From Bloomberg on Stimulus Bill Mish-Mash:

Senate Version

The Senate version of the stimulus bill already differs from the House plan. The Senate Finance Committee voted this week to add a $70 billion alternative-minimum tax cut to the package.

Lawmakers in the two chambers also differ over how much to spend on highway projects, renewable-energy tax breaks and expanding access to broadband.

Senate Minority Leader Mitch McConnell, a Kentucky Republican, said the House plan doesn't include enough tax cuts and that many of them that are in the bill would go to those who don't pay federal income taxes. He said Republicans want to add provisions aimed at fighting the housing crisis by having the federal government back fixed-rate 4 percent mortgages. Why? Why! Why?

"It's clear that we need to go directly at the housing problem," McConnell said. "Republicans have a proposal for lower-interest rate mortgages that we think would help ease the problems that started the economic downturn." Oh, that's why. Let me quote this again, "Republicans have a proposal for lower-interest rate mortgages that we think would help ease the problems that started the economic downturn.". I'll forgive Senator McConnell since he may not read my blog, but lower interest rate mortgages (in combo with "It ain't my money" style underwriting) is what provided the fuel for the economic downturn. We wouldn't be in a downturn if we didn't climb so damn high up the bubble mountain in the first place. Now, you want to bring us back up to the peak of market distortion?! Overproof rum makes a pretty poor remedy for a hangover! I really don't understand why politicians think that more of the problem will lead to the solution! Interest rates are already hovering near a historical low. Houses are not selling, except for the synthetic sales which are actually banks flushing bad assets out of their system at lower and lower price points. See my explanation of this phenomena (be sure to review the comments below the article), and the more detailed review by Mr. Mortgage.

True stimulus in an environment such as this should not rely on dated and stale academic dogma. No tax cuts, no cutting already very low mortgage rates after a low mortgage rate inspired property and credit bubble, no additional nonsense. Let the fragile break, let the insolvent fail, and let the imprudent risk takers face the consequences of their actions. I heard Nassim Taleb state the other day, that the US is allowing the pilot that crashed the plane to continue flying. Here are some REAL solutions to some very real problems:

1. Stimulus dollars should be spent on direct stimulus. The smaller community banks and private investors should be given guarantees (similar to those used in government guaranteed student loans) for lending to small businesses. This will create a multiplier to leverage government funds by a multiple, stimulate lending, but to a sector than is not overly bubblified, and most importantly - it will create jobs, and it will create jobs now, not later, next year or whenever.
2. Stimulus dollars should go into very limited guarantees (ex. non-recourse loans) to risk takers who are willing to sift through the garbage of the big and medium banks and buy the assets off of them. I know I would be first in line for such a deal. Now we have instant price discovery (albeit, not true price discovery since the government had to give away near risk free money, but beggars can't be choosers, now can they?), and a clearing out of bad debt. But that price discovery may bankrupt many banks, right? Well, it's going to happen anyway. It's just a matter of whether it will happen now, or then. At least with this plan, there is a less painful pricing point, due to the government's less intrusive (but still evident) market intrusion of supplying overly favorable access to funds.
3. Admit the banking system is insolvent and let the (if not force the) most insolvent to fail. Solution number two (above) will insure that capitalists will be there to pick up the pieces before they even hit the ground and put them to work immediately, for the opportunity for outsized profit will create a mad rush. This mad rush will force prices to equilibrium, which is how Mother Market is supposed to work in the first place. Why let greed only effect this country in a negative way?
4. Harness the massive stores of intellectual capital to be found in this country. Create perpetual licensing and financing arrangements for patented technology and ideas sitting idle in universities of this country. Combine this with idea number 1 above, and you will create a new technology and idea export boom. Think Google, Intel, Apple - all companies that created over a trillion dollars (combined) of wealth and productivity by leveraging patented ideas and technology found idle in our system of academic universities. This means, more jobs, more organically generated wealth, and more GDP growth. Remember, when people are making money, they don't need subsidized mortgage rates. They can buy their houses, cars and baubles, the old fashioned way - ex. through work and compensation for work.
5. Once, we get back onto our feet, make real substantive investment in our public education system and make it accountable - without excuses. If you really want to give tax breaks, give them to for-profit elementary and high school enitities and sit back and watch them compete with public school system and the not-for-profit private schools. No matter who wins or loses, the students will win. Just imagine a high school where BoomBustBlog was required daily reading!
6. Subscribe to BoomBustBlog.com!