More on The Economic Stimulus Plan That Isn't

Things are starting to shake out with the $150 billion economic package cobbled together by the President and members of Congress late last week. As is usually the case with compromised policy the devil is in the details. My previous post envisioned a potential flow of funds that would result from the economic plan. After reading some critiques of the plan on the web my analysis may need some revising. It looks like the plan may be less conducive to create immediate spending and more on pushing through tax cuts to upper wage earners.

According to Professor Krugman's latest column and his continuous blog updates the plan doesn't get enough in the hands of those who will spend it quickly. He faults the acquiescence of Pelosi and Company in allowing those benefits to be cast aside in the final compromise with President Bush. The resulting plan directs nearly 60% of the benefits to the upper two quintiles of income earners according to the Tax Policy Center. These upper wage earners are more apt to save the rebate dollars and not spend them immediately. With the low end stuff out of the plan the tax-cutter-in-chief can continue boasting about the cure all power of tax cuts that make up the rest of the package. No welfare queens getting rich off of this stimulus plan .

It's too bad the aid to State and local governments was weeded out in the negotiations. With Governor Strickland warning of looming budget deficits and local governments already feeling fiscal strain, an economic boost would be nice. This provision and some of the others may become a point of contention when the economic plan is debated in the U.S Senate. According to a story on Politico numerous Senators of both parties are already jockeying to get things put in the final version. How this will effect the outcome is hard to day. Could we see another GOP filibuster if attempts are made to include aid to local governments and increases in unemployment benefits?