Originally Posted by MTI

The first is that tax cuts are part of the solution. Harvard professor and economist Greg Mankiw points out that recent research confirms that tax cuts have a greater multiplier effect than new spending — more economic bang for the federal buck.

We should lower tax rates for middle-income families and eliminate their tax on savings altogether — no tax on interest, dividends or capital gains. Let’s also align our corporate tax rate with those of competing nations. These actions will rapidly expand consumption and investment, and right now, time is of the essence.

On the spending front, infrastructure projects should be a high priority. But because infrastructure projects involve engineering, environmental studies, permitting and contracting, they can take a long time to actually boost the economy.

Spending to refurbish and modernize our military equipment is urgently needed, and it has a more immediate impact on the economy. A great deal of our armament was damaged or lost in the Middle East, and the rest is long overdue for maintenance.

We should also invest to free us from our dependence on foreign oil, not by playing venture capitalist, but by funding basic research in renewables, material science, combustion, nuclear reprocessing, and the like. During the 2008 campaign, virtually every candidate agreed on the need for an “Apollo-like mission” to achieve energy independence. Now is the time to start.

Cities and states will clamor for government dollars. Like the Big Three automakers, states should first take advantage of the downturn to do some needed cost cutting and restructuring. State employee numbers, pensions, and health-insurance premium sharing — as well as duplicate and ineffective agencies and programs — should be high on the hit list. State budgets should be brought in line with those of the most efficient of their comparables. And the federal government should look to ease the burden of mandates on states, like Medicaid..

Lowering taxes for middle income taxpayers, infrastructure spending, upgrading military stockpiles and renewable energy research funding, in a federal stimulus program. A good idea?