There's one other thing that's keeping businesses from hiring -- they've managed to squeeze incredible productivity out of the workers who have thus far survived the layoffs. Whey should they hire when they can get away with making workers do more for less?

This post may have the right prescription in mind, but getting it filled will be a challenge. We can expect demagoguery from the obstructionists about increasing the federal deficit, and if any extra money is not spent perfectly, we'll also hear about fraud and waste of taxpayer money.

Here's a question that is so off-the-wall that I should probably use a pseudonym before asking it, but I'll risk asking it anyway. What would happen if the government issued a "temporary government credit" of $1,000 to every legal resident (e.g., $4,000 for a family of four), with the stipulation that it must be spent for domestic purchases within a specified time-frame - e.g., three months? At the minimum, it would boost Christmas shopping, but could it have longer lasting salutary effects? Apparently, the cash for clunkers program had a stimulatory effect that was greater and at least a bit more prolonged than many predicted, and so could this proposed credit do something similar, at a cost to the treasury of $300 billion?

I'm not opposed to increased spending on infrastructure as well, but as I understand it, the stimulus money already allocated is taking some time to flow into the system, and so we probably need something that is faster, that helps average Americans, and which will stimulate spending rather than savings, with the latter to be reserved for later, when the economy revives.

"The government...

"...should be spending even more than it already is on roads and bridges and schools and parks and everything else we need."

Let me say, first of all that I sympathize with Robert Reich's sentiment. But why can't a university professor and ex-Secretary of Labor rise above cracker-barrel wisdom and deal with real facts on the ground. The fact is the unemployment rate among 16-24 year olds is already nearly 20 percent and the underemployment rate, including discouraged job-seekers and economic part-timers is over 30 percent. That's three-zero, thirty.

Not all the unemployed are qualified construction workers. In fact, it's likely a relatively small proportion are. Even if they were, it's not likely that building all the roads, bridges, schools and parks WE NEED would require enough labor to employ them all... unless you're going to opt for those eight-person crews with one shovel. And another catch is that those infrastructure projects will also require the services of people whose skills and credentials are already in short supply -- thus creating bottlenecks.

No, spending even more on all those public works projects is not such a brand-new, fabulous, fool-proof panacea. Ahem. Did you know the patron saint of fiscal stimulus, John Maynard Keynes, didn't exactly have the house of pancakes bottomless coffee pot of government spending in mind.

Don't take my word for it. Read Lord Robert Skidelsky's "Keynes: The Return of the Master." Everybody else is. But even Skidelsky is being a bit coy in the latest book. He says, "Over time... the high-investment policy should yield to the encouragement of consumption through redistributing income from the higher to the lower-saving section of the population. This should be coupled with a reduction in the hours of work." That's a lot vaguer than what Keynes actually wrote and also much vaguer than what Skidelsky wrote about Keynes a decade ago.

The bottom line is that Keynes's ultimate solution for unemployment now is WORKING LESS and not "spending more". Maybe Keynes was wrong, eh? But in that case the burden of proof is on the advocates of more stimulus to show why Keynes was wrong or at least to honestly acknowledge that what they propose is NOT what Keynes advocated.

Why are our lefties stuck in FDR's 1930s?

Everyone agrees consumers lead our society -- 68-70% of spending. Capital spending won't increase until businesses see consumer spending (demand) increasing. So --

Give the money to the consumers.

Results: The money is deposited in the banks (the Fed can take its money back). Mortgages are paid by those who wish to do so. States and municipalities have an increased source from which to collect taxes and pay for the services that we require. Consumers acquire the means to repair their balance sheets not to mention creating a rainy day fund which psychologically, comforts consumers and increases their confidence when they go out to spend. And they have the money to spend.

Worried about inflation? Don't be. There is so much slack in this economy inflation is a far distant prospect -- unemployment (U6, 16-20%); capacity utilization (August -- 69.6% even with Cash for Clunkers and inventory restocking). You don't get inflation in the absence of wage inflation, and in this economy nobody's getting inflation-type wage increases.

Brass in pocket is the best solution to lack of consumer confidence -- but the pocket has to be filled.

Robert, I really appreciate the serious words you have chosen. If I hear your tone correctly, you are really concerned. And, it seems even Alan Greenspan shares that concern. A few experts, it seems to me, realize how serious all this is.

I think this economy is crashing. Most businesses are now losing money. Corporate income tax payments to the federal government are down about 70% from 2 years ago. Given that many businesses are still making their normal profits, especially those connected with defense/war, then for the rest to bring the aggragate down 70% means too many are losing money. If most businesses are losing money, then they will lay off people, default on their loans, move out of malls, etc.

This mess is not getting better, it is snowballing.

This is a response to an exchange above with Ellen.

Ellen - thanks for the discussion. I phrased my original suggestion as a question rather than an assertion because I recognize that you and others in this thread are more knowledgeable about this topic than I am. Nevertheless, I'm pleased that your first response to my thought about providing the public with more spending money was positive, and that your main criticism was that I wasn't proposing a big enough package. I would favor as big a package as in politically achievable, so we don't disagree there.

The other part of my suggestion was that the government payment to consumers be designed explicitly for domestic purchases. It's my understanding that economists worry that in circumstances such as those we face, many recipients might instead use the money for savings or to pay down debt - commendable actions but not the result that is needed most immediately. You appear to disagree, stating that the decision should be left to consumers, rather than for the government to act in an "authoritarian" manner.

Assuming that Congress wouldn't allow the government unlimited amounts to give away, why wouldn't it be better to use what can be attained just for spending? As an example, cash for clunkers was explicitly given to spend on cars, food stamps are just for food, etc. If "cash for clunkers" is not too authoritarian, what would be wrong with "cash for toasters, bread, circuses, kitchen remodeling, or just about anything else -as long as the money is actually spent"?

I'm trying to be practical. If we had access to unlimited resources, greater latitude might be more desirable. If we can't persuade Congress to give as much as might be optimal, why not use it all to address the most urgent priority?