Talk of a second stimulus package has been making the rounds in Congress for awhile now - since the effects of the $120B tax rebate Congress approved in the spring petered out at the end of the summer. A new stimulus package received the big nod of approval earlier this week when Fed Chairman Ben Bernanke endorsed the idea. The Bush White House, which had been dragging it's feet on a stimulus to that point, had no alternative but no roll over and cry uncle.
A number of Democrats have argued the second stimulus package should be mostly about infrastructure, proposing this approach kills several birds with a single stone, pumping desperately needed money into infrastructure improvements, puting folks to work and providing them wages to spend to jumpstart the economy. Sounds good. But critics argue the lag time for large infrastructure projects is so long the approach doesn't address the immediate need to pump money into the economy.
Reid Cramer makes the case Congress should consider short and longer term solutions.
This
economic security bill will be most effective if it combines provisions
designed to ameliorate immediate hardships with policies that provide
access to economic opportunity over the long term. In other words, we
need both a safety net and a stronger economic security platform.
The
safety net should include provisions to help viable homeowners remain
in their homes and communities. No one will be served by allowing
massive foreclosures to spread across the country. Government action
should also support a number of perennial proposals designed to help
vulnerable families make it through hard times. These include such good
ideas as increasing the funding for food stamps, extending unemployment
insurance, and offering targeted relief for rising home heating and
utility costs.
Besides
these insurance protections, constructing an economic security platform
will require dusting off an old-time virtue -- savings. Although lost
in recent years under an avalanche of easy credit, savings is an
essential component of economic security which is capable of
stimulating the type of growth that can power the economic recovery.
This is because savings can be used to weather unexpected changes in
income at the household level. Savings provide a foundation for the
risk taking, creativity, and entrepreneurship which creates economic
opportunity and drives economic growth.
President Bush wasn't being flippant or delusional when he told Americans to just go shopping after the 9/11 attacks. The economy was teetering after the attacks, and while there was a relatively short term setback, the results could have been so much worse. The President knows full well the American economy is fueled by consumer spending, and his encouragement to get out there and spend some dough was, no doubt, an effort to keep that teetering economy upright.
Federal economic policy has made the concept of
saving something that went out of style about the same time as avocado
colored kitchen refrigerators and shag rugs. Easily available credit has allowed those slipping under due to stagnant wage growth the opportunity to live that American dream. It's a cold heart that's critical of that desire. But it's had some devastating effects we're now able to see very clearly.
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