Galbraith wrote in the New Republic yesterday on other ways that money needs to be spent, NOW:

We need to start working on short-term projects just to stabilize the economy. Unemployment insurance is on everybody's list. The coverage right now is low, and a lot of people are going to need it. There are also simple things like revenue sharing--where the federal government writes checks to state and local governments. You want to keep libraries open, schools open, the parks open, the teachers on payroll. If you lay them off, they'll have more trouble paying their mortgages, and then the housing crisis will get worse. The elderly population is taking a major hit to its wealth as a result of the stock market collapse, and that's another problem we can deal with quickly. I would suggest bumping Social Security benefits up 20 or 30 percent. You can't replace everyone's losses individually. But we should make sure that as elderly people lose their 401(k)s, they don't fall completely below the poverty line, and that the elderly as a whole don't lose their purchasing power. . . . Looking further down the road, at grand strategy, renewable energy is what will be to the next generation what information tech was to the last one. Another long-term problem we have to fix is the physical stock of housing. There are millions of houses sitting on the market, and in increasing numbers, they will be abandoned, driving down the price of houses in the neighborhoods. I would start with a Home Owners Loan Corporation, modeled on the New Deal, that would get into the business of renegotiating terms and working to keep people in their homes. . . .

Last month Galbraith added more on his idea for revenue sharing from the feds to the states:

Radke: You have proposed that the federal government help states invest in infrastructure. What are you imagining?

Galbraith: As credit markets have frozen up, states and localities have much greater difficulty financing public capital expenditure -- just at a time when the resources in construction are available because the housing sector is in a slump. So we ought to be taking advantage of the borrowing power of the federal government to pass funds to states and localities to rebuild an infrastructure that has been neglected for over 30 years.

Radke: What would all of this deficit spending do to our long-term health?

Galbraith: It would improve our long-term health. When the private sector is not able to take out loans and to have an expanding credit-based private economy, then the public sector must. If neither does, then you have a great depression. That's the disaster you want to avoid.

On why infrastructure spending makes sense, an interested party (the head of the American Council of Engineering Companies) adds:

"An infrastructure-based economic stimulus package would spur immediate job creation and economic growth. At the same time, it would help create the critical infrastructure base needed for America to compete in the 21st century--an added benefit that an exclusively tax-based stimulus program can't offer." [David] Raymond emphasized that the impact of infrastructure investment would be immediate, as state departments of transportation have $18 billion in approved projects that could be contracted within 30-90 days. Transit agencies have an additional $3 billion in projects and public water utilities and sewer authorities have identified $16 billion in ready-to-go drinking water and wastewater projects. Studies show that each dollar invested in infrastructure generates $1.80 of GDP in the near term. Each $1 billion in infrastructure spending supports more than 34,000 jobs.blockquote>