The Washington Post, in its editorial yesterday, commented on the $800 billion-plus stimulus package. Excerpts: “It is the right size, it is the right scope,” Obama said at a town meeting in economically distressed Elkhart, Indiana. Of course, it is still not entirely clear what “it” is. The House has produced an $819 billion plan that emphasizes new federal spending over tax relief. The Senate is working on an $827 billion proposal tilted more toward tax cuts, in order to garner sufficient moderate Republican support to prevent a filibuster.
As Obama said Monday night, a stimulus bill is badly needed, and soon. And the differences between the House and Senate measures are not large. Both would spend $47 billion to extend and slightly increase unemployment benefits; increase spending for food stamps; incorporate Obama’s proposal for a $500-per-worker, $1,000-per-couple tax credit over the next two years; and raise the earned-income tax credit for the working poor. The relative consensus on these points is welcome and not that surprising, since they represent the least controversial examples of short-term, quick-spending aid in the two bills.
Sens. Ben Nelson and Susan Collins worked to scrub some less plausibly stimulative stuff from the Senate bill. But that measure still contains some dubious provisions, especially on the tax side. A $15,000 tax credit for new home purchases this year, which would cost more than $35 billion, looks especially wasteful. The proposal, drafted by Sen. Johnny Isakson, is supposed to stimulate the moribund housing market. Actually, because it is not limited to first-time homebuyers, the credit would do little to reduce swollen inventories: Homeowners who used this tax break to get a new house would have to put their old one up for sale.
