Ben Bernanke is urging Congress to enact some sort of economic stimulus package, which most likely will come as tax rebates or unemployment benefits. The idea is to infuse about $150 billion into the economy by giving money to people to spend, trying to jump-start some consumption and job growth. While the idea will likely give a little boost to the overall GDP in 2008, it is about as useful as putting a Band-Aid over cancer. Let’s look at some of the results that will come from this stimulus:

• $150 billion in the US is a drop in the bucket when spread thinly. Very little in new investments will be made, creating few jobs.

• The stock market will artificially inflate temporarily, allowing executives to take more attractive bonuses. Eventually stock prices will fall back down and the gains will be lost.

• The US’s budget deficit will grow since the money will not create enough job growth to increase future tax dollars to the government.

• Very few individuals will be significantly affected by a few hundred dollars in their pocket. I can see most people going to Wal-Mart or the grocery store to spend their money. This won’t change anything significant in the economy.

What we need is a stimulus that will create sustained growth, not just a little “pop” in the economy. A cash infusion spread thinly will not create investment. Nor will tax breaks for corporations (which is being suggested by conservative economists). We need a stimulus that will promote the following:

• Increase overall consumption by spreading GDP dollars more evenly throughout the population (reduce the wealth gap)

• Increase productivity by promoting investment in technology and education

• Increase productivity by increasing the number of workers

• Increase productivity by improving the morale of the dejected US workforce

The solution? Put the $150 billion into the Small Business Administration in the form of grants to small businesses. If the SBA gave grants of $500K to qualified small businesses with promising plans for growth and invention, there would be 300,000 small businesses with a huge cash infusion. These businesses will spend this money on capital improvements, new employees, and investment that will boost productivity. The absolute worst that will happen is that the companies will spend the money on a failed business, creating no growth…but they will spend the money. The worst case scenario of this solution is the best case scenario of Bernanke and Bush’s stimulus plan.