Economic Stimulus and Investing for the Long Term

With recession news getting worse every day (here’s one depressing roundup), there is a high likelihood that the Congress will pass an economic stimulus plan either in a lame-duck session in November or immediately after reconvening in January. General sentiment seems to be against tax rebate checks (Martin Feldstein summarizes the argument that the vast majority of the rebates went into savings, not consumption) and in favor of fast-acting measures like extended unemployment benefits and direct aid to state and local governments to replace lost tax revenues. In addition, however, we (and Larry Summers) think that now is the time to invest in long-term economic productivity, for example through infrastructure projects, in part because we are probably looking at a long recession. Our thoughts are presented under Simon’s name and picture on the National Journal’s Economy Blog, which is hosting a discussion of the stimulus package. Note that even the participant from the American Enterprise Institute favors a stimulus package of between $300 and $500 billion.

One response to “Economic Stimulus and Investing for the Long Term

  1. Food stamps too. Let’s see a temporary increase in food stamps. That’ll give us the best return on our tax dollar invested in stimulus.