The Senate-approved tax package the House just passed remained largely intact even though everybody dislikes at least some piece of it. Politically, of course, the compromise was made because everybody got at least something they wanted.
The tax package being debated in Congress right now has a bigger price tag than any other economic stimulus in history, but apparently not much bang for all of those bucks.
The Congressional Budget Office estimates that the package has a total price tag of $858 billion, topping both the $700 billion Troubled Asset Relief Program, which bailed out the nation’s banks and automakers, and the $787 billion stimulus signed into law in February 2009.
The package is being sold as a form of stimulus, which supporters of the measure argue is necessary to keep the still-struggling U.S. economy growing.
But many economists say it will drag the country deeper into debt, while doing little to spur growth.
“There are efficient ways to stimulate the economy and there are inefficient ways. Generalized tax cuts are inefficient,” said money manager Barry Ritholtz, CEO and director of equity research at Fusion IQ.
Most of the current tax package doesn’t fare very well. And some of the most expensive parts produce the least economic gain. The extension of “Unemployment Benefits”by far the most effective proposal in the current bill, returning between 70 cents to $1.90 for every dollar spent on the program, according to CBO. But it’s also one of the least expensive parts of the plan. While extending the Bush tax cuts is the costliest proposal in the measure, but returns just 10 to 40 cents on every dollar spent, the CBO said.
While many economists favor more stimuli, even some of supporters of the plan concede that the bill currently on the table is a relatively ineffective way to pump money into the economy.
So the “fiscally responsible” people held the most effective part of a stimulus hostage for the least effective and most expensive parts of the bill. This is not Demorats versus Republicans. This simply irresponsible.