As talk of a possible recession grows, so too does consideration of a second economic fiscal stimulus package. Rather than craft a conventional spending-oriented stimulus package focused solely on tax cuts for individuals and spending increases, Congress should craft a stimulus package of which at least a portion not only gives a quick shot in the arm to the economy but at the same time also boosts investment that spurs productivity growth and innovation, especially in information technology, which has been the engine of U.S. economic growth for the past decade. In an economy which faces key challenges going forward in areas such as the need to increase international competitiveness, raise productivity, and reduce greenhouse gas emissions, any stimulus package should also at least in part help address these challenges.
In a new report, Timely, Targeted, Temporary and Transformative: Crafting an Innovation-Economics Based Stimulus Package, ITIF lays out eight specific proposals that would not only spur spending and economic activity in the short run, but would also help address these challenges going forward. The proposals are:
- Allow IT Investments to be Completely Expensed in 2009
- Provide a Tax Credit for Investments in Health IT Made in 2009
- Provide $2 Billion to Colleges and Universities That Invest in Needed Research
Infrastructure in 2009
- Provide a Tax Credit of 50 Percent for Investments in Energy Efficient Equipment in 2009.
- Provide $735 million for Computers and Broadband For Low-Income Families with Children at Home
- Provide an $8 Billion One-Time Infusion into the Highway Trust Fund to Spur Ready-to-Go Surface Transportation Infrastructure Investments
- Allow U.S. Companies to Bring Back Foreign Earnings in 2009 at a Lower Corporate Tax Rate
- Provide Forgivable Loans to Make Up State Budget Shortfalls, Provided That States Shore Up “Rainy Day Funds in Later Years
Any stimulus package should be timely, targeted and temporary, but there is no reason why at least a portion of it cannot also be transformative.