Capitol Hill

Facts? Who needs facts when you can have Republicans and Democrats trading misleading charges about the stimulus plan? Republicans say the $825 billion plan is just a vast waste of money, filled with non-essential items that Democrats want to push through under the over of “crisis.” They add it will take way too long to effect the economy.

Democrats have a different take, defending every dollar as critical to the recovery. House leaders defended money for contraceptives as necessary to help states (45 of which are now running budget gaps) offset the cost of family planning services in these desperate times.

Now we have some real analysis by some real non-partisan numbers crunchers and it’s pretty enlightening. Remember late last week when it seemed like every cable news anchor repeatedly quoted a Congressional Budget Office study showing that only 38% of the money would actually be spent by September of 2010? Horrors! Proof the bubbly ones said that the Republicans “had a point.” Well, they didn’t.

That CBO “study” was not a study — it was a brief look at a portion of the stimulus package. Now the CBO has done a study on the whole enchilada and — quelle surprise — far more of the money gets spent upfront than Republicans were claiming. The full analysis shows that almost two-thirds of the money (64%) would be spent by Sep 2010 and therefore circulating in the economy.

In other words it’s pretty “stimulating” according to David Leonhardt writing in today’s NY Times. But it still falls short of Obama’s pledge to get 75% of the money out there fast. Keep in mind Federal “spending” in this case includes actual spending and tax cuts since they cost the government revenue.

Then there’s the report card put together by the non-partisan Tax Policy Center which grades the ten major tax cut components of the stimulus package as it appeared over the weekend (note: the package will change slightly as the Senate and House hammer out a compromise over their respective versions). The TPC looked at how much “bang for the buck” each dollar of Federal tax reduction will have on the economy in the short-term (which they unhelpfully fail to fully define although they seem to consider it the 2009-2010 timeframe).

Of the ten, only four get B+ or B grades and three of them are the ones Democrats have most vociferously championed. Those include the payroll tax reduction and an increase in the earned income tax credit — both of which would quickly put relatively small amounts of cash in the pockets of the working poor who are most likely to immediately spend it and thereby stimulate the economy.

The other 6 gets C’s or D’s including one of Obama’s pet projects (investment credits for renewable energy) and several business tax credits Republicans have loudly favored.

But getting back to the original argument here — does this package actually move money into the economy quickly? — the TPC report confirms the CBO’s findings showing that the tax cut portions do. The TPC’s four top-graded tax cuts will put $173 billion into the economy quickly while the six lowest-graded will provide just $42 billion in economic benefit over the longer term.

So while there’s plenty of room to debate what’s actually in the package — only $9 billion for mass transit? — the faux debate over whether it will work and work quickly has been settled. Let’s see if the cable newsies catch on.