Not necessarily. While the major substance of what is being promoted today—substantial rebates in the form of checks mailed directly to voters, combined with some economic window dressing—will achieve nothing to stimulate the economy, it certainly is possible to put together a package that could do some real good while satisfying the political need to appease voter fears.

  What would such a package look like? It would have to be based upon economic policies that would be good for long-term growth in the real economy. Some ideas would include making permanent the Bush tax cuts, reducing the Capital Gains tax rate, reducing corporate income taxes (America’s are among the highest in the world), raising the limits on tax-free saving and investing, eliminating taxes on dividends, and perhaps increasing the per-child tax credit in order to generate a more immediate benefit to consumers.

  Job creation and productivity growth are the engines that keep our economy moving, and anything that promotes these will be good for the economy in both the short and long term. One of the virtues of a stimulus package like this one is that it would make sense whether we were going into a recession or not.

  Unfortunately, there is no magic formula to repeal the business cycle. The recession the American economy may be facing is a natural result of imbalances in the credit markets that developed over the past few years, and nothing that policymakers do now will be able to undo the damage that was caused.

  By pursuing policies that strengthen the overall economy, and pushing them as a stimulus package, politicians can serve two complementary purposes: demonstrating that they “care” about middle-class anxieties about the economy, and implementing policies that are good for long-term economic growth.