We Need a Stimulus Now, But What Kind?

As I've noted several times over the past year, a fiscal stimulus is necessary if the economy is to avoid recession. We may be in recession already. We can't rely soly on monetary policy. A bold fiscal stimulus is necessary, and must be done quickly in order to prevent millions of people from losing their jobs -- and catapulting us into a deeper recession.

What sort of stimulus? Since 80 percent of Americans pay more in payroll taxes than they do in income taxes, and because middle and lower-income people are far more likely to spend whatever tax relief they get than higher-income people, the best stimulus would offset the payroll tax. And the easiest way to do this is through a refundable tax credit, effective as soon as possible. I've looked at what the candidates are offering. Obama's stimulus package seems to me to be the most reasonable. It would give a direct, immediate boost to the economy. In my view, its tax cuts for workers and extra social security payments for seniors offer the fastest and most efficient way to get more purchasing power into the economy.