Overstimulated

Ed Glaeser has an interesting and thoughtful piece in today’s Globe on the various stimulus ideas floating around.

I am a bit concerned about the rush to spend billions of dollars willy-nilly. The stimulus package has turned into a Christmas Tree of sorts, with every group hanging their desired ornament on it.

But I fear most people are not paying attention to the details. The State has cranked out its list. There are some worthy projects here, but there is also a lot that has not been fully vetted. $200 million for rebates for biomass pellet furnaces? $200 million buys you about 60,000 of those furnaces outright (against a housing stock base of around 2.5 million) and it increases as you lower the rebate (e.g. at 50% rebate, you are supporting the purchase of 120,000 units). Now, I’ve no idea if these furnaces are a good idea or not, but I’m not comfortable with the notion that the state should be subsidizing them on such a broad scale. Put differently, if you had $200 million, what would you do with it?

Another issue is spending on operating items that exacerbate the structural deficit. The City of Boston initially put in for a one-time grant for 10 police officers*. Great, but who pays their salaries and benefits next year?

*The request for the cops is gone now, so maybe that’s a sign of progress.