Political Concerns and the Stimulus

by: Chris Bowers

Sat Jan 24, 2009 at 15:30


To make a point related to Paul's from earlier today, let me echo the words of Matthew Yglesias from yesterday: the only politics of the stimulus President Obama and his team should concern themselves with is making sure that the bill does all it can to actually improve the economy. Short-term bi-partisan posturing, whether for political cover or arising from actual beliefs, is utterly insignificant compared the real-world impact of the bill itself (emphasis mine):

To me, this re-enforces the case for making the first, second, third, fourth, fifth, six, seventh, eight, ninth, tenth, and only priority in terms of the stimulus to write the best bill possible and pass it with the minimum number of votes necessary. Stimulus is a great idea in theory, but in practice the results of the congressional process may well get ugly. A bill that works substantively will be good enough politically, and worrying too much about the short-term politics just opens up the door for the bill to get more screwed up. If a giant stimulus passes and the economy stays in a funk, nobody's going to care how many Republicans voted for the bill years in the past.

People don't care how many Democrats and how many Republicans vote for this bill. People don't care how much Obama appeared to be seeking Republican input or not. The only thing they care about is whether this helps turn the economy around. About half of my friends here in Philadelphia have either recently lost their job, or had their hours cut back. Everywhere I go, the ambient conversation is about trouble people are having with their jobs. I have little doubt this is the case everywhere in the country.

More in the extended entry.

Chris Bowers :: Political Concerns and the Stimulus
As the current governing party, in 2010 and 2012, Democrats will be blamed for continued economic troubles no matter how bi-partisan we appear. Further, there are good reasons to believe that any ideas Republicans put forth won't work. For one thing, their ideas largely got us into this mess, and many of their leaders are now openly stating that they want the Obama administration to fail. They have bad ideas, and often act in bad faith. If you want to fix our problems, it is probably a good idea not to listen to them.

Making sure the bill works is also an over-riding concern for those of us who are excited about the rapid shift toward left-wing political sensibilities in this country. After decades of neoliberal and conservative dominance in Washington, D.C., we have entered a new moment of left-wing possibility. Nationalizing industries has become acceptable. Hundreds of billions, even trillions, of dollars in new public spending is acceptable. To top it off, we finally have large enough majorities in Congress, along with control of the White House to actually pass such legislation. However, if this moment is squandered by passing a bill that won't work, it could be another thirty or forty years before we have a similar opportunity to re-organize the economy. It doesn't matter if the bill fails because of poor oversight, because of a desire to appear bi-partisan, because it was too small or because it was too big. The stimulus will serve as a public test of left-wing economics no matter how it is constructed, and as such it is politically imperative for lefties that it work.

While this should have been painfully obvious after eight years of the Bush administration, altering legislation to meet short-term political demands erodes your long-term political position by passing legislation that makes people's lives worse. If we pass a crappy bill out of a desire to look bi-partisan, or to not appear left-wing, than our currently dominant political position will quickly evaporate. It is unclear what role the Obama administration is actually giving Republicans in constructing the stimulus. Pelosi, apparently, gave Republicans no role whatsoever. Good. That seems like a sensible approach right now. I hope Obama is doing exactly the same thing, and his "I won" comment from yesterday indicates that might be the case. Then again, the size of the stimulus, the role of tax cuts in the stimulus, and his repeated meetings with Republican leaders on the legislation, gives reasons to worry that political concerns are playing too large a role.

I don't intend this post as either accusatory or laudatory. Rather, as an American concerned that we might be in permanent decline, and as a lefty worried that our newfound opportunity to re-organize the economy will be quickly discredited in the eyes of the public without even having a chance to implement it correctly, I simply want to offer general guidelines on how to not blow this. There is a good chance that none of us will witness another opportunity like this for the rest of our lives. We can either find the road to salvation, or squander it away forever.


Tags: , , , , (All Tags)
Print Friendly View Send As Email
My concern is similar (4.00 / 2)
Right now, I'm worried that the current stimulus bill, or at least the one put forward by the House, will not create nearly enough jobs to justify its cost.

