October 4, 2002
OUR ECONOMIC PLAN:My Economic Plan: It's all too possible that we may be looking at a sluggish economy into 2004, maybe beyond. (Paul Krugman, 10/04/02, NY Times)
First, extend unemployment benefits, which are considerably less generous now than in the last recession; this will do double duty, helping some of the neediest while putting money into the hands of people who are likely to spend it. Second, provide aid to the states, which are in increasingly desperate fiscal straits. This will also do double duty, preventing harsh cuts in public services, with medical care for the poor the most likely target, at the same time that it boosts demand.
If these elements don't add up to a large enough sum--I agree with Mr. Madrick that $100 billion over the next year is a good target--why not have another rebate, this time going to everyone who pays payroll taxes?
And how will we pay for all of this? You know the answer to that: Cancel tax cuts scheduled for the future. The economy needs stimulus now; it doesn't need tax cuts for the very affluent five years from now.
This isn't rocket science. It's straightforward textbook economics, applied to our actual situation. It's also, I'm well aware, politically out of the question. But I think we're entitled to ask why.
Posted by Orrin Judd at October 4, 2002 10:37 AM