Beyond Stimulus

The reality of a recession has yet to set in, but Fed Chair Bernanke is wise not to wait around. He endorsed another round of government spending to jump start a recovery. Congress is already considering what will go into this second stimulus package, following up the one that produced those tax rebates which arrived in the spring.

I’m all for using federal resources strategically but I’m a bit concerned of the wisdom of reprising the tax rebates. I’d much prefer an approach that gets funds into the hands of state and local governments, increases federal support of the safety net, and helps families realign their spenidng with long-term savings needs. I make the case in this piece which ran in the American Prospect.