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We’re going to need some kind of fiscal stimulus — ideally a coordinated, global fiscal stimulus, to get us out of the hole into which the economy is rapidly sinking. Serious discussion of this will probably have to wait until after the election, but I hope people will keep in mind these Moody’s bang for the buck calculations:


Even though the tax cuts here don’t perform so well, many of them perform well enough and for political purposes it’ll probably be necessary to throw some tax side stuff on here. Payroll tax holiday seems like the best idea, since it not only gets a lot of bang for the buck but should have beneficial labor market effects. One big worry here is that there’ll be too much timidity. I suspect that we’re going to need to go very big. The new president and the new congress are going to need to brush off the forces of neo-Hooverism in the media and in the Blue Dog caucus and take some bold strokes.

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