An agreement has been reached on the stimulus legislation, and it is an agreement we could refer to as "galactically stupid." The decision to cutting $40 billion in state aid, another $20 billion in school construction, $2 billion for rural broandband access in favor of $30 billion in tax rebates for people who buy homes and cars is a travesty; the former option is more stimulative to the overall economy and targets needed investments, while the latter has a small stimluative value, is regressive and would be a step towards puffing the housing bubble up again. Noam's take is spot on -- "What a relief that those fat-cats in bankrupt states and crumbling schools won't be shaking the rest of us down--not this time." And economist Dean Baker e-mails with the following idea:
We should talk about the spending cuts as job cuts. So cutting $100 billion from the stimulus means that they cut 500,000 jobs. (Working with the Romer-Bernstein numbers, $100 billion would increase GDP by $150 billion. This equals 1 percent, which they calculate translates into 1 million jobs. We divide by two [2-year savings] and get 500,000 jobs.) So the Collins-Nelson crew just cost 500,000 people their jobs. Isn't fiscal responsibility wonderful?
It's a delight.
The only light at the end of the tunnel is the conference committee, when a select group of senators and representatives will get together to iron out the differences between the two houses' versions of the bill. It's possible that conference will be a venue to improve the bill, and once it is brought back for a vote -- no amendments allowed -- Obama's national tour next week will have brought enough pressure to bear that a chagrined Republican or two will cross party lines for the bill.
-- Tim Fernholz