Next stimulus package?

The talk in Washington and in the blogsphere has already turned to the next stimulus package (which would actually be our third stimulus package - remember the $152 billion package in the summer of 2008). Before everyone starts getting excited, let me state for the record that I think the talk is premature. I don't think the previous stimulus funds have yet started to do their macroeconomic job. But, if policy makers are going to put together another economic package, there are a number of things that should be in it.

First, let me reiterate what I have said before. Any economic package needs to be transformative. Simply reflating the bubble is unacceptable. Thus I reject any ideas that only spur consumption. We need to be investing and rebuilding, not buying more consumer goods from abroad.

Here are some of the ideas. First and foremost, invest in workers. Put in place a knowledge tax credit to spur companies to send workers to training, rather than unemployment lines. There are ideas floating around about giving workers government paid time off. I think that is a bad idea. Rather than paying them to do nothing, pay them to upgrade their skills to make themselves, their companies and the nation more competitive. As I've said before:

If we can give companies a tax break for a new piece of equipment (as we did in the first stimulus package), surely we can give companies a tax break to upgrade their most valuable asset: their workers.

Next invest in the creation of the infrastructure needed to foster other intangible assets. We need programs to stimulate innovation. Not just in energy, health care and use of IT in government -- as the Administration seems to be doing -- but across the board. We need programs to stimulate entrepreneurship. We need programs to help companies, especially small and medium size businesses embrace design thinking -- and the 21st Century linkage between manufacturing and services.

Finally, we need to invest in creating an economic strategy. As I mentioned last November, there are numerous calls for a new strategy. Since then, more and more respected business and economic leaders have joined in the call. Back in November I noted that Michael Porter ended his Business Week article Why America Needs an Economic Strategy - with the following:

We will need some new structures to govern strategically. I served on the last public-private President's Commission on Industrial Competitiveness--in 1983! This time we need one that is less politically motivated. Congress would benefit from a bipartisan joint planning group to coordinate an overall set of priorities.

We had such a group. It was a bipartisan Congressionally created organization - the Competitiveness Policy Council. It was created in the 1988 Trade and Competitiveness Act and operated from 1991 until 1997, when the GOP-controlled Congress cut off its funding. There was also legislation submitted in 2004 by Senator Lieberman to create a Commission on the Future of the US Economy -- which Athena Alliance consulted on and supported. It is time to invest in this strategic process as part of any new economic package.