Revision of economy booster from January 13, 2008 - 3:32pm
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With economists increasingly leery a recession is on the horizon, DC is beginning to talk "stimulus" language to give the economy a little pre-emptive boost. Not all economists and policy advisors agree if/when a stimulus package would be necessary and there are also different schools of thought on what are the best ways to inject energy back into the US economy.
Congress and the president may be proposing different stimulus packages in January and February. For the time being, here are a couple of ways they may go:
Supply Side
Some Republicans think a sure bet is to give businesses a leg up by cutting down corporate taxes - either whole sale or targetted toward investment.
Demand Side
Both parties are talking about tax cuts - or other forms of cash - to consumers (like you and me), but they don't necessarily share views on how or who to give those cuts to.
- Everyone gets a rebate: As in 2001, the government could send everyone a rebate check to get more spending cash in our pockets.
- Targetted to low and middle class families: Some economists argue that you get the biggest bang for your tax cut buck by focusing on poorer Americans who are more likely to spend any extra cash immediately, rather than put some away for retirement (could come in the form of a tax rebate or a short term cut to payroll taxes).
- Other benefits: similar to tax cuts for the under-wealthy, extending or enlarging benefits - for unemployment, "trade adjustment assistance," or food stamps - also gets spending money into the hands of people ready to spend it. There's growing talk of "wage insurance" programs that would supplement some income for downsized workers who have to take a major paycut.
Public-works Side
A third way to go is to invest a lot of cash into building infrastructure - roads, airports, etc. - which has the double advantage of creating jobs in the short term and investing in future business (which benefits from a strong infrastructure).
How much are we talking here?
Of course, you never know until the law is passed and the checks are drawn, but economists are talking about spending anywhere from $75 - $250 billion to get the economy jump started again.

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