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Who has the best fiscal stimulus plan?
From Brad DeLong. Excerpt:
The best way to keep a stimulus bill from becoming a lobbyist-pleasing ineffective and destructive Christmas tree in which a lot of the money goes to people who won't spend it and a lot more to people who shouldn't get it is to keep the legislative vehicle simple and clean. Boosting employment in the short term by cutting a lot of identical checks by April if we need to is something congress and the IRS can do. And Obama's plan seems to me to have the best chance of doing that--if he can sign Pelosi and Reid up to move a clean, focused bill.
Posted by Tyler Cowen on January 15, 2008 at 03:11 PM in Economics | Permalink
Comments
But what about providing assistance to state and local governments?
Most states don't have the luxury of running a deficit if thier revenue drops during a recession.
That means they will either have to cut spending or raise taxes, both of which could nullify Obama's tax break.
That seems like a big problem.
Posted by: Student at Jan 15, 2008 3:45:45 PM
Even if Pelosi and Reid sign on, how can all of the silly riders that get attached to bills be avoided? For a bill to get the majority vote, all sorts of barrel rolling and compromises have to take place. The end result is a bloated, complicated bill that does much to satisfy special interests in the short term and if it does anything at all on the long term is usually a negative...
Isaac Crawford
Blogging in Yemen
www.isaharr.com
Posted by: Isaac Crawford at Jan 15, 2008 4:17:49 PM
Decently long time reader from Dublin, Ireland posting for (I think...) the first time here. Just wondering why this blog has become so slanted (with two articles for Obama versus zero for anybody else) towards one particular Presidential candidate in the last few days, under the guise of impartial commentary on other matters. If you want to implicitly talk politics, perhaps it would be best to at least have a disclaimer.
Posted by: Noel Rock at Jan 15, 2008 5:27:43 PM
Whomever is printing up the counterfeit "supernotes" is doing wonders for "stimulating the economy"!
http://www.kansascity.com/news/nation/story/441167.html
Posted by: Supernotes at Jan 15, 2008 5:34:46 PM
I have no idea if this makes any sense, but perhaps others can put me in my place.
Couldn't the federal government provide a national sales tax holiday by compensating state governments over a certain period of time (a couple days, a month, I have no idea) to remove their sales tax for said period? This way, there is no need to worry about whether or not the stimulus will result in increased aggregate demand. I know sales taxes are different from state to state, but whatever. Like I said, I haven't thought this one through. Can anyone tell me why this idea is lame? Or does it make any sense?
Posted by: dave at Jan 15, 2008 7:17:28 PM
It is a lame idea for Delaware and, I believe, 19 other states that don't have a sales tax.
Posted by: Alan Coffey at Jan 15, 2008 8:04:58 PM
I'm for the guy (or gal) that proposes a stimulus plan that only effects states that need it (Michigan, California, Nevada, Florida, etc). Anyone who is insane enough to think Montana, Wyoming, Utah, etc. need fiscal stimuli is smoking dope. Of course I don't believe there are too many federal government employees that are going to favor state's rights here, as they find it in their personal best interest to not give up control over 300 million people
Posted by: Jay at Jan 15, 2008 9:22:36 PM
Best stimulus plan is to cut subsidies and cut taxes, that'd remove a big distortion in the market that only leads to inefficient use of resources.
Posted by: Michael G.R. at Jan 15, 2008 10:03:01 PM
Call Nancy Pelosi @1-202-225-0100 and DEMAND IMPEACHMENT.
dave: Wyoming got rid of it's TAX ON FOOD with ONLY 19,000 signatures, WE are at present working toward the removal of SALES TAXES.
Posted by: Mike Meyer at Jan 15, 2008 10:05:44 PM
Is a stimulus even necessary right now? The federal government is already running a $130 billion deficit, and that's only going to get larger as tax revenue falls as growth slows. Would doing nothing and allowing all this to run its course really be that bad?
Posted by: Brian at Jan 15, 2008 11:26:21 PM
Deficits don't matter anymore to Democrats. We are all Bushies and Hasterts now....
Posted by: jorod at Jan 16, 2008 9:59:56 AM
This is assuming we're going to pretend that a stimulus package is going to stimulate anything in the first place? I vote you suck it up and ride out the storm. This isn't the first recession in the history of the world, and it won't be the last either. It certainly isn't the first recession brought on by a bubble in real estate investment. Ever hear of the Mississippi bubble?
http://facilis-descensus-averni.blogspot.com/
Posted by: kem at Jan 19, 2008 7:35:26 PM
This is assuming we're going to pretend that a stimulus package is going to stimulate anything in the first place? I vote you suck it up and ride out the storm. This isn't the first recession in the history of the world, and it won't be the last either. It certainly isn't the first recession brought on by a bubble in real estate investment. Ever hear of the Mississippi bubble?
http://facilis-descensus-averni.blogspot.com/
Posted by: kem at Jan 19, 2008 7:36:09 PM
I don't know if anyone else has suggested this, but why doesn't the government allow a temporary write-off for consumer purchases? In other words, spend your disposable income instead of saving it (and save your receipts), and the government will allow you to deduct that amount from your taxable income. Obviously caps would need to be put in place to prevent abuse, but I think the idea is economically sound (if not easy to accomplish procedurally).
Another way to achieve a similar effect would be to enact some sort of negative sales tax, whereby the government springs for a small percentage of your consumer purchases. At the very least these measures would be targeted to the actual purpose of the stimulus, as opposed to a broadly applied transfer payment.
Is there any reason these ideas fail on purely economic grounds?
Posted by: Bandwagon Smasher at Jan 23, 2008 7:14:40 PM
One more failure on the part of the Federal Government, first tax rebates for those who do not pay taxes, more earn income welfare, to hand out money that the government does not have, we are in debt is the dumbest idea yet. How about putting a cap on credit card interest, encourage taxpayers to pay off debt, not depend on government handouts to get them out of debt for their own poor decisions - this will never stop, since the government politicians must buy your vote.
Posted by: Stephen at Jan 26, 2008 2:43:27 AM
