Stimulus bill's shortcomings.

As I see it, the Stimulus bill coming out of the Senate has a bunch of problems:

• $15,000 tax break for first-time home buyers.  Yes, there will be a rush of new applications in the Summer IF the economic decline slows substantially by July.  But without confidence in the future, why would most people spend the money and assume that much risk in the face of an uncertain future?  This portion of the bill is mostly worthless in creating jobs.
• 4~4.5% mortgage rates, as foisted upon banks, will cause a rush of people refinancing, which is a good thing for the housing mortgage market, but a bad thing for commercial lending, credit card markets and commercial mortgages.  The biggest problem remains a lack of credit flowing, and the reason why this is still the case is because banks are either at or near their leveraged limits based upon available capital.  By forcing banks to shift their credit towards housing mortgages, other markets that need credit will see further drying up of available credit access.  We already know that NINJA and sub-prime loans will continue to default (reset) through 2010.  These people will not likely be able to refinance as their mortgages are underwater, and lenders do not want to mark to market their values.  Therefore, these homes will go into foreclosure, will be sold at auction, and banks will only recover a portion of their capital, leaving their leveraging ability at low levels.
• The tax credit / rebate for auto purchases this year and next is a bad idea in its current form.  It will end up providing the same percentage of credit to a Hummer as it does for a Prius, and it goes counter to the stated goal of achieving lowered carbon emissions.  That's wasteful tax spending.
• 50% funding grant for extended COBRA coverage is a bad idea for two reasons.  First and most obvious, is that it does nothing for those already laid off and haven't accepted COBRA.  Think about it; only 9% of those eligible for COBRA actually sign up for it, so basically most people currently laid off do not have COBRA and do not benefit from this rule.  The other basic problem with this rule, is that it actually encourages waste.  If the Feds had instead offered 50% to all unemployed with a cap of $100, people would be far more judicious about their choices going forward.  Without a cap and with coverage for only recently unemployed and those choosing to stick with COBRA, the Feds are incentivizing waste.
• The total investment for infrastructure was lowered by a GOP compromise.  The problem is, this is the best way to spread the wealth throughout the nation AND get something back in return for that money - improved infrastructure to aid interstate trade.  The GOP seem to think that giving cash directly to people is wise, but I beg to differ.  In such a bleak landscape, I think most people would rather SAVE that money for a rainy day that they think is coming in the near-future.
• Tax cuts are a bad idea.  Supply-side economics fail, because people will end up SAVING some of the money you put back into their pockets rather than spend it all, dollar for dollar.  We already have evidence that people are likely to save that money; a recent report has shown that Americans' savings rate has shot up (to 3.6% in December, above the average of 1.7% in 2008, and a -0.5% in 2005).  I highly doubt the consumer will spend the US out of this Recession.

And what is the consequence of this Stimulus Bill failing?  Not just more economic woes, but also opening the door for the GOP to blame the Democrats for failing on their ideas.  However, we have to remember that much of the above-criticized aspects of the bill were derived by GOP ideas that were incorporated as an attempt to compromise.

I think the Democrats have set themselves up for losing at least the House in 2010.