This past weekend, Laura Tyson made the case for a second stimulus in the New York Times. Things, you see, are looking down, particularly for the states. State budgets are being strained, and the prospect of teacher layoffs is a possibility without continued federal aid. Yet.....
The situation would be even worse without the $787 billion fiscal stimulus package passed in 2009. The conventional wisdom about the stimulus package is wrong: it has not failed. It is working as intended. Its spending increases and tax cuts have boosted demand and added about three million more jobs than the economy otherwise would have......
But by next year, the stimulus will end, and the flip from fiscal support to fiscal contraction could shave one to two percentage points off the growth rate at a time when the unemployment rate is still well above 9 percent. Under these circumstances, the economic case for additional government spending and tax relief is compelling....
Two forms of spending with the biggest and quickest bang for the buck are unemployment benefits and aid to state governments.
continued at Daily Kos....
