It is sometimes hard to be an historian, harder than being an economist. I read the papers and they say that Congress is coming up with a "fiscal stimulus" package to fight the recession.
All Right. Fiscal stimulus used to mean increased public sector spending for public works, health care, education, transportation, along with various incentives for companies (often tax incentives to invest in
job production). But this stimulus package is largely about tax rebates, the kind that automobile companies offer as cash back rebates for buying their cars (a kind of tax break for consumers based on income).
The papers say that "liberal economists" see this as a step in the right direction, even though it doesn't provide for increasing welfare state benefits or "transfer payments," especially food stamps and unemployment benefits (whose real value has shrunk since the Reagan years significantly). "Conservative economists" also see this as a step in the right direction, although they are critical of the failure to make the Bush tax cuts permanent.
Meanwhile the culture of public sector cutbacks and rising regressive taxes and fees continues, meaning that this 150 billion rebate driven fiscal stimulus package may very well be more like Reagan tax cuts of the 1980s than a "step in the right direction"--people will get a chunk of money all right, but that chunk will evaporate rapidly as they pay more for tolls, licenses, local property taxes, utilities, etc, before there is any "stimulus" effect in regard to mass purchasing power.
Increasing minimum wages is a much better way to increase mass purchasing power. Strengthening unions who will be able to negotiate higher wages and benefits for workers is a much better way to increase mass purchasing power. Lowering the cost of necessities like health care, transportation, education, children's day care, and energy through public sector programs is a much better way to increase mass purchasing power. And, in limited ways, this was done in the past, from the 1930s to the 1970s, when it was associated with compensatory or anti-recession fiscal policies.
Of the major Democratic candidates, John Edwards is saying some of these things, and it would be great to hear others chiming in. In the 1930s and after, people sought to make sense out of the rise of the New Deal
by referring to it in terms of three Rs--Relief, Recovery, and Reform. Now, I would suggest a new three Rs for the present crisis--Reregulation of capital; retaxation of corporations and the rich; and Restoration of
the public sector, revitalization and expansion which will be a "compensatory" fiscal policy to reverse what has been nearly three decades of institutionalized cutbacks.
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