Yesterday’s announcement by President Obama of $50 billion dollars in front-loaded infrastructure spending, with an enduring national infrastructure bank that could better set priorities, may not be a moonshot policy that would turn the entire economy around by its lonesome. We’re pretty deep in the hole, so such a policy probably doesn’t exist. But it is a smart idea that moves things in the right direction in the short- and long-term, and instead of going back to the tax cut well, at least this focuses on targeted spending for job creation.

Now that that’s over, we’re back to the business tax cuts again.

As part of his emerging program to jolt the economic recovery from its stall, President Obama will call this week for allowing businesses to deduct from their taxes through 2011 the full value of new equipment purchase, from computers to utility generators, to increase demand for goods and create jobs.

The upfront deduction would allow businesses of all sizes to keep more money now and would give large corporations, many of which are sitting on cash because of uncertainty about the economy, an incentive to spend and invest.

It would cost an estimated $200 billion in revenues, though the ultimate net loss would be $30 billion over 10 years, administration officials say, since businesses would eventually deduct the depreciated value of the equipment in any case.

This kind of write-off, known as bonus depreciation of Sec. 179 (for the section of the tax code), exists today, as part of the stimulus package, at 50%. In fact, it’s been tossed into stimulus bills since around 2003, under George W. Bush. It hasn’t caused an eruption of capital spending, although this is at least twice the incentive.

The positive here is leveraging a $30 billion investment to produce an expected $200 billion in purchases in 2010 and 2011. The question is whether businesses will take the bite. And businesses may not like the fine print:

According to the draft description from the administration, the proposal “would put nearly $200 billion in the hands of businesses over the next two years — helping companies that make new investments in the United States at a time they need it most.”

But, it added: “Most of this relief would be recouped by the Treasury as businesses regain their strength. Specifically, businesses would get the upfront deduction for their investment — now when they most need it — but would give up their future annual depreciation allowances in future years when the economy is stronger.”

So, that’s the policy. I don’t know if it amounts to much for businesses, but maybe it’s enough of an incentive for them to upgrade equipment. Which someone else would have to produce (would that producer have to be American? Probably not). But would that provoke them to hire? Right now plenty of companies are making record profits without expanding hiring, so it’s unclear. And if that’s the case, why do they need such an enormous break in the not-so-well-grounded-hopes that it’ll lead to hiring?

On the politics, it’s very clear that Chuck Grassley’s a big fan of this kind of business tax break. I think you’d find a half-dozen Republicans who could support this, provided their leadership allows them to do so, which is the wild card.

What we do see in this economic recovery package (or whatever the White House wants to call it) are some pretty strong accumulated numbers, albeit potentially misleading ones. You have $200 billion in possible capital investments in this proposal, $100 billion from permanently extending the R&D tax credit, $50 billion in up-front infrastructure spending, and a $30 billion small business lending fund. Does that add up to a $380 billion “stimulus”? No. The R&D tax credit gets extended every year like clockwork; making it permanent will be nice for the Senate to get it off their to-do list, but it’s hardly stimulative. I don’t really know how to simulate the capital investments part of this, but like everything else here, this will be paid for, at least on the back end. Same with the infrastructure and the small business bill. In short-term stimulus, maybe you can get to $100 billion. These are mostly decent policies (this bonus depreciation thing, maybe not so much), but again, with all of them employed you might knock half a point off the unemployment rate in the near term. I hope they’d do better than that, but it’s hard to figure.

On the politics, I’d like to see Republicans vote against tax cuts like this just because a Democrat proposed them, but there are long-term considerations to progressive policies arising from a tax cut-centric recovery package.