While economists remain divided on the role of government generally, an overwhelming number from both parties are saying that a government stimulus package — even a flawed one — is urgently needed to help prevent a steeper slide in the economy.
Many economists say the precise size and shape of the package developing in Congress matter less than the timing, and that any delay is damaging…
Sinai said his models indicated an equal mix of tax cuts and government spending would be most beneficial to the economy. If spending gets into the economy quickly, it has a sharper impact on growth, he said. And while people typically save rather than spend a portion of tax cuts, Sinai argues that that “goes to repair their financial positions . . . so that a year or two from now, they’ll be in better shape to spend more.” With household finances in their worst condition in years, Sinai said, it may make sense to give people an opportunity to pay down debt and rebuild savings.
But the difference in stimulus approach is not worth the cost of delay, Sinai agrees. “The greater good is to pass quickly and without confrontational disagreements a large stimulus program,” he said.