money will go to those who will actually spend it.
If you want to expand the social safety net or increase education funding, those should be done separately. I hate conflating issues.
Slacker |
