Economic analyst Robert Kuttner voices the liberal dream of using the recession to justify spending trillions of dollars on loads of liberal policy wishes, all to the tune of $2 trillion over the next two years (all to be paid for with sharply higher taxes down the line, I am sure). Here are some excerpts (bold is mine):
1) Aid to state and local governments [so they can avoid layoffs or cuts in services]. Cost: $200 billion.
2) Emergency revenue sharing to states and cities by picking up half of the state share of Medicaid. Cost: $100 billion.
3) Have government temporarily pay most of the cost of COBRA coverage for laid off people who lose their health insurance, and allow people over age 55 to buy into Medicare. Cost: $100 billion.
4) Expand Unemployment Insurance to cover part time workers, extend eligibility period, and increase benefit levels. Cost: $50 billion.
5) Roll back tuitions at state universities and community colleges, and increase Pell Grants--contingent on universities not increasing costs to students. Cost: $100 billion.
6) Declare a temporary holiday on the worker share of the Social Security tax, and have government make up the loss to the trust fund, contingent on employers not cutting wages. Cost: $450 billion.
7) Continue many of the [previously mentioned] relief programs into a second year, as economic conditions warrant. Cost: $500 billion.
8) Use direct federal lending to refinance distressed mortgages, and as necessary reduce the outstanding principal amount. This can begin by mid-2009. Cost: $200 billion of subsidy; most additional debt is eventually repaid.
9) Begin planning immediately for a broad range of infrastructure programs, from traditional outlay on roads, bridges and mass transit to spending on 21st century infrastructure such as retrofitting homes, green energy, universal broadband, and smart-grid electricity systems. Spend money on worker training as necessary. Cost: $300 billion.
Total stimulus is two trillion dollars over two years, or about seven percent of GDP a year. If we spend at this level, we can avoid the worst, and a recovery can begin by 2010. Along the way, we will make life better for a lot of working and middle class people, create (or prevent the destruction of) millions of decently-paying jobs, and rebuild public systems that have gone to ruin. A secondary benefit is that people start believing in government again.