I learned three things from the Japanese stimulus experience and these two more local articles one and two. First - let's not give away rebate checks - they have a minimal if not net negative impact.
Second - if you chose to support infrastructure in your stimulus package, only invest in projects that have a sustained employment impact (i.e. roads only create jobs only as long as you're building them, but a school or a hospital can create jobs and support the economy long after the the fund for construction is depleted).
Third, in Japan, for every Yen invested in road-building projects, they saw a 137% growth in GDP (or a 37% ROI, due to the temporary jobs + reduction in travel time). For social services and elderly pension payments, they saw a 164% growth, and for schools and education, the impact was 174% growth.
Assuming the American economy would respond similarly, it's pretty clear that our infrastructure investments in this stimulus package should focus on pensions, social services, schools, and education.
Focusing on the highest yield opportunity (Education), let's say we're going to spend $100 on Education in the bill. I'd like to give the first $50 to the States to hire new teachers, but the Feds can't employ teachers, plus it's not a stimulus activity - it's an ongoing cost. So I'd do a trade with the States:
Similarly, the Feds could put more money into the pension pool, but that seems to be a longer-term solution. Instead, I'd put 75% of the funds into construction of housing projects for the elderly, and the remaining 25% into elderly care training programs affiliated with community colleges around the country.
I despair about all the money in this budget that's going towards road repair (very short-term impact), and stuff like broadband - minimal job creation now or in the future.
I hope there is room in the process going forward (like with TARP) to redefine the use of the stimulus package so that it is at least informed by some of the experiences others have had.
I just saw an article a friend posted on Facebook about stimulus effects in Hawaii, which referenced this article in the NY Times, both are well worth a read.
The Feds will spend $35 to build new schools; $25 on teacher professional development and expanding Teachers Colleges; $25 on improving school infrastructure; and $15 on 21st century assessment and curriculum development and distribution. Each State that wishes to take advantage of this must hire teachers equal to 50% of the benefits they will get from the package. They must further commit to paying those teachers in years to come via their normal budgetary process (i.e. no hiring temps). The Federal budget would make sure this happened because they would condition budgetary education funding based on this.
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