redblueamerica.com

The good news? Democrats say they want to work with Republicans on stimulating the economy.

The weird news?

Democrats are considering three ideas — an extension of unemployment insurance, expansion of food stamps and perhaps most importantly, rebate checks or more for every single taxpayer. The amount of these checks is being debated, but they would be similar to the $300 checks taxpayers received in 2001. President Bush has not been specific about his ideas beyond calling for a permanent extension of his 2001 tax cuts, which expire in 2010.

I wasn't in favor of the 2001 rebate -- I thought that money should've been used to pay down the national debt or something like that -- but it made a little more sense in 2001 than it does now. Why? Because in 2001 the government was running a surplus. A nice big surplus. Now, though, the government is spending lots of money that it doesn't have.

And a rebate to every taxpayer in America? That $300 (or whatever it turns out to be) will be helpful to working families, but does Bill Gates really need it?

This Nobel laureate makes sense to me:

If one is going to give a short-term tax rebate as a fiscal stimulus, I would target a short-term, limited-time-only decrease in the payroll tax — what individuals pay for Social Security and Medicare. That's a regressive tax, so on average it would go to people at the lower end of the income scale. One should limit that payroll decrease in terms of time, say one or two years while the economy remains weak, which would avoid creating huge deficits.

It seems that's a well you would only want to go to one time -- this time -- because repeated trips would end up undermining Social Security and Medicare. But as a one-time solution, it would target relief to people who need it while avoiding incurring ever-greater deficits and debt. For Pelosi, who has made a big deal about Democrats restoring pay-as-you-go rules, it seems like a smart way to go.

UPDATE: Obviously, more unemployment insurance and extended food stamps will also cost (borrowed money) but they do have the advantage of targeting help where it's needed. As opposed to borrowing more money to spread around indiscriminately.