As a result of, and in addition to, the credit crunch, it looks as if we’re in grave danger of a bad recession. That suggests the need for macroeconomic stimulus, and accordingly the Democrats in Congress are working on a package.
One problem with the “stimulus” strategy is that it takes time to move money through the pipeline; instead of usefully absorbing otherwise unemployed capacity, the stimulus can arrive just as the economy moves toward full employment, thus worsening the risk of inflation.
If the problem is to spend lots of money quickly wihtout wasting it, I have a suggestion: double the budget of every peer-reviewed research-funding agency and tell them to use it on the projects that just missed the cut this year and last.
Those projects are already designed — many of them are continuations, and in that case they’re already up and running — and the money would start flowing almost immediately. Since National Institutes of Health has been funding only about the top 6% of its proposals, there’s lots of high-quality stuff already evaluated but not funded. The NIH is the whale of federal research-grant agencies, at about $30 billion a year. The National Science Foundation comes in a distant second at about $7 billion; I’m not sure how much the others (NOAA and EPA, for example) amount to, but this could be a noticeable chunk of a stimulus package.
The other obvious approach is revenue sharing with the states, on a capitation basis.