The G7 Group is another set of analysts who are puzzled at how unstimulating the Bush unstimulus package is:

The new developments do not change our take on the overall package -- it isn't all that stimulative. Let's consider:

1) The elimination of taxation that individuals pay on dividends is not all that stimulative. The IRS estimates that of dividends reported in 2001 (the most recent year for which there is data) nearly two thirds of taxes paid on dividends were paid by people earning more than $100,000. This is the crowd least likely to spend any new money.

2) The administration is leaning away from expanding the accelerated depreciation, and is leaning toward doubling to $50,000 the amount than small businesses can deduct from their income taxes. (This, actually, may be one of the more stimulative provisions assuming some pent up demand.) Be aware that the expanded depreciation (from 30% to 60%) that the administration had been considering for large businesses may not make the package.

3) Accelerating the income tax cuts from '06 and '04 into '03. This will actually create a little stimulus. However, whether the top brackets are accelerated (which Bush has decided to do) will be hotly contested. Not until the bill is passed will the federal government be able to instruct businesses to change withholdings, which is where the stimulus comes in.

4) Finally, the spending provisions for highways and homeland security will be stimulative. But we caution you against counting these monies twice. Highway spending was going up (and markets should have priced that in.) Markets should also have counted on the $38 billion in homeland security and defense money. So the real new money is about $10 billion or so to assist states with deficits. We would just remind you that an offset should be viewed as an offset. With states expected to run collective deficits of $85 billion in 2004 (See G7DB 12/31), a $10 billion infusion from the Feds may save states from budget cuts.