And bipartisanship, even in this buyerís market, is cheap at an extra $20 billion. Thatís how much Bush, who publicly entered the fast-gathering stimulus-package debate Wednesday for the first time with a bid of "$60-$75 billion," topped Tom Daschleís whispered $50 billion earlier offer. Thatís on top of the $55 billion already dashed off to rebuilders and the airline bailout. So what's to worry about? Greenspan and Rubin say any more than $100 billion total (roughly 1 percent of GDP), and youíre begging for rising interest rates now and rampant inflation later.
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Bush says never mind all that $75 billion buys him a plan "to encourage consumer confidence, enhance business investment, as well as to take care of displaced workers." In other words, a nice, bipartisan, practically triangulatory sampler of things like extended unemployment insurance (very popular with the Democrats), sending out rebate checks to poor non-taxpayers (also a Democratic suggestion cutting payroll taxes is a possibility too) and just enough corporate tax breaks to keep the business lobby off the ledge and Dick Armey from bolting to the Libertarians.
Armey wants at least $150 billion a year in permanent tax breaks corporate, capital-gains, all the old favorites. But he can also see that 90-percent light shining on Bush, and he's telling colleagues to "stay disciplined and keep a tight focus" and the press that the benefits-and-rebuilding parts of Bushís plan are "like pouring sugar in a gas tank."
Armey isnít crazy. Business tax breaks would get directly to the source of a lasting recovery while sprinkling some change in the consumerís pockets just buys us a little more time. But Bush knows who won in 1992 and who lost. Payouts like extended unemployment benefits may be economically undynamic, and theyíre hardly the sort of income likely to inspire a renewed spending spree, but they look good, they feel good, and they keep the class critics away. It was Bush, after all, who said yesterday that "one lay-off was one lay-off too many."
And the plan makes him bipartisan. Rumsfeld and Powell are keeping up the GOPís end on foreign policy, but Bush knows the Republican Party doesnít have a ton of credibility when it comes to the economy and Social Security and the national debt, and nobodyís in the mood right now to take a flyer on the rich people letting it trickle down. When it comes to the economy, do what Bob Rubin would do, and spread it around. Let businesses come around when theyíre ready.
Bushís generosity could present him with a budget problem. The next few surpluses are pretty much history this is a wartime recession, after all and with everybody from steel to peanut farmers claiming their "vital importance to national security," the pork is piling up fast.
Which may leave him with a long-term interest rate problem. Keeping mortgage-type rates down to stimulate refinancing was Rubin-Clintonís greatest achievement, and itís what Rubin is worried about throwing away right now, and getting inflation instead.
Then Bush may have an economic problem. Wall Street is waiting for a tanks-roll victory rally that may never come. Government budgets are shifting toward economically unproductive spending on things like defense and security. Consumer confidence will be vulnerable to further attacks and higher interest rates wonít help. The business cycle will be back, and the recovery will someday come but what kind of a recovery is still an open question. You donít want to trade a V-shape for a W.
But as the Fedís behavior can attest, this is no time to worry about inflation. And when a president with 90-percent approval ratings puts on a green eyeshade and tells unemployed people to all go get jobs at Wal-mart, those approval ratings donít go up.
Besides, if all this stimulus busts the budget and shackles the recovery and makes us rub our heads in 2003 and wonder where all the money went and why we havenít won this war yet the president can let the record show that Bush II, at least, was a sympathetic guy when the times were toughest.