A new report out from the Center on Budget and Policy Priorities last Friday explores the use of economic stimulus packages (i.e. tax cuts) at the state level, which have been proposed in seven states. CBPP concludes tax cuts are not an effective economic stimulus at the state level, and may in fact hurt state economies. From the report: Policymakers in many states are proposing tax cuts or rebates that they hope will "stimulate" their state economies, often citing the federal stimulus bill as both a model and a reason to support such a plan. Leaders have issued such proposals in Alabama, Arizona, Connecticut, Florida, Illinois, Pennsylvania, and Wisconsin, among others. But state tax cuts would do little or nothing to boost a state's economy. In fact, they reflect a misunderstanding of how state governments can best respond to a recession. The report outlines six recommendations for actions states can take to boost their economies. CBPP: FISCAL STIMULUS AT THE STATE LEVEL

The Senate Defense Appropriations Subcommittee held a hearing yesterday on defense contracting. It turns out that at least one contractor in Iraq - one receiving hundreds of billions of dollars from the government - is slightly less than "cost effective."

A "Classic Ideological Clash" The Senate is bracing for a possible cloture vote tonight or early tomorrow on the Foreclosure Prevention Act (text). Senate Majority Leader Harry Reid (D-NV) has written a letter urging President Bush to reverse his veto threat against the housing stimulus package.

Memo to the 111th Congress By a 236-182 vote yesterday, the House passed the Renewable Energy and Energy Conservation Tax Act of 2008, an $18.1 billion package that extends three key renewable energy tax credits that expire at the end of 2008, creates a new tax credit of 50 cents per gallon for producing cellulosic ethanol, and establishes a $4,000 tax credit for plug-in hybrid vehicles. See JCT summary of provisions and scoring.