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Home » Girl Gone Wonk

Economic stimulus is in the eye of the beholder

Submitted by on Monday, 9 February 2009 No Comment
Trying to define what is and isn't economic stimulus is beginning to look like that classic judicial struggle to nail down pornography: "I know it when I see it."

The problem is, too many are seeing it with partisan-colored glasses. It's funny when Republicans do that, because one of the chief conservative gripes from the start has been that stimulus proposals use the economy as an excuse to pour money into liberal favorites.

Et tu, GOP?

Housing

A $36 billion proposal by Georgia Republican Johnny Isakson would offer a $15,000 tax credit to anyone who buys a home in the next two years. It's in the Senate version of the bill.

A $1.2 billion plan to improve Section 8 housing was eliminated from the Senate version.

Homes for those who can afford to buy and whose credit will pass today's stringent standards: Good.

Fixing homes for people forced to rely on government help: Bad.

Problem is, Isakson's proposal likely wouldn't stimulate much of anything. Housing inventory already is bloated, with one marketer of foreclosed properties listing 1.5 million bank-owned homes. Builders in many parts of the country are stuck with unsold homes.

Jobs in construction? Not anytime soon. Commissions for bankers and Realtors? Most definitely, and wouldn't it be hugely ironic if the stimulus enriched two of the prime groups responsible for landing the nation in this mess.

Construction

The House and Senate versions have only minor differences in spending for transportation projects, including $27 billion for highway and bridge construction and repair.

The Senate version, though, eliminates $16 billion in school construction.

Maybe there's some technical reason all construction work isn't created equal. Otherwise, you'd have to assume this is a back-to-the-Republican roots movement that will lead to education once again being a state responsibility. Let's see if that position changes when it's time to renew No Child Left Behind.

And speaking of states, the Senate compromise also slashes aid in that area by $40 billion. As if government employees and teachers aren't workers, too. Oh, wait. They're union members.

Watch for the next "foreclosed" sign to go up on the state of California.

Cars versus kids

The Senate version adds a tax incentive for folks who buy new cars but cuts by $1 billion child-care funding.

“Maybe it’s to help future Obama cabinet secretaries, so that they don’t have to pay taxes on their nannies,” a Heritage Foundation budget expert quipped.

Or maybe it's to help lower-income workers deal with child-care costs growing at twice the rate of inflation, so they can actually afford to go to work.

Then again, if they don't go to work, that would trigger a round of "I told you so's" from the set that frowns on extending unemployment and other benefits to low-income workers, something that remains in both versions of the stimulus plan.

"As for extending unemployment benefits through the downturn, it might be a good idea for other reasons, but it wouldn’t stimulate economic growth: It would provide an incentive for job-seekers to delay reentry into the workforce," The National Review proclaims.

As if existing on half your normal pay, with no health insurance, is as glorious as a finacier's junket on the taxpayer's dime.

And they're wrong about extended benefits not stimulating growth.

"Lower-income households are more likely to be credit constrained and more likely to be among those with the highest propensity to spend. Therefore, policies aimed at lower-income households tend to have greater stimulative effects."

Don't take the liberals' words for it, though. That's coming from the nonpartisan Congressional Budget Office.

Copyright 2009 Debra Legg. All rights reserved.

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