The Bush administration’s propaganda sheet on the ridiculous stimulus package claims that it includes $100 billion in individual “tax rebates” or “tax relief.” The sheet goes on to claim that the relief is “not federal spending that would have little impact on the economy.”


In fact, the $100 billion is simply extra spending; it is a giant one‐​time welfare program. To pay for it, the government will borrow an added $100 billion, which will impose $100 billion of higher taxes on future generations.


Suppose there was a Democrat in the White House and she proposed $100 billion in cash hand‐​outs to families. She could structure it exactly the same way as Bush has, but call it a “Family Food and Health Care Supplement.” The minority GOP would probably denounce it strongly as wasteful welfare, which it would be.


But, as we have seen dozens of times since 2001, because the political operators in the White House call themselves Republicans and conservatives, many members of the Republican party appear to be going along with this nonsense.


The $50 billion business tax relief (capital expensing) is a little different. As a temporary break, it makes no sense. If businesses just pull some of their 2009 investment into 2008 to get the break, it just means we’ll have an investment slump next year. All we will have done is, once again, screw around with corporate business plans instead of making permanent reforms to help companies compete in the global economy. 


I’m a supporter of making capital expensing a permanent part of tax law. But enacting expensing temporarily, as we did a few years ago, just makes politicians think of it as a gimmick to be enacted every two years before an election.