Summary of the Article

Summary of the article:
Obamaʹs economic recovery plan not a hit with economists
By Paul Wiseman and Richard Wolf
USA Today
September 8, 2010
In an attempt to boost the struggling economy, President Obama proposed a new $180 billion package of tax
breaks and transportation projects. Obamaʹs proposal includes the following:
-Allowing businesses to deduct from their taxes 100 percent of investments in new equipment through 2011,
giving businesses an additional $200 billion right away and costing the Treasury only $30 billion over the
next ten years due to depreciation write-offs.
-Expanding the business tax credit for research and development and making this credit permanent, at an
estimated cost of $100 billion over ten years.
-Construction spending of $50 billion to build or repair roads, rail lines and airport runways.
Some economists are not convinced that these proposals will create any dramatic improvements in the
economy, claiming that they will not result in the creation of many new jobs and that tax breaks on payroll
taxes may be more effective than credits for research and development. Economists Mark Zandi and Alan
Blinder did say, however, that construction spending on infrastructure eventually generates $1.57 in growth
for every dollar spent, but the benefit to the economy will not be immediate.
-Even if the Obama administration succeeds with its effort to gain Congressional approval for its proposals, it will still take time for these policy to actually work. The time it takes for these policies to work is known as

A) inside lags.
B) outside lags.
C) automatic stabilization.
D) crowding out.