Washington Has the Wrong Medicine for Economic Stimulus

Since Sept. 11, investors have looked to Washington for leadership on three fronts: monetary, military and fiscal. Thus far, the Federal Reserve and the Pentagon have acquitted themselves admirably in meeting the first two challenges. The Fed aggressively slashed interest rates, and the military unleashed the fury of American air power on the Taliban.

But so far, all parties in Washington -- congressional Republicans and Democrats as well as the White House -- have failed to reach a consensus on a fiscal response. Instead, casting nonpartisanship to the wind, both sides have proposed incompatible, easily caricatured "economic stimulus" packages.

The Republican-controlled House passed, by the narrowest of partisan majorities, a bill larded with tax cuts for individuals and corporations. Among its most egregious measures: a refund of 15 years' worth of corporate alternative minimum taxes paid by remarkably profitable companies such as General Electric (GE Quote) and IBM (IBM Quote). ...