If Spending Is the Goal, Try Use-It-Or-Lose-It Gift Cards
In the past few days, I have read numerous disquisitions on what John Maynard Keynes meant when he said, "In the long run we are all dead." Economists, journalists and bloggers have rushed to defend Keynes against accusations that his childless state somehow made him disregard the long run in favor of short-term stimulus policies.
I'll leave "long run" to the etymologists. What struck me about the outpouring is just how many advocates there are for more government spending. When the economy is depressed, the government needs to borrow and spend so we have the means to spend, Keynes argued. It's that simple.
So is the solution. If spending is, in fact, the goal -- and based on what I read, it seems to be -- then success is within the government's grasp. Just follow a few simple steps:
The U.S. Treasury sells a special issue of very short-term securities with, say, a one-month maturity at an interest rate close to zero. Call them "spending bills," not to be confused with savings bonds. Since borrowing is costless, the sky's the limit when it comes to the amount.
Next, Treasury issues every household a pre-loaded gift card that expires in one-to-three months. Use it or lose it. No bureaucrats or federal programs required. My plan eliminates the middle man and delivers spending power directly to the people.
I'll leave it to the government to decide how to allocate the funds. It may decide to give more to those with less, and less to those with more, thereby satisfying President Barack Obama's fairness doctrine. Treasury can repeat this exercise as needed.
Voila. Power to the people. Spending power, that is.
Silly, you say? To the contrary, my plan is an efficient way to achieve what Keynesians are advocating. If it doesn't make sense, talk to them about their premises.
(Caroline Baum is a Bloomberg View columnist. Follow her on Twitter.)