A Better Stimulus Plan

Harvard University economist Ed Glaesar proposes a better stimulus plan:

Today, the New Deal’s heirs are vociferously arguing that more of the stimulus package needs to be spent on public works rather than tax cuts. The big-government skeptics point out that the government can’t spend hundreds of billions of dollars on infrastructure projects both wisely and quickly. Good infrastructure spending doesn’t happen on a dime, and applying a “use-it-or-lose-it” rule to speed up spending will lead to a lot of waste. The country could certainly invest more, in both human and physical capital, but that spending should follow the rule that benefits must exceed costs. Good investments need plenty of time to plan and implement, which pretty much rules them out as good fiscal stimulus. Moreover, since many of these projects will disproportionately benefit the prosperous, many of them can be financed with user charges.

Yet skepticism about vast public works does not necessarily lead towards Alf Landon-like antipathy towards stimulus, or towards tax cuts for big businesses and the wealthy. A quite plausible alternative, which is partially present in the president-elect’s proposal, is for the fiscal stimulus to primarily take the form of payroll tax cuts for poor and middle-income Americans. Those are, after all, the people who are most likely to spend the money quickly.

Targeted tax aid for poorer Americans would be far more egalitarian than most kinds of infrastructure spending, such as broadband technology. Sensible infrastructure projects wouldn’t disproportionately employ the least-skilled Americans. Forgoing the payroll tax for households earning less than $75,000 a year is surer progressivism than bridge-building.

The full article can be found here.

2 Responses to “A Better Stimulus Plan”

  1. Gerardo says:

    8 Years of Bush Tax Cuts and the economy is booming right? Yeah lets get some more that are specifically going to those who least need it and are least likely to immediately spend it–and it will be a great stimulus.
    Puro pinche pedo…..

  2. Did you even read the article? He is arguing for exactly the opposite of what you said.

    Here is the gist of his argument, in case you missed it:

    Targeted tax aid for poorer Americans would be far more egalitarian than most kinds of infrastructure spending, such as broadband technology. Sensible infrastructure projects wouldn’t disproportionately employ the least-skilled Americans. Forgoing the payroll tax for households earning less than $75,000 a year is surer progressivism than bridge-building.(emphasis added)

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