The core of this column is a celebration of a remarkable career that still keeps motoring on. But I cant let the week go by without some observations on the stimulus package.
There are three goals here. The first is quick stimulus, the equivalent of shooting adrenaline into the veins of a sick patient. The second is to alleviate suffering, for those unemployed, hungry or worse off in a truly bad economy. The third is to add investments, in areas where not all the payoff will come in the next year or 18 months, but where the long-term value will grow our economy in ways that will ameliorate the fiscal stress we will face in the coming decade.
Using these criteria, both the House and Senate plans are flawed. In some ways, I am more disappointed in the Senate bill. The $70 billion alternative minimum tax fix put in at the behest of Sen. Chuck Grassley (R-Iowa), who did not even support the package violates every principle of those opposing a stimulus package, namely a worthy goal that has nothing to do with stimulating the economy.
To keep in a package of tax cuts for well-to-do families who will not spend the additional money they get, and cut out funds for school construction and some infrastructure spending, including information infrastructure, that would be stimulative, and to shortchange cash-starved states and localities, is foolish at best. The same is true of cutting funding for science and health research.
At the same time, neither the House nor the Senate bills have included significant funds for defense, where a lot of needed priorities that would be beneficial and would gin up the economy are going wanting. Simply start with replenishing the supplies and equipment we will leave in the deserts of Iraq, much of which came from state National Guards that could use it back, and that will get factories humming across America.
But here is the bottom line. Our economy, and the global economy, are both in dire straits. If we fail to act to get things moving, we could fall into a global deflation, which will cause enormous pain for years to come. A sizable portion of the economic distress is psychological; people simply stopped spending money last October, and stopped investing in the securities that provided a large share of the capital for companies and individuals to borrow. A stimulus package has to provide some real stimulus, but it also has to convince people that government is finally working that help is on the way even if it will take a while to get them to open up their wallets.