Difference of opinion on a second stimulus: Obama has suggested additional infrastructure investments (in roads, bridges, etc) could make rebuild our aging structures while providing stimulus. McCain disagrees.
I agree with Zandi below that combining stimulus with infrastructure can meet both long-term challenges while stimulating the economy in the short run.
Mr. McCain’s economic adviser also rejected another idea that has become a centerpiece of Mr. Obama’s stimulus thinking — financing large infrastructure projects.
“That’s not timely and quick,” Mr. Holtz-Eakin said. He offered as a better course lowering corporate taxes and making President Bush’s larger tax cuts permanent.
Indeed, the policy prescriptions of Mr. McCain’s chief economic adviser were challenged by another economist on the McCain campaign, Mark Zandi, chief economist at Moody’s Economy.com.
A paper Mr. Zandi prepared this year concluded that, within the first year of enactment, increased infrastructure spending and aid to states generate roughly four times as much economic growth as making the president’s tax cuts permanent, cutting corporate taxes or allowing businesses to write off new investments more quickly.
“Everyone agrees that we need jobs, and everyone also agrees that infrastructure is one of our most pressing needs,” Mr. Zandi said in an interview last week. “If we can combine stimulus with infrastructure, I think that’s great.”
Above all, Mr. Zandi said, it was now imperative the government deliver some sort of new stimulus.
“The problems plaguing the economy seem entrenched,” he said. “The economy could spiral even further down if you don’t try to stem that.”