Stimulus package holds no guarantees

The stimulus package that seems to be picking up some steam on Capitol Hill is a major gamble at best. Its nearly trillion-dollar federal spending package is intended to boost the foundering economy, but there is no certainty that the pump-priming, Keynesian model will work under these unique circumstances. Its only real certainty is that future generations will be paying off this debt of borrowed money.

But Congress and the president are loath to do nothing. No one wants to be accused of sitting idly by while the economy collapses. So the two different spending bills passed by the House and about to be passed by the Senate do something, but there are doubts whether they will do enough or do the right things. Republicans and conservative Democrats trimmed the Senate's spending in an effort to reduce the gargantuan borrowing, but critics say the items trimmed are among the most stimulative in the original bill — aid to states for infrastructure projects and additional aid for the unemployed.

I find it baffling that tax cuts remain in this bill. After eight years of GOP tax cutting, which contributed to record budget deficits, we're still pushing for more tax cuts? For an element of the Republican Party, tax cuts are the panacea for all problems, economic and political. While I am sympathetic to the notion of reducing government's share of the economy and agree that a severe recession is no time to be raising taxes, additional tax cuts seem at this time illogical and ineffective. Last year's tax rebates did almost nothing to stimulate the economy. More tax cuts are likely to be hoarded by wary consumers worried about their jobs as unemployment rises unabated.

After months of effort to fix the economy, the basic problem — unpaid mortgages on houses with declining values — remains. Last year's original rescue plan was supposed to buy up those "toxic assets" and allow banks to begin lending again. But former Treasury Secretary Henry Paulson decided to invest the money directly into the banks themselves, not into their bad debts. But just like the consumers who hoarded their tax rebates, banks hoarded the federal cash and tried to ride out the downturn. New Treasury Secretary Timothy Geitner is promising a new attack on those "toxic assets."

One tax cut in the Senate package has been called the $15,000 house flipper bonus. In an effort to stimulate the real estate market, it would provide a $15,000 tax break to anyone who buys a house. You don't have to be a CPA to figure out that you can buy any old house, sell it the next week for $5,000 less than you paid and still come out $10,000 ahead. Let's hope this example of wrong-headed legislating doesn't make it into the final bill.

Congress is eager to get something done, and most Americans are all for taking action to fix the economy. Unanswered questions remain: Will this package be enough? Will the economy take the medicine that is being offered? Will this unimaginable amount of money be spent wisely? Will the economic stimulus do enough good to offset the inevitable pain of having to repay this money in higher taxes or higher inflation in years to come?

Nobody really knows the answers to these questions now.