The NYT Editorial Board weighs in with an interesting little tidbit. Unfortunately, the Board falls victim to the crying wolf recession doomsday reporting, which seems mandatory in the mainstream media. I swear that I once heard that consumer and investor confidence were critical to a market based system... well just scare the shit out of everyone why don't you with drivel like this:
The economy has fallen into recession each of the four times the national index slipped into the red since 1979. Recessions have started in the month in which the state indexes were declining in half the 50 states and rising in the other half. In October, eight were down. In December there were 13.(Emphasis mine). Seriously, how many conditionals can fit into a single sentence that really doesn't say anything of value? I could point out that only one of the last five recessions started in an even numbered year, or that no recession after WWII has started in January or February... but this would be of similar integrity, and a little silly. I could also make a sly remark about the fact that each of the last 7 recessions has started with a Republican in the White House, but that may seem partisan. Well... it is the truth.
If this trend continues, it suggests a recession could be on the way.
Another, much better, Op-ed piece appeared today. Authored by Nobel Prize winner Stiglitz, the theme is a quick infusion of cash could help significantly -- but we should consider other long-term options as well. He highlights the concept of truly redistributing wealth by pushing more cash into the unemployment insurance system (where it will get spent) and also mentions aide to State and Local governments...
We should begin by strengthening the unemployment insurance system, because money received by the unemployed would be spent immediately.
The federal government should also provide some assistance to states and localities, which are already beginning to feel the pinch, as property values have fallen. Typically, they respond by cutting spending, and this acts as an automatic destabilizer. Federal assistance should come in the form of support for rebuilding crucial infrastructure.
The importance of keeping state and local governments afloat is important, as since the Reagan years these entities have had a significant increase in services provided without federal monetary assistance. Many of poorest and needy people rely on this state/local system for support. Additionally, this redistribution could help ease the pain in the truly hard hit areas of the country (e.g. Michigan) where the citizens wouldn't believe there is going to be a recession -- they think it's been here for two years.
Burman, from the Urban-Brookings Tax Center also has an op-ed today
discussing the recession (maybe?). I don't believe I've heard of him before, but this column definately intrigued me. He also argues for getting cash into the hands of those most likely to spend it, and additionally brings up the Bush tax cuts as a method of stimulating the economy... not by extending them, but by making them go away sooner.
It’s true that more tax cuts this year could help head off a recession in the short run. Washington could send taxpayers rebate checks or give businesses temporary breaks for new investments in equipment. President Bush is likely to propose both as part of his $150 billion package of emergency measures.
Similar efforts in 2001 and 2002 had mixed results at best, but so long as the tax breaks are temporary, they wouldn’t do much long-term economic harm either. That said, the president’s proposal would leave out 37 percent of households because they do not earn enough to pay income taxes. A credit against payroll taxes or, better still, increasing transfers to the low-income families most likely to spend the money — say, by temporarily increasing food stamps — would do more to energize the economy.
Burman also discusses the concept and value of moving the sunset for the Bush Tax cuts up from 2011 to 2009. This is rarely argued for, especially during an impending recession (maybe?). I hope this argument gets some traction and we can begin having a serious debate, not just about how to help stave off a recession now, but how to fix our government's fiscal condition going forward.
Best of all, this is one stimulus proposal that would reduce the deficit — the single largest threat to the economy’s long-term health. And that long-term benefit wouldn’t depend on our getting the timing and amount of stimulus right, something policymakers are notoriously inept at.
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