The incoming Obama administration and congressional Democrats are considering a second fiscal stimulus package, estimated at more than $500 billion, to follow the Economic Stimulus Act of 2008. As they do, much can be learned by examining the first... [snip]
The major part of the first stimulus package was the $115 billion, temporary rebate payment program targeted to individuals and families that phased out as income rose. Most of the rebate checks were mailed or directly deposited during May, June and July. The argument for these temporary payments was that they would increase consumption, stimulate demand and get the economic growing again. Yet, they did absolutely nothing.
So what can Congress and the incoming Obama administration do to give the economy a real boost? Below are a few fairly bipartisan measures worth considering:
- Keep all income-tax rates were they are now, effectively making current tax rates permanent.
- Enact a worker's tax credit equal to 6.2 percent of wages up to $8,000, and make it permanent.
- Construct a government spending plan that meets long-term objectives, puts the economy on a path to budget balance and is expedited to the degree possible without causing waste and inefficiency.
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