Less than stimulating.(THE ECONOMY)

NOW that the government has spent billions bailing out Wall Street, political calculus--at least Nancy Pelosi's--demands that equal attention be paid to "Main Street." Thus Democrats in Congress have announced that they are putting together a $300 billion economic-stimulus package. (For more details, see Stephen Spruiell's article on page 22.) Not all of the proposed measures are objectionable, but none of them would be effective in staving off a recession. Considering what we are likely to get out of this Congress, it is probably better to do nothing at all.

Last winter, Congress passed and Bush signed a $168 billion economic-stimulus package, consisting mostly of tax rebates. Upon signing the bill, President Bush called the package "a booster shot for our economy." As of this writing, the patient appears utterly unresponsive. The rebate checks failed to have much of an impact, because the concept underlying all such stimulus is flawed: The economy is stimulated when tax policy encourages people to work, save, and invest; rebate checks merely redistribute income.

But House Speaker Pelosi now says she wants another nine-figure stimulus package. In addition to rebate checks, it would include funds for bridges and highways, extended unemployment benefits, and a bailout for states whose budgets are in the red. Bush has signaled his willingness to sign a stimulus bill, and at this point he and Pelosi are merely haggling over the size. If Obama wins, size won't matter. Pelosi could split the package in two, send Bush whatever ...