Just Show Business

By Karen Tumulty/Washington

The message in the internal memorandum that House Republican conference chairman J.C. Watts circulated among his G.O.P. colleagues last week was blunt: America is paying attention now, and it's time to get serious. G.O.P. polls show voters care less about what their parties stand for than whether they can make them feel safe. "Equally true is that Americans are going to be tough in their assessment of Republicans and Democrats alike, and they will be critical in their reviews," wrote Watts.

But if Americans are expecting their lawmakers to show a sense of purpose that matches the moment, the message doesn't seem to be getting through. Nowhere is the disconnect more evident than in the "economic stimulus" bill that passed the House on the narrowest of party-line votes last week. The idea is to give the economy a badly needed jolt by getting businesses to hire and consumers to spend. But nearly three-quarters of the $100 billion tab would go toward corporate tax breaks, which might carry weight with political ideologues or help pay off campaign contributors but will do little to pep up a sagging economy.

Most dubious is the idea of sweetening a repeal of the corporate alternative minimum tax with a refund of the $25 billion that companies have paid since the tax was instituted in 1986. How, precisely, does a retroactive tax cut give an incentive to future investment? Republicans say they are putting productive capacity into the hands of corporations that create jobs. Ford Motor Co. would be the biggest winner, getting a windfall of $2 billion. But as former Clinton Treasury Secretary Robert Rubin told House and Senate leaders last month, "I'm on the board of Ford Motor Co. The problem is not a shortage of cars. The problem is a shortage of people to buy cars."

Then there's the critical issue of timing. Most economists say that for a stimulus to work, it must pack its wallop into the next 12 months. Many of the corporate breaks in the House bill--more generous depreciation of equipment purchases, for instance--would be carried out over at least three years.

The bill has something in it for members of the working class, on the theory that they will actually spend their windfall. But even that comes too late. Individuals and families who didn't earn enough to qualify for rebates in this year's earlier tax cut would get checks ranging from $300 to $600. But the IRS could not begin mailing them until next year.

Lawmakers haven't even bothered to disguise the fact that much of what they are doing in the name of economic stimulus amounts to posturing. Treasury Secretary Paul O'Neill called it "show business," and all sides predict that much of what passed will be jettisoned when the bill is reconciled with a yet-to-be-drafted Senate version. "We're mostly kind of letting off some steam," a top aide to the House Republican leadership acknowledged after last week's vote.

The Democrats in the Senate seem eager to do the same. Senate Finance Committee chairman Max Baucus has drafted a leaner, more focused stimulus plan, but he didn't miss his chance to throw in $2 billion for agriculture that could help his re-election chances in Montana next year. Majority leader Tom Daschle has begun talking of attaching Senator Robert Byrd's $20 billion "homeland security" package to the legislation as well. It is hard to argue against the need for beefing up meat and poultry inspections and stockpiling vaccines, but any direct economic benefit is probably four or five years away. The real reason for adding Byrd's proposal to the economic package is that it could buy some votes when the bill reaches the floor.

The biggest fight will come when Senators start haggling over how to help the unemployed. Liberal Democrats want the government to pay for extending their medical benefits; moderates and conservative Republicans want to give out-of-work people tax breaks so they can buy their own health insurance. Understandably, the unemployed will have little appreciation for such philosophical arguments while they do without health care. And in the end, the Republican House and Democratic Senate will do what they always do--split their differences and declare that they have done something good for the country. This time they may find the country is looking for something better.