Here Take This, But don’t Tell Your Mom By: Mark W Adams

Cross Posted at American Street

Hurray!  We're all gonna get Paid!

Remember when your Dad or Grandpa (or perpetually drunk uncle you'd only see on holidays) would slip you a couple of bucks and tell you with a wink not to tell anyone where you got it -- and "Don't spend it all in one place," even though it really wasn't all that much to spread around?  The stimulus package coming out of Washington is kinda like that.

Now that money really isn't much in a 13 Trillion dollar economy.  $150 Billion is like a penny on the dollar in an economy this size.  The stuff you grab at the checkout counter to make the correct change instead of digging through the fluff in your pocket.  That's what Washington says will make all the difference.

As Shep points out, we got the money from the same place we have been right along, our Chinese loansharks.  (That's why Dad told you not to mention it to Mom.)  Up to our eyeballs in hock, we go to the same well one more time.  Meanwhile, the biggest cause of our pockets holding not much more than fluff and a penny or two goes on and on and on. 

We not only are putting our young men and women in harms way as targets in a perpetual occupation -- we're going to make their generation pay for both the war and my new iPhone.  Awesome!  A twofer!!

Krugman is predictably not happy, and for good reason.  Republican ideology trumped good sense.  The myth that these guys are fiscally responsible stewards of the economy simply means that the vast majority of Americans know nothing about politics or economics.

Of all tax and spending stimulus options that CBO examined, the only two that it found would have a large "bang-for-the-buck" as effective stimulus and act fast to boost the economy are the unemployment insurance and food stamp provisions. Both could start injecting more consumer purchasing power into the economy within one to two months. The planned tax rebate checks, in contrast, are not likely to be sent out until June.

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The unemployment insurance and food stamp provisions apparently were rejected by House Republican leaders, who reportedly said that the inclusion of spending measures would be unacceptable to the House Republican Caucus and would derail the package. Such a stance reflects the elevation of ideology over sound economic reasoning.

Lemme get this straight.  Pelosi et al. caved in to some conservative bluster because they threaten to obstruct the bill on ideological grounds -- and the Dem leadership agrees to their blackmail in fear of themselves being labeled obstructionist?  As we see every day, the ruling coalition is not the Democratic Party, but the Blue Dogs Plus the GOP.  The Republicans may be the party of fear, but we're represented (and I use the term loosely) by the party of wusses.

The Street Insider goes on to say, "Economy.com found that for each dollar spent on extended UI benefits, $1.64 in increased economic activity would be generated" and another $1.73 per doller spent on Food Stamps. But for a dollar in lost revenue handed over to the accelerated depreciation portion of the Stimulus Package (the business tax-cut), "only 27 cents" of boost would be realized.

Despite this evidence, the package apparently contains at least $50 billion in business tax cuts while excluding unemployment insurance - the single measure most focused on the people hardest hit by the downturn - and food stamps.

Oh, and the States would lose revenue too on items pegged to the federal and state tax codes -- and they don't get an offset.

Look, I know that any legislation made in haste is going to have problems. But even at a glance, this thing is Teh Suck!

But Oooh! Looook! Shiney!!!

Sorry uncle George. But I AM going to spend it all in one place.