Thoughts about the stimulus package

I am no expert, but maybe someone would be interested in my thoughts about the current legislation.

The stimulus package is intended to be an economic stimulus. Econometric models should be available to predict the impact on the GDP of the overall package and each component.

Of course, we don't want to have a stimulus package that just makes rich people richer, but leaves lots of unemployment and partial employment, which leaves the poor no better off, which simply exacerbates economic disparities. Distribution of benefits counts.

Putting people to work, job creation, seems to me to be better than tax reductions. Assuming that both are financed by increasing government debt, both will put more money in circulation and thus stimulate the economy. However, projects that create employment also produce things that will increase productivity in the future, if the focus is on public works. Similarly, it seems better to me to put money into retraining people whose jobs have been lost to changes in our economic structure rather than just unemployment insurance.

Don't put employment generation projects into fields that depend heavily on imported inputs, whether they be steel or electronics; they would seem to me more likely to stimulate the economies of other countries than would projects that depend on non-tradable services. Fixing roads and schools therefore seem like good projects.

Putting money into science seems a bad idea to me for a stimulus package. Science does not pay off quickly. Scientists are largely employed already, and a rapid increase in science funding is likely to result in inflation of the costs of doing science. Moreover, if the science funding is not maintained in the future much of the benefit would be lost.

Similarly putting money into the creation of employment of illegal immigrants doesn't seem like a good idea to me. We could find that the stimulus package attracts more illegal workers, exacerbating the immigration problems, without reducing the poverty impact of the crisis on U.S. workers. A lot of the construction industry seems to be manned by immigrants.

It seems to me that we are between a rock and a hard place. The United States has spent too much, gone into too much debt, and saved too little, getting us into this problem. The stimulus package is based on increasing debt to increase spending. That seems justified for the short term, but destructive for the long term. So the key seems to me to postpone the pain of changing our habits for no longer than is necessary to break the downward spiral, but not to put it off too long. Ulimately we are going to have to save more, invest more, and consume less of our GDP.