Key Republican Rips Income Inequality, Calls For New Stimulus

[Jim Lane]

16. What you're calling for IS stimulus.

All the items on your list, except for the last one (cancel free trade agreements), would fall under the classic Keynesian remedy for a sluggish economy -- government spending to increase aggregate demand.

Of course, not all stimulus is created equal. The items on your list would generally have a more powerful stimulative effect, dollar-for-dollar, than would stimulus achieved through tax cuts. (The ARRA stimulus bill of early 2009 was not only too small but was also too heavily weighted toward tax cuts, a flaw that limited its impact.)

I don't know if your call for a fundamental change would be met by, for example, an extension of unemployment benefits. That kind of transfer payment to people who are struggling has a very high stimulative effect, because they spend almost all of it immediately. It doesn't have the "investment" aspect of things like infrastructure spending, though.