Even if Republicans don't want to revive stimulus spending, they could take a smaller step, one that implies no direct fiscal stimulus but could unlock some $20 billion in infrastructure funds for states.
So says Peter Orszag:
"The unemployment rate remains stuck at more than 8 percent. More investment in roads, water systems, airports and other public infrastructure would bring both short- and long-term benefits. And state and local governments face ongoing deficits. So wouldn’t it be great if we could design an efficient way to channel tax subsidies to state and local governments to invest in infrastructure?
"Turns out we already have: the Build America Bonds program, which was a huge success in 2009 and 2010, but then expired. If you want an example of how political polarization is impeding sound economic policy, BABs would be hard to beat. Despite no credible argument against it, a divided Congress refuses to reinstate the program."
