clipped from: www.cbpp.org   

ECONOMIC POLICY IN A WEAKENING ECONOMY:
Principles for Fiscal Stimulus

By Chad Stone and Kris Cox


Targeted measures are those aimed at individuals and entities that will spend quickly the bulk of any new resources they receive.  Tax cuts that mainly benefit high-income individuals are poorly targeted to provide stimulus, because those individuals are more likely to save a large share of any increase in disposable income they receive than are people of more modest means.  Government-funded construction projects that take many months or even several years to get underway are poorly targeted as well.  In contrast, tax cuts and increases in government spending aimed at low- and moderate-income consumers and unemployed workers — such as tax cuts that provide a flat refund to all tax filers, additional weeks of unemployment benefits to workers who have been unable to find a new job, and increases in food stamp benefits — are far more effective as stimulus.

How an Employment Trigger Would Work