Saturday, February 07, 2009

Change I can believe in

Just changed out the oxygen sensor in my car in under an hour. I'm hoping that fixes my slightly reduced gas mileage and a not entirely smooth idle.

But more importantly. Everyone is abuzz about the stimulus plan. My opinions:

1- Eleventy trillion seems like a big number, but it really isn't that big. Many of the things in this package, like the so called shovel-ready projects, are things that most likely were going to be funded at some point in the future. I'd have to actually read the thing to find out what the numbers are, and I probably won't. So much of the stimulus isn't new spending, but spending that has simply been renamed. Instead of being on the Omnibus Spending Act of 2009, it's on the Omnibus Pork Act of 2009.

2- A little disappointed in the new regieme on this one. I get that it is important to get a stimulus passed quickly for a variety of concerns, but I'd have liked to see a little better leadership ("corralling") of Congress. Hopefully the bill has enough wiggle room in it so that when the actual spending gets done, it's a bit more thoughtful.

3- I've heard a lot of tax-cut talk, some more interesting than others. I like plans that are a little more targeted than just sending out more checks to everyone. I've heard of things like cutting employment taxes, temporarily subsidizing SSI and medicare payments, changing the various limits around. I think ideas like that would be better at stemming job loss. A dollar spend is a dollar spent, but to actually work, the spending needs to be targeted at the margins. Giving the unemployed $600 gets them through another month or two, but what then? Giving the comfortably employed $600 might get them to buy that new TV, but I'm not so sure that can trickle down in time to save job cuts.

Pipe dreams:

Change the unemployment insurance concept all around. Split it up like the SSI tax is done, where the employer pays half and the employee pays half. Except that it's not really precise halves. Figure out the "base" cost of unemployment insurance. What it costs to give an employee $x for y weeks. That premium is split equally. Now, when a company lays off tons of people and their unemployment insurance rate goes up, that extra premium goes on their books. Investors and management can see the cost separately and make better decisions.

Further, employees would have the option of paying for extra insurance. Either a greater percentage of their income, or longer time allowed, or both. Helps workers who care feel better about an uncertain future, and increases the pool of money to pay for unemployment. And also is more transparent. Of course, this is antithetical to the smaller government, let private enterprise work it out way of thinking. For many things, I agree fully with this idea. But I think this is one of those cases where the incentives of the individual actors doesn't mesh with the needs of society. When bubbles like the credit bubble and the housing bubble can have greater effects than just rewarding and punishing the individual investors, I think it is government's place to actually govern.


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