Today, Peter Orszag, the new director of the Office of Management and Budget, appeared on MSNBC to discuss a provision in the stimulus package — proposed by Senate Republicans and supported by some Democrats — that would give a $15,000 tax credit to home-buyers. Orszag said that if he “wanted to get wonky” then he would argue that the credit needs to be targeted better:

If I wanted to get wonky, I would say it’s better targeted when it’s for first time home-buyers. If it’s for all home-buyers, you’re both inducing new sales, but then you’re creating — when someone already owns a house, they’re selling a house and then buying one. That doesn’t do as much for net demand for housing as inducing more first-time home-buyers would do.

Watch it:

At the end of Orszag’s answer, MSNBC’s anchor announced that “wonk is welcome here!” For obvious reasons, we wholeheartedly support that sentiment.

Orszag’s point about targeting, though, is very important. While his suggested target for the credit is a good start, it could go a step further and be targeted only to first time home-buyers who are buying an already existing home. As Matthew Yglesias noted, falling real estate prices have “everything to do with the fact that we’ve built too many buildings.” If the home-buyer credit leads to a reinvigorated construction boom, while finished homes continue to sit empty, then it won’t be increasing demand in a way that’s productive.

Ultimately, this is not a great tax credit, as it is not likely to incentivize many people who weren’t planning on buying a home anyway. But if it’s to be included, it should be targeted at the “blight of empty, poorly maintained and often vandalized houses that sorely need new owners,” thus maximizing its effectiveness as economic stimulus.

Yesterday, Senate Republicans took to the morning talk shows to discuss the proposed economic stimulus package, which the Senate will begin debating today. During their respective discussions, both Sen. Mitch McConnell (R-KY) and Sen. Jon Kyl (R-AZ) were adamant about including tax cuts that are properly targeted:

MCCONNELL: We think we ought to lower tax rates for medium- and low-income people….This is a lot of money. If we’re going to spend anywhere near this, Bob, we need to target it directly. It needs to be timely, temporary, and targeted.

KYL: The centerpiece of this is a $500 rebate to folks, about 27 percent of whom don’t even pay federal income tax. That didn’t work last year. It’s not going to work this year. And so that’s not a good place to start.

Of course, there’s a contradiction here, in that McConnell extolled the virtues of targeted tax cuts for lower-income people, while Kyl ridiculed just that sort of cut. More importantly though, the only stimulus proposal that Senate Republicans have come forward with is Sen. Jim DeMint’s (R-SC) “American Option,” which as Ben Furnas noted earlier, is $3.1 trillion in permanent tax breaks for corporations and the wealthy.

If McConnell is really concerned about giving tax breaks to lower-income people then the following statistic — the average tax break for a corporate CEO and a minimum wage worker under the DeMint plan — should be troubling:

As Ali Frick noted over at ThinkProgress, a tax credit to lower-income workers “isn’t some kind of charity; it’s one of the most effective kinds of tax cut in terms of stimulating the economy.” Since stimulus (in part) means boosting consumer demand, not padding the bank accounts of those at the top of the income scale, it makes sense that lower-income people are the ones to focus on. McConnell has the rights words, but as of yet, no action to show that he truly gets it.

In a press conference this morning, Sen. Mitch McConnell (R-KY) discussed his objections to President Obama’s stimulus package currently before the Senate. McConnell expressed his concerns over the long term cost of the plan, because “we are already looking at, before we even do this, at over a trillion dollar deficit for this year”:

Most of my members believe that we could pass a very robust stimulus for less than the amount currently before us. We have been throwing figures around like it was paper money. We are already looking at, before we even do this, at over a trillion dollar deficit for this year. We all agree that we need to do something, but I don’t think we should not just completely act like the amount is irrelevant.

Watch it:

McConnell is not alone in trotting out this argument. Sen. Jim DeMint (R-SC) has also railed against increasing the deficit to pay for measures that won’t act as effective economic stimulus, saying that the current stimulus plan is “arrogantly indifferent to economic reality.”

The only comprehensive alternative being offered by Senate conservatives is DeMint’s “American Option: A Jobs Plan That Works,” a series of permanent tax breaks for corporations and wealthy Americans. A new analysis from the Center for American Progress Action Fund finds that the DeMint plan would cost over $3.1 trillion over ten years — more than three times the amount of President Barack Obama’s plan — and be largely ineffective at creating jobs.

The DeMint plan includes permanently cutting the corporate tax rate, totally eliminating the Alternative Minimum Tax, lowering income tax rates for the wealthiest Americans, and eliminating scores of tax deductions that help students pay for college, sick families pay medical bills, and teachers purchase supplies for their classrooms.

Permanent tax cuts are one of the least effective ways of stimulating the economy according to both Moody’s Economy.com and the Congressional Budget Office. Furthermore, slashing government revenues this permanently would leave deep structural deficits for generations to come.

McConnell is fond of saying that a stimulus bill should be “timely, temporary, and targeted.” The plan Senate Republicans are backing, though, fulfills none of these criteria.