THE STIMULUS PACKAGE now dragging its sorry behind through Congress is a bill that is too stupid to fail. So many politicians have loaded so many bad ideas into it that under no circumstances will they not let it become law. First there are the bad pork barrel spending ideas–the subsidies for aquatic weed management and all that. Then there are the dumb Republican ideas, including the repeal of the alternative minimum tax, which gives corporations the incentive to dredge up all the old loopholes that supply-siders spent so much of the 1980s trying to eliminate. Finally there are the awful Democratic ideas. Against the evidence before our eyes, the Democrats have decided that this recession has been caused by a crisis in consumption. The fact that consumer spending remains high and that the retail sector is enjoying something of a bull market is no reason not to think that consumption is in the tank, they say. So the Democrats have come up with all sorts of spending plans designed to get people to the malls. I don’t know why they haven’t proposed rerouting squads of cargo planes to drop Emergency Shopping Rations (ESRs) onto motorists in Wal-Mart parking lots. It’s a more efficient way of boosting consumption than any they’ve so far devised. So we can be pretty sure that something called a stimulus package will pass. If the economy rebounds in the first or second quarter of next year, as most economists and Wall Street-types expect, then the stimulus package will have its effect at pretty much exactly the most useless time. What’s most depressing about the whole exercise is not what’s in the legislation, dreary as that is, but the way the debate has been conducted. Keynesianism reigns triumphant. There used to be people called free marketeers who believed that the government could not intelligently time a stimulus bill to effectively goose a dragging economy. These thinkers, who used to be known as conservatives or libertarians, argued that economic planners simply lacked the information necessary to successfully manipulate the economy. But apparently there are no such creatures any more, certainly not in the Republican party. Now every Republican, it seems, has his own stimulus package ideas that will allegedly pull exactly the right strings in exactly the right manner to stimulate economic growth. The second depressing feature of the debate is the death of the supply-side ethos. The supply-siders’ greatest achievement was not to win arguments against liberals. It was to win arguments against corporatists. They insisted that Republican economic policy should serve some higher purpose than simply pouring money into corporate bank accounts. They put forward plausible and idealistic notions of how tax policy could be changed to stimulate industriousness, productivity, and other virtues. Most current Republican congresspersons were in business in the 1980s and weren’t paying attention to politics. They didn’t really follow the supply-side wars. They don’t know the arguments, as is obvious from the current debates. So corporatism has returned with a vengeance. Now, in order to save the manufacturing sector, or any other sector, it is deemed important to hand subsidies to business honchos. If this strategy worked, Belgium would be the greatest nation on the earth. When the Europeans subsidize business we call it dirigisme. When Republicans do it they call it a stimulus package. Meanwhile the few remaining good ideas in the stimulus package wither. The Bush administration is bravely trying to accelerate some of its cuts in the income tax rates. But the centrist package, which the administration semi-applauded, includes a only 1 percent cut in one of the mid-level marginal rates. Whoop-de-do. Meanwhile the new ideas–such as Sen. Pete Domenici’s payroll tax holiday–don’t do anything to rearrange incentives and make America a more productive nation. It’s all depressing, and the saddest thought of all is that, according to White House budget director Mitch Daniels, during the rest of President Bush’s first term the budget will be in deficit. That means that the GOP can probably kiss goodbye any thoughts of privatizing Social Security. Republicans can also probably forget about a future round of tax cuts. They will spend the next few years desperately trying to save the cuts they’ve already passed. But hey, they will have this stimulus package to look back on–possibly the worst way to spend $60 billion (or whatever it turns out to be) that could be imagined by the mind of man. David Brooks is a senior editor at The Weekly Standard.
