UPDATE: I have no illusions about this, but I think it's important to do Division A of the current House package right: More time and debate may not lead to my ideas being adopted, but they will improve the current, Democratic ideas. Since most of Division A won't take effect until after this year, we can afford to wait a single month examining it. So that's the proposal: Split Division A from Division B, pass Division B (the "jolt") in early February, and pass a revamped Division A by the end of March.
- There are two parts to the stimulus package, which the CBO describes as Division A and Division B of the package.
- The infrastructure and other government spending in "Division A" is much less important in the short term and, by and large, won't enter the economy quickly. It's not the promised jolt. But Division A is large part of the package and has long-term consequences for the country and the national debt.
- If the stimulus "jolts" the economy, as promised, it's because of the tax cuts and direct payments in Division B. (Direct payments include refundable tax credits, payments to unemployed folk, payments to states, etc.) The "jolt" succeeds if Division B succeeds.
Division A and Division B do not have to be passed together. There is no reason why Division B can't be passed in February and the less-urgent Division A delayed until March.
Indeed, my main reason for writing this series of posts (1, 2, Hilzoy's response, 3) is to point out it makes sense to do Division A and Division B sequentially, in different bills, and not simultaneously as the House Democrats have. By focusing on each division in turn, there is an opportunity to improve them both. (This isn't a von-only view; some Democrats agree with me.)
I am going to leave the short term spending, Division B, for another day. I would have preferred that Division B simply enact Obama's promised tax cuts for the middle class while delaying Obama's promised tax increases, along with some non-controversial palliative spending for the unemployed, uninsured, and states. But that didn't happen: Division B, as it exists today, is a hodge-podge of tax cuts, credits, and payments to individuals and states. It has some good parts, but it's not particularly coherent.
Still, we're unlikely to see a radical reshaping of Division B in light of the pressure to get something done.
If we stop and consider a moment, however, we might make some real improvements to Division A (the long-term part of the package). If Division B is a hodge-podge, Division A is a grab bag: you don't know what will pop out of it next. The only notable part of Division A is what it doesn't include. Division A has no grand infrastructure projects that have the potential to effect long-term, structural changes to the economy. Rather, Division A basically gives a bunch of existing government programs more money. It's timid, and it reads like it was written by committee - which is was - because it appears to contain something for everyone.
My suggested changes to Division A? Throwing more money at existing government agencies is not going to effect a structural change. Division A needs to be lean and targeted. It's not how much money you spend, but where you spend it.
Division A, in other words, should be bold. Here's a start.
Invest $150 billion in Rep. Mica's (R-Fla.) high-speed rail proposal. High-speed rail is a good idea for a number of sections of the country. Drop the $30 billion for new roads and bridges in the current package. That's going to encourage more pollution and more dependence on foreign oil. It's not the kind of change we need.
The current investments in green energy are laughably small. If you're serious about a green economy, triple the money in this section. It doesn't matter if the projects aren't shovel ready: Division A should be about the future -- the next challenge, not the present one. R&D dollars are in sort supply these days; having the government step in is money well spent.
Our military is too small for the wars we're fighting, our fighting men and women are stretched (see Hilzoy's post on suicide for a sad symptom), and the world is growing ever more dangerous. If Obama's so-call "smart power" truly involves both diplomacy and military might, make a $100 billion investment in modernizing and improving both: give $25 billion to Homeland Security and the State Dep. and $75 billion Defense Dept.
And that's it: every other program currently in Division A gets individual consideration. If those billions in other programs are worthwhile, justify them case-by-case. They aren't in the package deal.