A faulty stimulus.

• Author: Rothschild, Matthew
• Position: Comment - Statistical data - Column

You'll probably be getting your rebate check soon from George W. Bush. Go ahead and cash it, and spend it, too, preferably at a locally owned business. The economy needs the injection. But the stimulus package that Bush and Congress agreed upon wasn't nearly as economically or ethically sound as it should have been.

Despite attempts by some Democrats to extend benefits to the unemployed and those on food stamps, the final package failed to give the biggest boost to people who needed it the most--and who would have spent the money the quickest. Nor did the package give relief to people facing foreclosure. Nor did it have a dime in it for public works. The idea that we're a community and that we have an obligation to the least among us and that we ought to create good public jobs to improve the commons and spare the environment--none of that entered into the final equation.

It was simply spend, spend, spend. Shop, shop, shop. But all the spending and all the shopping won't do as much good as they used to, since many of the consumer goods are now manufactured in China for slave wages. As Jesse Jackson pointed out, Bush is dropping gift certificates to Wal-Mart from the sky instead of giving people good jobs here at home.

Oh, there was one other element to Bush's stimulus package, and that was to give businesses a tax break on capital spending, along with a bonus depreciation for investments made in 2008. This is just about the worst way to help the economy out. The last time Bush gave out this tax break, most businesses said it didn't make much of a difference on their decisions, such as whether to build a new store or not, according to the National Association of Business Economists.

Contrast the economic benefits of this business tax break to those that progressive Democrats proposed and to those that finally made it in.

"A study by Moody's Economy.com chief economist Mark Zandi estimated that expanding bonus depreciation would generate only $0.27 in new economic activity per $1 of government cost," noted an article from CNNMoney.com. "The $600-a-person income tax rebates that are the stimulus package's centerpiece, by comparison, would produce more than $1 for each dollar spent, while expanded unemployment benefits and food stamps--initially proposed by Senate Democrats, then dropped in the face of a threatened Republican filibuster--would have generated $1.64 and $1.73, respectively, according to Moody's calculations."

But hey, businesses...