The White House and congressional leaders struck a deal Thursday on a quickly crafted stimulus plan aimed at heading off a likely recession in the world's biggest economy.

The deal announced just days after President George W. Bush called for an economic growth package brings the House of Representatives on board and sets the stage for likely action. But talks were still ongoing with the Senate.

Bush urged lawmakers to act swiftly in the face of what appears to be a rapidly deteriorating economic backdrop that has sent stock markets around the world into near-panic.

"This is another example of Washington deserting working people and the middle class. They gave $70 billion of tax breaks that do nothing for those who've lost their jobs. It's a complete disconnect between what's happening in Washington and what I see happening here in South Carolina and across the country. We desperately need a modernization of the unemployment insurance law to cover more poor families and those who have lost their jobs. We also need to build an infrastructure for the clean energy economy that will create jobs and fight global warming.

"George Bush will sign whatever economic stimulus package that is sent to him by the Congress. The Congress needs to stand its ground. They need to insist on unemployment insurance modernization. Because otherwise we're going to have thousands and thousands of families across this country who don't get the unemployment help they need, and they lost their jobs through no fault of their own."

The good news is, Congress and the White House struck a tentative deal on an economic stimulus plan. The bad news is, Congress and the White House struck a tentative deal on an economic stimulus plan.

If this description is correct, the stimulus bill will be a real disappointment. As I pointed out in an earlier post, economic theory — Milton Friedman's theory! — suggests that if we want stimulus funds spent, they should go to people in temporary economic difficulty who are likely to be liquidity-constrained. But it appears that most of the measures that would do that — benefits to the unemployed, food stamps, aid to state and local governments — are being bargained away. Even the tax credit is apparently not fully refundable, so those who need it most, and are most likely to spend it, won't get the full amount.

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