WHAT IF YOU HAD TO FIX THE MESS?

摘要

Imagine that it's January, 2003. The economy has weakened. It's your job to craft the best fiscal policy to get things revved up again without breaking the budget. You don't need to take politics into account. (This really is an alternate universe.) What to do? Tough choices lie ahead. You'll need to decide whether to emphasize reviving the economy right away or improving conditions for long-term growth. If you pick short-term stimulus, you'll have to choose whether to spend money on boosting consumer spending, business investment, or job growth. "Be clear on what it is we're endeavoring to do," Federal Reserve Chairman Alan Greenspan said last year. There's a good case to be made for doing something in the short term―especially by getting more money into consumers' pockets. The economy is running far below its potential, and the Bush Administration proved last year with its tax rebates that the government can inject stimulus quickly enough to ameliorate a downturn. The long term is vital as well, of course―but the arguments are trickier there. While big, permanent tax cuts encourage work and investment, recent research shows those gains can be outweighed by the drawbacks of bigger budget deficits.