Tax Rebate Stimulus Boost Will Wear Off

There's a lot of skepticism in the country about how effective the $168 billion fiscal stimulus package will be, but economists who've crunched the numbers say it will give the economy a much-needed boost in the middle of the year.

"It could make the difference between a short and a long recession," said Mark Zandi, chief economist for Moody's Economy.com.

But it won't solve the economy's fundamental problems, he said. That will require policymakers making a serious effort to solve the housing and credit crises.

President Bush signed the stimulus legislation Wednesday. It has three main features: 1) a tax rebate of up to $1,200 per working couple, plus $300 per child; 2) tax breaks for businesses to invest in capital equipment; 3) provisions to make more expensive mortgages available through FHA, Fannie Mae and Freddie Mac.

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