Bush’s bonus depreciation perfectly fits election cycle Jay Hancock, sunspot.net

Only three decades after Yale economist William D. Nordhaus proposed the existence of what he called ”the political business cycle,” Bush and his allies have perfected the art of short-term economic manipulation. …

[C]ompanies rushing to take advantage of the ”bonus depreciation” provision in the recent tax bill are expected to spend billions of dollars on capital equipment next year, revive the sleepy business-investment sector and — not incidentally — ensure Bush’s re-election.

Merrill Lynch economist David Rosenberg expects bonus depreciation to be “wildly stimulative” in 2004 — so stimulative, he suggests, that even comatose technology spending will sit up, stretch out and take a few laps. …

“The name of the game is to get re-elected,” Rosenberg says. Bonus depreciation, he adds, “is going to bring forward activity that otherwise would have taken place in 2005 into 2004.” And, because it affects big projects taking months to complete, it will spur economic energy well before the November election.

You probably know the bad news. Rosenberg’s research and Nordhaus’ theory both suggest that once the polls close and stimulus stops, a slowdown or even recession are more likely.