The Tax Policy Center Newsletter
January 25, 2008
Options for Fiscal Stimulus
Testimony before the Senate Finance Committee
Jason Furman
The key to well-designed stimulus is to ensure that it is timely, temporary and targeted – the "three T" principles enunciated by economists as diverse as Harvard Professors Lawrence Summers and Martin Feldstein, Federal Reserve Chairman Ben Bernanke and Congressional Budget Office Director Peter Orszag. Three of the options that best meet this test are (1) a refundable tax rebate that is adjusted for family size and phased out for high-income households; (2) a temporary extension and possibly expansion in unemployment insurance benefits; and (3) a temporary increase in food stamps. Furman's testimony discusses the underlying economic logic that motivates the three principles of fiscal stimulus, applies these principles to analyze a range of stimulus options, and describes in detail the design of an individual rebate.
Read the complete testimony
This fact sheet answers nine questions about fiscal stimulus including why do we need fiscal stimulus, what approaches could provide fiscal stimulus, and what specific plans have policymakers, economists, and presidential candidates proposed.
Read the fact sheet
New TPC Tables
Revenue and distribution tables for economic stimulus proposals, including the House stimulus plan, can now be found on the TPC website. The list will be updated as more tables are prepared.
See all the tables
Deal or No Deal: Stimulus Moves Ahead
Howard Gleckman
Well, it could have been worse. President Bush and House leaders say they have cut a deal on a $150 billion stimulus package—about $100 billion for families and individuals and about $50 billion for businesses. The centerpiece of the plan: a cash payment of at least $300 for most wage earners, along with an additional $300 per child. But, like everything else in Washington these days, this plan is not simple.Continue reading at TaxVox
Response to my Fan Mail
Len Burman
I wrote a somewhat provocative op ed in yesterday's New York Times that sparked a lot of feedback. My modest proposal was to accelerate the expiration of the Bush tax cuts by two years—to 2009. I said that doing so would generate a burst of economic activity in 2008 while reducing the budget deficit, a rare feature for a stimulus. Some of the feedback was positive. A few people even saw the humor in turning the tax cut advocates' arguments upside down. But others took a dimmer view.Continue reading the response
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