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The historical role of a stimulus is to kick things off, to grease the wheels of credit, to get things “moving again.” But the effect ends when the stimulus does, when the sugar shock wears off. Compulsive budget balancers who prescribe a “targeted and temporary” policy followed by long-term cuts to entitlements don’t understand the patient. This is a chronic illness. Swift action is definitely needed. But we also need recovery policies that will continue for years.First, we must fix housing. We need, as in the 1930s, a Home Owners’ Loan Corporation to restructure failed mortgages on sustainable terms. The basic objective should be to keep people in their homes by all necessary means …
Second, we must backstop state and local governments with federal funds. Otherwise falling property (and other) tax revenues will implode their budgets, forcing destructive cuts in public services and layoffs for teachers, firefighters, and police. …
Third, we should support the incomes of the elderly, whose nest eggs have been hit hard by the stock market collapse. … The best way is to increase Social Security benefits. …
Fourth, we should cut taxes on working Americans. Obama proposes to effectively offset the first $500 of Social Security taxes with a refundable credit. It’s a good idea, but can be expanded. …
Finally, we must change how we produce energy, how we consume it, and above all how much greenhouse gas we emit. …
What a dollar of stimulus puts back into the economy when spent on…
