Economic Stimulus Essentials

More from the Economic Policy Institute:

Since last summer, the Economic Policy Institute has warned that the economy could go into a recession and called for consideration of an economic stimulus package. This week, President Bush has delivered a major economic address, Congressional Democrats have announced they will take action on an economic stimulus package, and the Hamilton Project is holding a panel discussion on this issue. EPI is developing a comprehensive stimulus proposal, which will be released soon.

EPI economists, including EPI’s president Lawrence Mishel, who was one of the economists participating in the economic forum with Speaker Pelosi on December 7, are available to discuss the current condition of the economy and the principles that should shape the stimulus package:

1) Do it now because a) there is ample evidence that the economy has weakened and may get weaker; and b) the stimulus, once passed, will not take effect for several months.

2) Do it right — get the money to the people and public investments that will pump it back into the economy: a) Accelerate federal investments on the nation’s needs — repairing bridges, roads and highways; building and modernizing our children’s schools; and promoting energy efficiency and independence; b) Emergency assistance to tax-strapped states, so they won’t have to cut services, lay off workers, or raise taxes on the middle class; c) Targeted tax relief for the hard-pressed working families who need it most and will quickly spend the money on the necessities of life.

3) And do it on a scale sufficient to make a difference — $140 billion (1% of Gross Domestic Product) is a moderate first step.

EPI’s approach is distinctive because it would simultaneously stimulate the economy and address urgent needs by accelerating public investments.