Sunday, February 08, 2009


After complaining about ineffective stimulus or non-stimulus proposals in the House bill, the Senate has not only eliminated some of the most unambiguously effective stuff, such as $40 billion to head off state and local government spending cuts (by definition "shovel-ready") - it has also put in a $70 billion alternative minimum tax (AMT) patch for 2009.

As anyone even minimally expert on these issues already knows, that is about as ineffective a stimulus provision as one could possibly have. The money goes mainly to upper-income individuals, who are unlikely to change their consumer spending much in consequence of it.

No doubt the House will accept it, however, in exchange for genuinely stimulative spending provisions.

The only principled defense one could offer of it is that it makes the true stimulus bill smaller, arguably reducing the deficit relative to having a full-size stimulus bill plus the AMT fix to boot (since no doubt it would have been adopted anyway). I happen to think that a smaller stimulus bill is wrong on the merits despite the long-term fiscal problem. But couldn't they try to make the case directly if that's what they believe?

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