In a New York Times op-ed yesterday, former Labor Secretary Robert Reich argued that, in the face of a deepening recession, the government must continue to spend to stimulate the economy. “Without adequate public investment, the vast majority of Americans will be condemned to a lower standard of living for themselves and their children,” he wrote.
To head off the prospects of a severe recession, the Democratic leadership in Congress is “seriously considering” a large fiscal stimulus proposal, which would send a significant amount of money to states and cities – many of whom are announcing major cuts in services and layoffs due to budget shortfalls.
The first stimulus passed by Congress and signed by the President earlier this year, which sent out $600-$1,200 tax rebate checks to most individuals and couples, has been widely credited with helping deliver modest 2nd quarter growth in 2008. The new Democratic plan would offer new federal spending on infrastructure, extend unemployment insurance benefits, and expand the food stamp program.
John McCain, however, isn’t keen on delivering a stimulus for middle- and lower-income Americans. Instead, his campaign is recommending making Bush’s tax cuts for the wealthy permanent:
Senator John McCain, the Republican candidate, is less enthusiastic. His campaign prefers, as a stimulus, making President Bush’s tax cuts permanent and lowering corporate tax rates. But the McCain camp does not reject out of hand the Democratic proposal now taking shape.
Despite aggressively pushing for a $700 billion bailout for Wall Street, the White House has threatened to veto a second stimulus targeted at the middle-class. Press Secretary Dana Perino helpfully recommended that “the best way to help” the economy is for unemployed people to simply “get back to work.”