The problems I see with the current one are:
So, what would be faster and more direct?
I’m sure posters will come up with lots of different things.
The government is doing faster/more direct stuff to try and save the economy already, by cutting interest rates and rescuing failing banks. You can’t really expect the government to mail checks to 50 million households any faster than what they’re already doing.
Nobody knows exactly what to do here. Nobody even knows whether we really ought to save the banks failing due to massive forclosures, or try to help people who can’t afford their mortgage anymore.
There isn’t really a fast answer, because the government just doesn’t have the money to do what we’d like it to. Health care costs are almost certainly part of the problem, but the government can’t subsidize health care any more than it already is without making serious cuts somewhere else. Some people (like me) think the answer is obvious: get out of Iraq, cut the military budget, and spend a lot more on health care and tax relief for the companies who might otherwise have to lay off a bunch of employees.
My problem is with the half-assed way the U.S., especially the Bush administration does things. He tries to have the best of both worlds. On one hand, he wants to “return money to the people who paid it” in the form of tax cuts and stimulus packages, but on the other hand he likes big government spending like No Child Left Behind, and Medicare Prescription Drugs. We won’t even mention the war in Iraq
So what we have is a confused policy of the government trying to provide a high level of services with comparitively little money. If we had either a strictly Reagan type policy or a strictly Roosevelt type policy (both ends of the spectrum) we would do better.
A one time stimulus package is a shell game trying to prop up the economy before the election, until his successor has to make tough decisions.
Now, I have always been for smaller government and tax cuts, but we can’t have everything on the flip side…
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Is the stimulus package really a stimulus package or is it a way to inject some liquidity into the market? A lot of people are going to use it to pay off debt, and that’s not at all a bad thing when banks are finding themselves making small talk in the line at the discount window. ISTM that we need investment right now–the silver lining in the falling dollar is that we ought to start making things again, because other people are suddenly able to buy them. Any incentive program I designed would encourage that investment.
If the true goal is short-term economic stimulus, then I believe the most effective methods are to increase food stamp allowances and increase the duration of unemployment benefits. These get money instantly into the hands of those most likely to spend it, the working poor.
If the goal is increased liquidity and availability of credit, then the moves the fed has been making are most likely the correct ones.
As far as dealing with the housing issue and the collapse of sub-prime loans, a federal fund backing “troubled” loans that encourages lenders to renegotiate terms is a possible solution, but one that brings in the specter of the moral hazard.
That decision was made just llike you would expect this administration to do it. The take over of Bear Sterns included 30 bill of tax payer guarantees. They do not care about the people.
Brilliant! Then all you have to do is figure out another way to fund the Federal Highway Administration and the people can save a whopping 18 cents a gallon. I figure this would save me $15-20 a month minium!
If you’re going to prime the pump with increasing the deficits, you at least need to put it in the hands of people who will spend it. Cutting Paris Hilton’s taxes isn’t going to result in her spending more. Cutting the taxes of Joe Sixpack will. I don’t know if I could improve on the present package, but it remains to be seen if it will have any impact on sales and therefore production and employment.
The problem with this analysis is that it implicitly assumes that Paris Hilton has a giant Mason jar buried in her back yard, into which any excess funds vanish from the economy.
So she stuffs it in her bank. Whoop-de-do. Having all the wealthy people inflate their portfolios doesn’t put bread on the table for the working class. People buying manufactured goods does.
Except that doesn’t necessarily prevent the station owners from keeping their prices static and taking all or part of the decline in profit.
I would stimulate the economy by getting the hell out of Iraq.
At 200 Million dollars a day, in two months time, the government could put almost 8 billion dollars back in the kitty.
Sending out $600 and $1200 dollar checks, not to mention checks to people who don’t pay taxes, is taking from me on Monday and giving back to me on Friday, and not giving me a chance to earn interest. Giving money to people who don’t pay taxes is just taking from me and giving to them.
Bollocks.
What bank failures? The FDIC insures deposits are more than 8500 US banks. In the past year they have added only about 40 banks to their list of troubled institutions. If your deposits are insured, bank failures won’t mean much to you.
I would stimulate nothing. No checks, no bail outs of banks or people defaulting on their mortgages.
And I’d stop lowering interest rates. If anything I’d raise them and tighten up the amount of dollars out there.
Inflation and a weak dollar is a far, far worse beast than recession, unemployment, bank failures, and foreclosures combined.
I think “stimulus packages” are absurd and overall do little if any good.
The problem is tat the Govt has been running a stimulus package for years now. Defecit spending pumps money in to the economy and we have been doing that at an astonishing rate.
I’d argue that defecit spending would be useful if we spent the money on infrastructire and R&D. The money we are spending in Iraq would have a much better return if it was spent on alternative fuels, increased home insulation, low-energy light bulbs, and mass-transit.
We could also spend money re-traing workers for new jobs, improving education, and paying tuition for grad students.
I strongly disagree with that. Especially the grad student one. Absurd.
Eliminate (or greatly reduce) payroll taxes for a period of time for each net new full-time employee added to the payroll. Maybe for every new employee, you get two payroll tax exemptions for the firm.
This only applies to jobs in the US.
Interesting. The number of American students willing to continue in graduate school is falling. Look at a PhD computer science program and look at the number of foreign students vs US citizens.
Companies like Intel, Googel, and Microsoft have a hard time filling positions and are lobbying Congress for an increase in work visas.
Would you agree that a billion dollqrs spent on student tuition is less valuable than an equivalen amount spent on soldiers’ salary is?
Then let companies like Intel, Googel, and Microsoft pay tuition for grad students.
Your synopsis is that if it’s not spent on one thing it’ll be spent of the other. A faulty equation as it assumes the money will be spent no matter what, and, if it is spent, it limits what it will be spent on.
Going back to your earlier post where you list “improving education”, I dissent to that one too. That should be a state/local issue not concerning the feds at all.
So this is just the normal Libertarian/states rights stuff.
I doubt there’s an economist in the world – even a Libertarian/Austrian School economist – who would agree with that, as stated. What are you basing it on?