One of Greg Mankiw’s ideas

Read the whole post, for Greg's full set of prescriptions, but this idea I had not previously considered:

I recognize that some state governments are now struggling in light of
the macroeconomic crisis. For the next two years, I would let each
state governor have the authority to divert a portion of the payroll
tax cut in his or her state and take the funds instead as state aid.
This provision would essentially be giving governors the temporary
authority to impose a payroll tax on his or her citizens, collected via
the federal tax system. Those governors who think they have valuable
infrastructure projects ready to go would take the money. When
designing a fiscal stimulus, there is no compelling reason for one size
fits all. Let each governor make a choice and answer to his or her
state voters. It is called federalism.

And here is Greg on the broken window fallacy, worth a read.


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