Mankiw on Fiscal Stimulus

Harvard Economist N. Gregory Mankiw was on CNBC again this morning discussing the stimulus package. The bill that is being hashed out in Congress is a combination of tax cuts and government spending, seemingly textbook treatment of expansionary fiscal policy. The textbooks say that spending has a more direct stimulative effect and a larger multiplier because the money is actually spent. Tax cuts are often saved. Mankiw, and several others, are beginning to argue that recent research shows that tax cuts have a higher multiplier, in spite of what the textbooks say (including his own). Also, one of the big concerns with government spending is the lag time involved. How long will it take before the government spending projects actually translate into income for consumers? Also, skeptics of the package accuse Democrats of using the current situation to load up the bill with all the unfulfilled Democrat "to-do-lists" that haven't gotten done in the past fifteen years. Let's hope the wisdom of crowds prevails and the bill that results is truly the best effort of our representatives in Congress.