Let's be honest -- those $300 billion in tax cuts won't create any jobs. Giving everyone $500 is an idea we tried last year, and the economy shed 2.6 million jobs. Obama made a massive mistake by starting out in such a weak negotiating position, because the GOP isn't placated by these tax cuts and will of course flip if it gets trimmed down even more. Thus, his efforts to look "bipartisan" have already backfired -- the GOP is unsatisfied, and the stimulus bill is much weaker than it should be.

Only two parts of the stimulus will DEFINITELY create or save jobs -- money to states to stave off layoffs, and infrastructure.

Right now the bill has plenty of money for the states.  Yet there is only $85 billion in infrastructure spending. If you read Rep. Oberstar's comments from earlier this week, or saw Rep. Defazio on Rachel Maddow on Friday, you'll know that this was the direct result of the tax cuts. Pelosi might be shutting out the GOP, but the Obama team isn't, because they are the ones who insisted that infrastructure be cut for more tax cuts.

If the liberal netroots don't band together with unions and other interest groups, start making phone calls, and demand that infrastructure spending get boosted to $300 billion or more, I'm afraid this stimulus bill will be a major failure.

Without infrastructure, what will Obama and the Democrats be able to point to in two years? Statistics on health care, education, or blanket statements about how "it would have been worse"? Screw that. They need to be able to point to high speed trains, rebuilt schools, reinforced bridges and levies. Physical symbols of progress and investment.

Everything, everything about this bill has to be job creation. The tax cuts should be the lowest priority. Honestly, education and health care should also take a back seat -- those can be dealt with later. Right now, we need Obama to fulfill his promise to create the largest infrastructure program since the national highways.


Has anyone itemized (4.00 / 1)
where the additional money should be spent?

Seems to me that if we can push for a specific agenda rather than just 'more stimulus', we're in a far more powerful position.


[ Parent ]
How specific should we get? (4.00 / 4)
I mean, I live in L.A., so I'd love to see a few billion for our long-delayed "Subway to the Sea" project, a subway that connects downtown to Santa Monica. I'd also love to see $40 billion for the high speed maglev train from Los Angeles to San Francisco. And I'm sure transportation and energy experts in every major city and state could rattle off hundreds of billions of dollars worth of similar projects.

But if only $85 billion is dedicated to infrastructure, you're not going to see any major projects built. That amount of money will shore up some existing infrastructure, maybe add some extra lanes on some highways, but won't have a real visible impact.

Rep. DeFazio was on Rachel Maddow yesterday, talking about how Chicago alone has $6 billion in ready-to-go infrastructure projects:



[ Parent ]
a longer clip (4.00 / 2)
Didn't realize the previous one cut off before DeFazio discussed Chicago.

Go to about 6:45 in this video:



[ Parent ]
Pelosi (4.00 / 4)
Pelosi, apparently, gave Republicans no role whatsoever. Good. That seems like a sensible approach right now. I hope Obama is doing exactly the same thing, and his "I won" comment from yesterday indicates that might be the case.

It appears that they're keeping the GOP's mits off of things, but doing so while granting them a lot of concessions.  The problems arise when they give too many concessions, and threaten the workability of the plan (tax cuts suck at job stimulus).

Keeping the GOP out of the process, while giving them some stuff they want will probably drive them nuts, while  allowing the Dems to shrug, and say, "We gave them stuff we didn't have to and they're throwing a fit, what do you expect us to do?"  That's fine, so long as they don't give away too much.  In fact, it played properly it could be more than fine, it could be downright brilliant.

Proof in the pudding, as always.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3


Time to run your chart again (4.00 / 1)
Paul, the OMB chart that shows what will actually work to stimulate the economy ought to be shown in every blog post about this topic. Hopefully, it will be updated with some of the current unworkable Republican ideas. What we need are decisions made by people who know something about reality, not by politicians spouting right-wing rhetoric.

