Economic Stimulus, R.I.P.

Apparently, the Senate could not muster enough votes to override Senator Daschle's veto of the economic stimulus bill. It will not be missed. As Morgan Stanley's Dick Berner points out,

Incoming data almost conclusively validate the recovery that is now under way. Consumer and business demand has held up better than expected, the push from increased government outlays is gathering momentum, and forward-looking demand indicators point to further improvement.

My guess is that a fairly big fiscal stimulus is coming, regardless. Defense spending is going to rise. My guess is that Congress will not swallow the "cuts" (relative to planned spending levels) that President Bush proposed in nondefense outlays. My guess is that President Bush will have to acquiesce to higher nondefense spending in order to have his other priorities passed.

Discussion Question. With government spending of $1800 billion, how could a stimulus package of $80 billion be considered anything more than rounding error?