Economy: Given the forces brought to bear in Washington, the chance of some kind of big-spending "stimulus" package getting passed looks pretty good. The only question is, what kind of stimulus?
The answer to that question matters. It will go a long way toward deciding whether the bill will be acceptable to voters - and whether it will work economically.
As it is now, the Democrat-crafted stimulus package is nothing short of a disgrace.
It spends money on all sorts of things we don't need right away, creates new permanent spending programs and flushes literally trillions of dollars down the government spending drain.
As Bloomberg.com noted Monday, the total for all the bailouts, stimuli, emergency loans and guarantees provided by the government over the last year and a half is now $9.7 trillion - two-thirds the size of our entire economy. Guess who'll pay for that.
But will it even work? A large body of economic opinion suggests the answer is no. Martin Feldstein, a Harvard economist and former president of the National Bureau of Economics Research, called the stimulus package an "$800 billion mistake." The bill, he says, spends far too much for too little in return.
This view is supported by an analysis from the Congressional Budget Office, which found that either the Senate or the House "stimulus" bill would in fact reduce GDP 0.1% to 0.3% over 10 years.
We'd be better off doing nothing, the nonpartisan CBO says. Why? Both stimulus plans spend vast sums in ways that won't do much to boost output or employment. They will, however, swell the national debt, leading to less investment.
Many economists think tax cuts would be the best stimulus. One of the strongest proponents of this theory wrote in 2007 that for each $1 in tax cuts, GDP will expand by $2 to $3. Her name is Christina Romer, now President Obama's top economics adviser.
We hope her boss is listening. Spending should be de-emphasized and tax cuts emphasized for the bill to succeed. This would not only boost the economy. It would be the surest way of getting political backing from voters - and perhaps even bipartisan congressional support from Republicans.
This is vital, since Americans are skeptical of Congress' plans.
A new IBD/TIPP survey finds 77% of Americans favor individual tax cuts, 67% favor business tax cuts and 63% favor capital gains tax cuts to kick-start the economy. A Rasmussen survey found pretty much the same thing. People want tax cuts, not spending, to dominate any stimulus package.
Yet, despite this, or perhaps because of it, Democrats are working at a frantic pitch, scaring voters with tales of disaster if a big-spending, pork-laden stimulus bill isn't passed right away.
President Obama has warned of a "catastrophe" if nothing's done soon. And when asked by NPR about the lack of focus of much of the spending, House Appropriations Committee Chairman David Obey responded: "So what? This is an emergency."
Even the president seems to agree with this, stressing that the purpose of the bill is "spending" - never mind on what.
But what we spend the money on does matter. While almost everyone agrees a little timely infrastructure spending might help, it would be far better to "spend" the money in the stimulus package on tax cuts than on literally dozens of wasteful government programs hastily enacted by a panicked Congress.
Americans are right to hold their representatives' feet to the fire on this. And they need to remember at election time in 2010 who voted for more waste and less stimulus, and who didn't.