Heckava job, Senators

Tim Fernholz thinks the compromise ironed out by the Senate's "centrists" is a bad deal.

An agreement has been reached on the stimulus legislation, and it is an agreement we could refer to as "galactically stupid." The decision to cutting $40 billion in state aid, another $20 billion in school construction, $2 billion for rural broandband access in favor of $30 billion in tax rebates for people who buy homes and cars is a travesty; the former option is more stimulative to the overall economy and targets needed investments, while the latter has a small stimluative value, is regressive and would be a step towards puffing the housing bubble up again. Noam's take is spot on -- "What a relief that those fat-cats in bankrupt states and crumbling schools won't be shaking the rest of us down--not this time." And economist Dean Baker e-mails with the following idea:

We should talk about the spending cuts as job cuts. So cutting $100 billion from the stimulus means that they cut 500,000 jobs. (Working with the Romer-Bernstein numbers, $100 billion would increase GDP by $150 billion. This equals 1 percent, which they calculate translates into 1 million jobs. We divide by two [2-year savings] and get 500,000 jobs.) So the Collins-Nelson crew just cost 500,000 people their jobs. Isn't fiscal responsibility wonderful?

It's a delight.

The conference committee to iron out the differences between the Senate and House versions is growing to be interesting. Cutting aid to the states when some may be running out of money to pay unemployment benefits is appalling and cutting school contruction is just stupid -- it's both great stimulus and important for the long term health of our communities and economy. While trying to put the work of stimulating the economy on the backs of people who, worried about their jobs, are not going to be thinking a tax credit for a new house or new car is all that apealling, recalls a world in which we do not currently live. Hopefully, Obama's events this week, together with pressure from the administration's economic team will fix this damned thing.