I'm surprised that no one yet seems to be proposing two very effective programs from the Great Depression: the Civilian Conservation Corps (CCC) and the Works Progress Administration (WPA). These programs put people to work immediately and built useful infrastructure and provided useful services.


[ Parent ]
Here's a good one from Mother Jones (4.00 / 2)
This chart shows which stimulus measures would actually help the economy. Funding the food stamp program, extending unemployment benefits, providing aids to the states, plus spending on infrastructure would all be effective in stimulating the economy. The measures providing less than one dollar of stimulus per dollar of expenditure -- such as extending the Alternative Minimum Tax patch, making tax cuts for dividends and capital gains permanent, corporate tax cuts, etc. -- are actually a waste of money. Note that the $1 dividing line on this web graphic is not in the right place.

>


[ Parent ]
HR 1 spending just the first of several $500b installments? (4.00 / 1)
I would like to hear from the Congressional leaders that the reason the spending side of the stimulus bill is so small is that it is prudent to appropriate money only after plans for effectively using the money are more or less in place.

It makes sense to me that tax cuts are such a large percentage of the first Obama stimulus package:  The analytical work necessary to determine the usefulness of these tax cuts has already been done.  The Congressional staff and Obama's staff can just pull it off the shelf.

It would be smart to pass all the tax cuts, and some spending, now.  Additional legislation by this Congress should just fund projects, BIG projects, that will have been properly vetted.

Let's keep pressing for this outcome!


I made this point to the earlier post (4.00 / 1)
by Paul: I think that we are basically stuck with what we've got politically.

Both Obama and the Democrats in Congress have weighed in with proposals in the low $800B range. It's pure delusion to believe it's going to be revised upward greatly from that.

Unfortunately, by estimates of some very good economists -- e.g. Krugman -- that is likely less than half the stimulus needed really to do the job. Nor do I see a path in which a second stage of the stimulus comes to play soon enough to tilt the scale against a major economic downturn. Obama certainly has said nothing to indicate that this is just step one in a larger package. He and his people will look incompetent (because they didn't anticipate the need) or dishonest (because they did so anticipate, but weren't candid enough to acknowledge the need) if they request a major second step in the near future.

So we should probably do about the most productive thing we can do: push for whatever minor improvements we might get in the package, but mainly just cross our fingers that Krugman and others made some unreasonable assumptions in their own estimates, and that the economy is either a lot less impaired or a lot more resilient than people seem to think.


True but not so bleak. (as Matson also says below.) (4.00 / 1)
It's pure delusion to believe it's going to be revised upward greatly from that.

Although I don't agree with that, as we move forward, and the scope of the collapse of 'the economy' is more apparent even this stimulus can be expanded. One remember that Roosevelt didn't even begin his real economic policies until his second term for example. While this, obviously from here, forestalled the recovery, the process began and Roosevelt is a hero to Americans. even next year, or later this year the stimulus can be expanded. Second, the congress isn't done with the package. Third there is far too little, far too little, in this package to even begin the process of creating a green stimulus package. The green energy package has yet to brought forward in my estimation, the hard work of creating a solar and wind energy sector whose purpose is to replace not just imported oil, but domestic coal, has to be a separate 'stimulous' package.

So we should probably do about the most productive thing we can do: push for whatever minor improvements we might get in the package, but mainly just cross our fingers that Krugman and others made some unreasonable assumptions in their own estimates, and that the economy is either a lot less impaired or a lot more resilient than people seem to think.

Krugman is correct as you fear, and the stimulus is too small, either I'm right and the green package is still to come, or Congress needs to expand it, or the timing of the energy sector 'moon program' is yet to come. Our job is as you say to push, but we have to push not just this initial package, but the next one and the next one.

BTW, not all stimulus's wil require direct outlay of cash from the fed. One method is to 'top up' state and municipal spending by supporting loans for windmills and bridges (approved negative interest loan programs that only pay back 90% of the principle on approved projects for example) and intriguing programs like FIT (Feed In Tarrifs) which set base price levels and times for green energy coming newly online. There4 are few already in place, but Germany has one which has contibuted a lot toward an already very impressive 18% reduction (!!!) in national carbon footprint and created 250,000 jobs.  

