TEMPORARY MEANS TEMPORARY

Chicago Tribune: To recap: The economy took a hit Sept. 11. The economy was already edging toward recession but may have skirted it -- were it not for the shock of the terrorist attacks. A temporary stimulus to boost growth is in order -- even Fed Chairman Alan Greenspan says so.
Members of Congress may be girding to do battle over just how to spend more money than the government takes in, but they are unanimously agreed that they're going to spend big bucks -- regardless of whether it helps.
The operative words here should be targeted and temporary. If Congress is going to provide a stimulus, it has to be targeted in ways that will actually boost the economy. And it has to be temporary, lest lawmakers lead the nation back into decades of red-ink government.
Blunt tool: Federal tax and budget policy is a notoriously blunt tool for managing the economy. Earlier this year, the government sent out $38 billion of rebate checks as part of President Bush's pre-Sept. 11 stimulus package. Preliminary studies show that taxpayers spent only $1 out of every $5, preferring to pay down debt or save the rest. Those may have been wise decisions -- Americans carry a lot of debt -- but that means $4 of every $5 didn't go to jump-starting the economy.
Now it's time for Stimulus II.
Republicans on the House Ways and Means Committee last week gave up trying to craft a bipartisan package to boost the economy and just started stuffing an empty sock with every GOP tax-cut idea they could think of.
Their package would cost about $100 billion this year -- much higher than what President Bush said he wanted.
About $70 billion of that is aimed at boosting business investment by enhancing tax write-offs for buying equipment, repealing the corporate alternative minimum tax -- with a bonus refund of all minimum tax payments over the last 15 years -- and allowing companies to deduct current operating losses against taxes paid over the last five years. The package also would cut the effective capital gains tax rate to 18 percent from 20 percent, and immediately cut the 27 percent income tax bracket to 25 percent -- something that wouldn't happen for an additional five years in the tax cut passed earlier this year.
Checks of up to $300 for individuals and $600 for couples would be mailed out -- supposedly by the holidays -- to low-income workers who didn't benefit in the first round of rebates because they don't pay any income tax.
Except for the rebate checks, most of these are permanent tax changes. As such, they should be carefully scrutinized. Will their short-term impact on economic production justify the long-term cost to the Treasury? They might, if corporations have only a brief window to make their investment decisions. But to the extent these are permanent changes, the House committee package looks awfully costly, with little guarantee of quick impact.