Congress to Pass Bailout Sized Stimulus

Schumer is talking a 500 billion to 700 billion dollar stimulus bill, spread over 2 years.  The Obama campaign is talking about 2.5 million jobs.  This is good, a very large stimulus bill is needed.

As with everything, the devil will be in the details.  There are good ways to do stimulus, such as food stamps and unemployment extensions, and there are bad ways to do stimulus, like tax cuts for the rich or giving money to corporations which aren’t efficient at creating jobs.

In general, here’s some of what I’d like to see in a stimulus bill, from most important to least:

• Unemployment benefits extension
• Food stamp increase, with food stamps worth more when buying healthy foods like produce
• Welfare extension, undoing some of the damage done by "welfare reform"
• Buying back low mileage vehicles, scrapping them and giving credits for buying high mileage vehicles
• A massive refit of the nation’s building stock to make it more energy efficient (lots of jobs)
• A refit of the nation’s power infrastructure to encourage micro-power generation, especially by individual households
• A massive rollout of real high speed internet, as part of a general encouragement of working from home
• General infrastructure repair and rebuild.  Less important than folks think, but not bad.
• Help with healthcare, ideally single payor (at the bottom of the list because it will cost some jobs, but it will also free up a ton of money for spending)

Now a word on taxes. 

The current plan is twofold – a huge stimulus bill, and a big tax cut.  The second is a mistake.  Yes, it’s what FDR should have done, rather than letting Hoover’s tax raises stay in place, but the current situation is not identical to the Great Depression by any means, mostly because FDR was not facing an energy supply bottleneck, and America today is.  Giving people tax cuts means they will spend money as they’re used to spending money, and they have been spending money badly.  A huge stimulus bill, combined with huge tax cuts, minus fixing the supply bottleneck, will cause oil prices to surge back up if it actually works.  That will cause another bout of inflation in food and resources, similar to the one we had earlier this year, and will shake the economy apart.

Any stimulus bill must tackle the supply bottleneck as part of the spending, but it will take a few years for that to happen.  In the meantime, tax cuts are not the best way to get people the help they need.  Spend money on their behalf, in ways that will help them rather than giving them money to spend on an economy where their spending will exacerbate built-in problems like oil shortages.  Reducing energy costs, health care costs, housing costs and so on will put more real spending money in folks hands than any tax cuts.

Related posts:

1. Biden to Smack Boehner Around on Stimulus
2. NYT Can’t Recall that Republicans Who Demand “Where Are the Jobs?” All Voted Against the Stimulus
3. Warren Buffett: Economy Needs Another Stimulus to Get It Up
4. Eric Cantor Says Stimulus Bill Failed, Except That Whole Creating Jobs in His Home State Part
5. White House Calls Kyl’s Bluff on Canceling Stimulus, Republicans Whine About It