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New Ways to Stimulate

The New York Times’ Jackie Calmes adds to the articles about the Obama administration and Congress considering an expansion of elements in the stimulus package, due to ever-rising unemployment. The programs that Calmes reports will be expanded are varied — there is extending unemployment benefits and the COBRA program, which provides health care to the recently laid off, both programs that expire Dec. 31. But then they are the “tax credit” plans — a tax credit to first-time purchasers of homes and a tax credit to businesses who hire new workers or don’t lay off current ones.

What’s missing from this discussion is any new government programs that more directly help the unemployed. Extending unemployment benefits and COBRA, of course, directly helps the unemployed. But these tax credits seem a limp, and easily exploited, way to nudge consumers and businesses to more stimulating behavior. I’d like a push for more civil servant and public goods projects — or at least a move to recall some of the teachers and health workers state governments were forced to lay off. The government should be one job market more able to respond to a recession, yet 53,000 government jobs were shed just last month.

It’s politically risky to push for such an expansion of government. But the NYT piece implies that what’s riskiest for Obama and Democratic leaders in Congress is to maintain the status quo and see unemployment continue to rise well into next year. Maybe in the case of fighting unemployment, helping people who need it most can also be good politics.

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