The Main Street Economic Recovery Proposal: Will it Bring Us out of Recession?

Mercatus on Policy No. 33

4 Pages Posted: 25 Jan 2009 Last revised: 17 Jun 2009

See all articles by Eileen Norcross

Eileen Norcross

George Mason University - Mercatus Center

Frederic Sautet

The Catholic University of America (CUA) - Busch School of Business

Date Written: December 29, 2008

Abstract

This is a policy paper on the stimulus plan as of December 2008.

Fear of a deep recession has led policy makers to propose an unprecedented stimulus package to save the economy, a sort of Main Street economic recovery package that would rely heavily on government-sponsored infrastructure projects to create jobs and stimulate economic activity.

The problem is real. The unemployment rate is 6.7 percent and rising: 10.3 million American workers are unemployed, and 2.7 million jobs were lost in the last year alone. If history is any guide, however, the bailout the government proposes won't work.

Instead, policy makers should focus on the fundamentals of economic behavior and the incentives faced by individuals, governments, and entrepreneurs. Reducing taxes, insisting on fiscal prudence on the federal level, and encouraging it on the state and local level by cutting, rather than increasing, public spending would do far more to help the economy than any of the proposals currently being discussed in Washington.

Keywords: Stimulus, Recovery, Financial Crisis

Suggested Citation

Norcross, Eileen and Sautet, Frederic E., The Main Street Economic Recovery Proposal: Will it Bring Us out of Recession? (December 29, 2008). Mercatus on Policy No. 33. Available at SSRN: https://ssrn.com/abstract=1332516 or http://dx.doi.org/10.2139/ssrn.1332516

Eileen Norcross

George Mason University - Mercatus Center ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States
703-993-4930 (Phone)

HOME PAGE: http://https://www.mercatus.org/eileen-norcross

Frederic E. Sautet (Contact Author)

The Catholic University of America (CUA) - Busch School of Business ( email )

Maloney Hall
620 Michigan Ave, NE
Washington, DC 20064
United States

HOME PAGE: http://business.cua.edu/faculty/sautet.cfm

Register to save articles to
your library

Register

Paper statistics

Downloads
134
Abstract Views
649
rank
212,954
PlumX Metrics