Change
"We must break up the banks and never again let them get so big that they distort our politics and take down the economy.


[ Parent ]
Only one bill (4.00 / 2)
While I agree with this post, it should also be pointed out that this is only one spending bill.  We can, and should, still see other spending bills specifically for rail and so on.  For example, I don't think the required matching funds for California's high speed rail project are in this bill, but I have little doubt that money won't eventually be coming.

If we are right that this bill doesn't dramatically increase in size and quality, we need to keep the pressure on that the stimulus was only half the side it needed to be, thus allowing lots of additional spending on infrastructure, health care and so on.


In that case (4.00 / 1)
I would hope that the next transportation bill put a new emphasis on mass transit, that a big energy bill devotes funds to wind and solar, and that there are NO future tax cuts until our budgets are balanced.

But I think it will be harder to get spending bills past the Blue Dogs as time passes. The time to strike with big spending is now. We all know that Blue Dog votes will always be there for tax cuts -- but they won't necessarily be there for needed spending.

I'd love to be more optimistic, but so far the Obama folks are pretending like this particular bill will create millions of jobs and solve the infrastructure problem, and we all know from looking at the numbers that they must be smokin' something.


[ Parent ]
yes (4.00 / 1)
their ideas largely got us into this mess

I wish this point would be used more and more by democrats


New analysis on the latest (0.00 / 0)
What is in the Economic Stimulus of 2009?.

There is one thing I note which I doubt too many are going to realize, they are not making sure those jobs go first and primarily to U.S. workers, U.S. citizens, perm residents, US incorporated businesses, small business in the United States.

This is actually critical due to global labor arbitrage and the offshore outsourcing industry.  

This is a massive, massive project so "all eyes" need to be analyzing the details.

I also say the same thing you are saying, which is to analyze purely on what works, what has been proved to work in the past and if one obtains objective economists, statistics and ignore those writing bad economics or ignoring major statistics, economic indicators in their "religion" one can get a good package together that will be the most "bang for the buck", which is the key here.  

NoSlaves.com  


The Economic Populist


What they should do (4.00 / 1)
is set up a WPA-style agency, perhaps a joint agency from the Transportation, Education and Energy departments, that oversees all fund distribution and ensures that American workers and American firms benefit. They could also work with OMB to make sure there is no corruption or waste.

That would be the smart way to do it. But if the TARP bill was any indication, our current reps in Congress don't know or care about oversight.


[ Parent ]
Obama working with business community (0.00 / 0)
I hope that Obama, his economic team, and Congress can work together to get a sensible stimulus package passed quickly.

I recently saw articles on a few newspaper websites talking about how Obama was working with the U.S. Chamber of Commerce to make sure that the stimulus package was smart and effective at fixing the economic problems, now and into the future.  I take that as a very positive sign, since Democrats haven't always worked closely with the business community.

The main points of their discussions have been making sure that the stimulus package includes tax relief, infrastructure funding, housing industry tax credits to assist homeowners, and reducing borrower & lending fees through the Small Business Administration.  Of course, there are other items that need to be in the stimulus package, but I agree with all four of those ideas.

I noticed that the U.S. Chamber of Commerce is asking for input from the public to let them know which of those proposals they support the most.  The Chamber can then use that data in their discussions with Obama and members of Congress.  Make sure to vote in their poll here - http://www.friendsoftheuschamb...


Just took the poll (0.00 / 0)
but I'm not at all surprised that "More tax cuts for small business" are the two most popular in their "poll".  

[ Parent ]
Donate to Open Left








Friends of the Earth thanks the OpenLeft community for the ideas you generate and your contributions to the progressive movement.

As an anti-spam measure, there is a 24-hour waiting period after registering before new users can comment.
blog advertising is good for you
blog advertising is good for you
SEARCH

   

Advanced Search