Randy Kuhl
complimented the Democratic leadership for working with Republicans to craft a
stimulus package.
I have one question for stimulus supporters of either party: Will the checks be printed with a picture of
Hu Jintao, or is the memo line "I.O.U. - P.R.C" sufficient?
Comments
The Schip veto override is scheduled for Wednesday. I wonder how our Congressman is going to vote. It seems to me that this would be be a boost to the economy since it provides insurance coverage for children from families who earn too much to qualify for Medicaid but cannot afford private insurance. The $35 million increase in the Schip Program will benefit 4 million people, which is less than $1 a person. The best thing for Kuhl to do is to help override Bush's veto.
Rich, it would also be a stimulus for the NY economy, because Gov Spitzer is now planning to fund the S-CHIP eligibility increase out of the NY budget. We'd be better off if the increase were funded from the US budget, instead.
Ouch! Funny stuff.
In fairness, I think the flat fee rebate check idea might be a good economic stimulus. I don't claim to understand the mechanics of this at all, but Krugman and others aren't against it.
I have no doubt that dumping money into the economy will result in short-term uptick. I'm just trying to remind everyone where that money's coming from, and that it will have to be repaid someday, perhaps by our children or grandchildren.
I agree.
It's hard sometimes not to remember that they were talking about what would happen if we paid off the whole debt not so long ago.
But I don't oppose a small stimulus package. As long as it doesn't involve making the Bush give-backs to the wealth permanent.
Krugman made the point today that the middle class employed might tend to save the money (e.g., pay down a credit card) rather than spend it. The poor who have no credit, savings or job might be more likely to spend it. If what is needed is an immediate increase in consumer spending then that approach might make sense. Of course even if it is feasible, it would never sell in congress, unless of course we gave away a whole lot more to the "investor class."
Why don't we just cut to the chase and send Wal-Mart, K-Mart, 7-11, Mobil and Citgo a few billion each, then? Or, if that doesn't work, the IRS has a list of every small business -- send them a few thousand each. Cut out the middleman!
Well, the big companies (and foreign suppliers) would certainly get their taste, but providing consumers with the cash would run it through the supply chain which includes shippers, small businesses, retail workers, etc. More work for more people.
You're right, of course, that stimulus will trickle through the economy.
My general complaint is that everyone rushes in to throw on a short-term band-aid, but there's no effort to address the long-term issue.
My general complaint is that everyone rushes in to throw on a short-term band-aid, but there's no effort to address the long-term issue.
What is the long-term issue? It seems to me the long-term issue is that the American economy has avoided prolonged recession since the government started using short-term stimuli to stave off extended recession.
Economics isn't a science, but these policies do seem to more or less work in western countries, though not, admittedly, in Japan.
Don't get me wrong, I'd like to see new regulation of lending practices. But a lot of what's going on now is a strange lack of liquidity in financial markets that doesn't have that much to do with the subprime crash, per se. The government should be addressing that as well by cutting rates (as it did this morning).
I know I'm an apologist for contemporary economics but the fact we've avoided serious recession for so long really is impressive. Maybe it's luck. Who knows?
I have no problem with contemporary economics. According to a recent article in the Economist, the consensus of economists is that a stimulus package might work if it follows the "three T's": targeted, timely and temporary. Even if this is true, and I've yet to see real studies showing that it is, politics makes this impossible.
Targeted: Much of the last stimulus package, Bush's in 2001, was banked. Krugman is right that re-targeting stimulus to the poor might get it spent, but no package that does just that is politically palatable. So we're almost certain that any package won't hit the target.
Timely: This stimulus package will be late to the party. By the time the stimulus package gets through Congress, it will be March or April. The economic issues behind this recession came to a head months ago.
Temporary: With the kind of money that we're willing to throw at it, this will certainly be temporary. So that's 1 of 3.
Also, I think the real political issue is the lack of regulation of mortgage-backed securities, which has led to a credit crisis as well as putting Citibank right near the edge of catastrophe. We should be concentrating on measures to address that issue, not an ill-timed and ill-targeted stimulus package.
Krugman is right that re-targeting stimulus to the poor might get it spent, but no package that does just that is politically palatable.
I'm not sure that's true. A flat $500 tax rebate might be politically palatable and would affect people with less income disproportionately (as a proportion of their income). Maybe I'm wrong that this is politically palatable, though.
I'll grant you this may be less than timely. But two out of three ain't bad.
Here's another view in today's New York Times. I like the idea of strengthening unemployment insurance, for example. That gets money more directly to people who are hurting. Also, more money for infrastructure is a good idea. And then he endorses tax cuts, but they're pretty far down his list:
http://www.nytimes.com/2008/01/23/opinion/23stiglitz.html
You're right. That's a very sensible plan.
And you're probably right that it's a nonstarter politically.