What About Stimulus Vouchers?
Individual grants of cash may not work because of fear. People will save the dollars or pay down debt. But if you made the grant in the form of script or coupons, you could force the money to be spent for goods and services. The value of the script could be limited to say 90-days. It could not be used to pay down debt. It could not be saved. Redemption by merchants of the script for dollars could be handled by commercial coupon redemption centers. Now, of course, it's possible that this idea has already been floated. But you never know.In my experience it's never safe to assume that everything has been considered. I haven't seen this idea anywhere. What about it, folks?
UPDATE 1/11 - Len Burman of the Tax Policy Institute wrote that he offered a proposal in this spirit in mid December on the NYT economics blog:
Finally, there will almost surely be some sort of consumer rebate. The last two times, this was done through cash payments from the I.R.S. and the results were somewhat disappointing. A significant fraction (40-50 percent) of the money went into savings or reducing debt rather than additional spending. While saving is a virtue, it does not boost the economy in the short run.
An alternative that might produce a bigger boost would be to send everyone with a Social Security number a prepaid card, like the ones offered by major credit-card companies. The money could be spent at any retailer that accepted the company’s credit cards. In principle, the card would be the same as cash, and might still allow consumers to save more. In practice, we know from behavioral economics that labeling matters. If people get a card that they can only use if they spend the money, their spending is likely to increase more than if they can bank a rebate check. And the experiment would produce fascinating data for economists to study.
There would be some administrative issues. To deter theft or fraud, card recipients should be instructed to activate their cards by telephoning an automated number and saying their Social Security number (which would not be on the card). Some people would not get cards because their addresses changed. Presumably they could apply for one on their income tax return or by filling out a form if they are not required to file. And card issuers should be required to compete to offer the new cards to minimize the cost to the government.
If nothing else, the proposal would create jobs in the credit card industry.