Though President Obama has called it a stimulus package from the beginning, the legislative package that the Senate is now tinkering with is mostly a government spending package. And that’s good, because government spending, done well, could help the economy in a big way right now, but stimulus by itself will do more harm than good.
To see what harm stimulus can do, you only need to look at last year’s tax rebates and the Wall Street bailout. Those were the main causes of the current economic problems. Before that, we just had a financial crisis, which by itself didn’t have the potential to bring down the economy.
But the amendments in the stimulus bill since it was introduced in Congress have been adding stimulus and cutting spending. Provisions like special business tax cuts, if overdone, could compound the problems we are already facing. The rhetoric of “creating jobs” is ironically tied to tax cuts and similar efforts that actually destroy jobs. If this trend continues, we could end up with a real stimulus package. That kind of stimulus package would give the economy a sort of sideways jolt, but wouldn’t help it recover.
You can tell which legislators really don’t want to help the economy when they dismiss spending such as food stamps and extended unemployment benefits as pork-barrel spending. These are the kinds of things the government is ultimately responsible for anyway. It helps the economy, and doesn’t ultimately cost the government anything extra, when funds for programs such as these are available when they’re needed. Regardless of how they explain their actions, the people in Washington who are trying to strip these things out of the stimulus package are just trying to hurt the economy — presumably so they can thumb their noses at their legislative colleagues later. The majority in Congress who care about the economy should just get together and freeze out the few who are trying to sabotage the process, and I expect they will do so over the next day or two.