With economists increasingly leery a recession is on the horizon, DC is batting around "stimulus" ideas to give the economy a little pre-emptive boost.

Not all economists and policy advisors agree if/when a stimulus package would be necessary (or if one would be effective) and there are also different schools of thought on what are the best ways to inject energy back into the US economy.

But, remarkably, congressional leaders and the president seem to be honing in on the principles and content of a stimulus project. "Targetted, timely and temporary" is the current mantra on Capitol Hill - getting cash to consumers and producers as soon as possible and with the biggest bang for the buck.

Congress is shooting to have a full plan ready to roll by January 28. For the time being, here are a couple of ways they may go:

Supply Side

A package is likely to include tax cuts for businesses, preferred by Republicans. Democrats seem ready to agree to tax cuts for small businesses, especially cuts that would promote investment, but it's unclear if broader tax breaks would be included in a final stimulus plan.

Demand Side

Both parties like the idea of tax cuts - or other forms of cash handouts - 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 2002, 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. The extra cash could come by dropping the 10% bracket, boosing the earned income tax rebate or as a 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 some talk of "wage insurance" programs that would supplement some income for downsized workers that have taken a major paycut.
• Long term cuts: given that the Bush tax cuts of '01 and '02 are set to expire in 2010, the GOP also wanted take this time to make sure those tax cuts stay in place by voting to extend the Bush cuts past 2010 - but the president has said, for the sake of a quick compromise, we shouldn't be talking long term tax cuts (which wouldn't help the immediate economic situation).

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), but economists seem to agree that the short term boost would actually take too long to have an impact.

How much are we talking here?

Of course, you never know until the law is passed and the checks are drawn, but there's DC is talking about a plan from $100 billion to $150 billion, ith economists saying anywhere from $75 - $250 billion is need to jump start the economy.

Who's paying?

The president is taking a strong stand that the stimulus package should not be paid for by raising taxes in the future, so that means - if Democrats wanted to stick to their pay-go principles - they'd have to find other spending cuts to offset the expense. Yeah, that's not going to happen - so expect the $100 - $145 billion to go on the national debt tab. 

We didn't make this up: We just stole it from NYT, NYT, WP, WP, 

Posted 1.13.07.