Greg Mankiw thinks monetary policy, if it were able to lower long-term interest rates, might still be able to stimulate private investment. Mankiw also raises the important points that fiscal stimulus will (a) raise the level of public indebtedness and place a heavier tax burden on future generations, and (b) might be more efficiently carried out at the state and local level, where infrastructure investments are typically made during normal circumstances.
Other observers, like Paul Krugman and David Brooks, are arguing more unequivocally for fiscal stimulus through infrastructure investments. Brooks in particular raises the point that state spending on higher education, itself an infrastructure investment, should ideally be targeted given how states typically cut such spending during recessions in order to run balanced budgets.
Much has been written about a deceleration in U.S. educational attainment, although that may mean high school graduation rates rather than college. But if students at the margin could be encouraged through an expansion of state support to complete college degrees, that seems like a very worthy goal with at least three important benefits.
While in school, students would presumably not be looking for work and lowering wages for other workers; their human capital investments would pay off for them in the form of higher wages in the long run; and future tax revenues would be bolstered because of their higher wages and the progressive income tax structure.
