Dear Reader,
In Escape from Recession, Economic Policy Institute economists Jared Bernstein and Lawrence Mishel give readers a useful primer on the need for -- and limitations of -- a congressional economic stimulus package. As President Bush signed the bill yesterday, In These Times talked to Bernstein about the specifics of the package and the possibility of Democrats proposing further measures to minimize the effects of an ensuing recession.
1) Maneuvering by the Senate Democrats yielded what some are calling a more decent deal than expected. Would you agree?
The deal that Bush has agreed to sign this week is better than the original House deal in that it reaches about 20 million low-income seniors who would have been left out. Presumably, a) they need the money, and b) theyll spend (not save) the rebates and that will help boost consumption a bit more.
2) What proposals didn't make the final version of the bill that should have?
The package could have been a lot better. As we noted in our article, expanding unemployment insurance and investing in public infrastructure -- schools, roads, bridges, waters systems -- gets you a much better bang for the buck and could be done in such a way as to help states that are quite strapped right now.
3) There's been talk that the Democrats are gearing up for an even larger second stimulus plan, one that could include revisions to the tax code. Is that likely to work its way through Congress or is it a political gambit? If it does, could it help minimize the effects of the ensuing recession?
I've not heard anything regarding tax code revisions. Remember, stimulus is by definition temporary, and while our tax code could use some revamping (which it may well get if the next President is Clinton or Obama), it doesn't make sense to do this in the context of stimulus. I do think that Congress will go back to some of these issues if the economy remains weak and unemployment is rising by late in the year, especially if there's evidence that lots of folks are using up their 26 weeks of unemployment insurance. If that happens in enough places, look for an extension to UI to pass later this year.
Click here to read Escape from Recession from our March issue.
Senior editor David Sirota touched on the same subject in his recent column The Stimulus Swindle. Sirota ponders why a package to energize our sagging economy took so long to surface in the first place.
But here's the question: Why are we talking about stimulus only now? After all, most people have been hurting for quite a while. Paychecks have been stagnating, foreclosures have become commonplace, health care premiums continue their double-digit increases and up until recently, conservatives greeted such hardships with saccharine fantasy.
To find out the answer, read the rest here. And check out Sirota's column, available every Friday on InTheseTimes.com.
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Yours Truly,
Adam Doster, senior editor and acting Web editor