Crash and Burn: the Case for a Third Stimulus Package
We've just about reached the point where we need to add a "gate" to the AIG fat-cats story -- "bonus-gate."
With all this populist anger bubbling up around us, it's an ugly time to discuss another stimulus package. Polls show that the public is sick of bailing out the financial sector, at least, and while there remains strong support for the Obama administration's larger efforts to boost the economy through a mix of policies, including public spending and tax cuts, the unfortunate reality (at least based on my anecdotal experience) is that many people view all of the government's varied efforts as part of the same package, and many see that package as little more than a public ripoff.
And, according to a CNN poll (last link above), two out of three Americans surveyed would oppose another stimulus package if the first one doesn't kick the economy into high-gear.
That's unfortunate -- "Blue Dog" Dems and GOP dead-enders in Congress made sure that the most recent stimulus package was of a size that most economists said would fall short of what was needed to make up for American consumers' sudden lack of appetite for purchasing
endless unnecessary crap shiny new consumer goods.
And now, in a new report (PDF) released today, economist Dean Baker, author of Plunder and Blunder: The Rise and Fall of the Bubble Economy, argues that an additional stimulus will indeed be necessary to pull the economy out of its doldrums. Baker calls for the injection in the form of tax credits to encourage businesses to extend insurance coverage to more employees and give their workers more time off. He also points out that trying to stabilize home prices in wildly over-inflated bubble markets is a fool's errand, and urges that efforts to rescue homeowners be focused in areas where prices are more or less in line with their historic levels.
The executive summary after the flip ...