Senate Proposes to Add to the Deficit Financing (Why This Bear Got Even More Angry)
Oh good grief:
Still, pressure from the elderly and labor unions – both politically potent forces – is spurring senators from both parties to call for the extras. The House plan leaves out some 20 million seniors, according to the AARP … Some senators also were pressing to add to the business tax breaks in the package, including restoring a measure dropped during the House negotiations that would let businesses suffering losses now to reclaim taxes previously paid.
Before I rip into this political pandering, let me try to say a few nice things (if I can). I was hoping that Senate tinkering would increase the bang for the buck. And maybe a non-Ricardian version of the Life Cycle Model of consumption has seniors with a higher marginal propensity to consume tax rebates. But remember that I’m sort of a member of Greg Mankiw’s Coalition with at least this minimal qualification for any package that comes out of Congress:
I’d prefer a fiscal stimulus package that does offer more bang for less bucks.
But it does seem that the politicians want more bucks, which means more debt passed onto our kids. Maybe Lawrence Summers was right to call for some fiscal stimulus, but the kind of political pandering that has ensued is just making me even more Angry.
Update: BNA writes that Max Baucus might be listening:
Senate Finance Committee Chairman Max Baucus (D-Mont.) announced a $156 billion economic stimulus proposal Jan. 28 that would offer flat $500 tax rebate checks to individuals, rather than rebates of up to $600 as proposed in the House, and include an extension of unemployment insurance. Unlike the compromise package agreed to between the White House and House leadership on Jan. 24, the Baucus proposal – which will serve as the chairman’s mark for a Jan. 30 Finance Committee mark up – also would expand the rebate checks to people who only get their income from Social Security.
Oh, he will be hammered by the GOP spin machine but proposing to reduce the $600 to $500 for those who are not liquidity constrained so as to offer more to those who are strikes me as good economics – assuming we need fiscal stimulus.