Effective Economic Stimulus Package Must be Timely, Targeted, and Temporary

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Dick Lavine /(512) 320-0222 x 101

January 23, 2008

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The current weakness in the U.S. economy requires a rapid response that targets aid to those who will be hardest hit by a recession. Assistance should reach all working households because they are most likely to immediately put any assistance back into the economy by spending to support their families. This can be accomplished by rebate checks, increased Food Stamp aid, or extension of unemployment insurance, as well as fiscal relief for state governments. Well-designed one-time measures would raise current deficits, but not affect the long-term federal budget outlook. President Bush and congressional leaders are considering various strategies for combatting the growing weakness in the U.S. economy. At the top of their list are rebates for workers, expansion of safety net programs, and tax incentives for businesses. An effective fiscal stimulus is one that is timely, targeted, and temporary.