海角大神

A modest thought experiment: Here is a check for $858 billion. Your job is to boost short-term economic growth. What would you do with the money?

President Obama and a huge bipartisan majority of the Senate have given us their answer (and the House is likely to add its support tonight or tomorrow): They鈥檇the Bush-era tax cuts, restore the estate tax but at an historically low level, cut payroll taxes for all, protect the middle-class from the Alternative Minimum Tax for another year, and continue jobless benefits for the long-term unemployed.

But upon closer inspection, very little of this massive increase in the deficit over the next few years will actually . If you care about the bang for the buck鈥攁nd given our long-term fiscal mess, you should鈥攖his new law is a colossal waste of money. In fact, you'd be hard pressed to use $850 billion in a way that's less effective than much of what鈥檚 in this package.

By my rough calculations, more than half 鈥攁t least $450 billion鈥攚ill do little or nothing to boost the economy in the short run. It won鈥檛 increase demand for goods and services. It won鈥檛 increase investment. And it certainly won鈥檛 create many new jobs. It will, however, provide a fabulously generous tax windfall to those who need it least.

Would you, for instance, try to boost short-term growth by giving a few thousand super-rich a $70 billion tax cut? Or by continuing $55 billion in mostly dubious special interest tax breaks for NASCAR race track owners, Manhattan real estate developers, ethanol producers, and other worthies? How about giving $27 billion in tax cuts to married people for being married? Or slashing payroll taxes for all workers, including those making hundreds of thousands of dollars a year? The entire payroll tax cut will increase the national debt by $100 billion, and more than $3 billion will go to those making $500,000 or more (who get an average of more than $2,600 each).

That鈥檚 not to say the deal is all bad. I would include some bits in a serious stimulus bill. For instance, I would use low-income tax credits such as those in the 2009 stimulus bill to put cash in the pockets of people most likely to spend it. I鈥檇 also keep tax rates relatively low, especially for low- and middle-income families. But those provisions account for perhaps one-third of that $858 billion.

Obama, Senate GOP leader Mitch McConnell (R-KY) and other supporters of the plan , of course, that 鈥渄oing nothing鈥� would lead to economic disaster. No doubt simply letting all of the Bush era tax cuts die would take money out of people鈥檚 pockets in the midst of a soft economy, and that would be a bad thing.

But that鈥檚 the false choice into which Obama allowed himself to get shoved. How did it happen that President of the United States found himself with only two fiscal policy options: Extending a collection of decade-old tax cuts, or letting them die?

In a sane world, government would design economic stimulus that made sense on its own terms. It would ask the simple question: What taxes should we cut and what spending should we adjust to maximize economic growth and job creation? But that鈥檚 in some parallel universe, not in the Washington of 2010.

So hooray, we have bipartisan fiscal policy. But it is in large part a massive waste of scarce fiscal resources and nothing to be proud of.

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