The Great Mainstreet Bailout Debate

by: Paul Rosenberg

Sat Sep 27, 2008 at 16:00


Wasn't that something?  Mitch McConnell denouncing unemployment insurance?  Roger Wicker attacking food stamps?  Richard Shelby ranting against senior meals programs? George Voinovich railing against infrastructure spending that would creat 384,000 jobs?  Pat Roberts frothing at mouth against weatherizing homes?

Oh, wait...

That didn't happen. None of it did.  Not even close.  Harry Reid didn't force the Republican obstructionists to actually fillibuster to kill the $56.2 billion stimulus plan in the Senate this week.  In fact, he hardly did anything to make it more than the briefest of blips on the sharpest of political radar screens.  And therein lies virtually everything you need to know about the political economy of America today, and the sorry, sorry state of our democracy, and the Democratic Party.

When the Democrats gained leadership control of the House and Senate, they were handed enormous power to shape the political debate in our country, and thus far they have utterly squandered that power.  This week was no exception, as they actually had a relatively small, but significant de facto Main Street bailout package not just in the works, but on the floor to be voted on, and they simply let the GOP Senators kill it with a silent fillibuster, and no political costs whatsoever.

Had they chosen to make a fight of it, they could have radically expanded and reframed the narrow Wall Street bailout debate to consitute a real debate about economic philosophies and priorities--one that is long, long overdue, and that would heavily favor the Democracts.

Details on the flip.

Paul Rosenberg :: The Great Mainstreet Bailout Debate
According to The Politico, major provisions of the bill included:

Unemployment

The unemployment rate now stands at 6.1%, the highest rate since September 2003. The unemployment rate is up 1.4% since last August, including an increase of 0.4% in the last month alone. The U.S. economy has lost jobs every month this year, a total of 605,000 jobs. The stimulus package extends unemployment benefits by seven weeks in all States and another thirteen weeks in high unemployment states.

High Food Costs

Food prices have increased by 7.5% this year after increasing 4.9% in 2007. In order to help low-income families cope with rising food prices, the stimulus package temporarily increases Food Stamp benefits by 10 percent and includes $450 million for the Women, Infants, and Children (WIC) program (which would allow 625,000 women and children to receive WIC benefits, meet some of the rising demand due to a faltering economy, and allow states to avoid creating waiting lists). $50 million is included for Food Banks, $30 million for the Commodity Supplemental Food program, and $60 million for senior meals programs (18 million more meals).

....

High Energy Prices

Energy prices have increased by 22.4% in 2008 after increasing 17.4% in 2007. In order to help Americans cope with spiraling energy costs, we include $500 million in the stimulus package for weatherization programs. This is in addition to $5.1 billion for Low-Income Home Energy Assistance and $250 million for weatherization provided in the underlying amendment.

• Weatherization Assistance. The stimulus bill also provides an additional $500 million for the Weatherization Assistance Program, which improves the energy efficiency of low-income housing. This amount of funding will support more than 8,000 existing jobs, weatherize about 300,000 homes, and save each household about $400 in energy costs this coming year.

Helping States Deal with a Flagging Economy

Twenty-nine States are facing a $52 billion shortfall in revenues in their FY 2009 budgets, resulting in cuts in health care, education, and other programs. The stimulus package includes $19.6 billion to reduce the States share of Medicaid costs by increasing the Federal share by four percent.
....

Creating Jobs

There are consequences for failing to invest in America. Bridges fall into rivers. Roads and subways are congested to the breaking point. FEMA cannot respond to a major disaster. Fuel prices go through the roof. Our economy slows, and we are less competitive in the world economy.

The stimulus package includes: $10.8 billion for building and repairing highways, bridges, mass transit, airports, and AMTRAK, creating 384,000 jobs; $50 million for the Economic Development Administration (EDA) to help communities impacted by massive job losses due to corporate restructuring; $500 million for the COPS program to hire 6,500 police officers; $600 million for clean water systems that would create 24,000 jobs; $2 billion for school construction that would create 32,300 jobs; and $500 million to address some of the construction backlog for the Corps of Engineers for flood control, navigation, shore protection, and environmental restoration projects - funds that will provide immediate construction jobs around the nation.

There's a lot more, and some of it is arguably questionable.  But the overall thrust is clearly to do important work while pumping money into the real economy, with a lot of resources going to the "little people" rather than the "big boys".

In a White House Press conference just hours before the vote, a clear veto threat was sent:

Roger.

Q OMB just sent out a -- looks like a veto of the second stimulus package. It says it doesn't meet the test like the first one. Can you explain that a little bit?

MS. PERINO: Well, you just got the document. You're a little bit at more of an advantage than I am, sitting here -- standing here. But we have talked before about the best way to stimulate the economy is to pass an energy bill. The best way to make sure that we stimulate the economy is to pass this rescue package.

There's some elements of the package that have been put forward by Democrats for a second stimulus that we do not think would be stimulative to the economy, such as unemployment insurance -- the food stamps, we believe we have met the need and that we were prepared to do more and there is reserve money available for that. So I'll let you all read that document that just came out from OMB, but that's -- our position on the stimulus -- second stimulus package hasn't changed.

Back when the first stimulus package was up for debate, I wrote a diary, "Bipartisanship Vs. Reality: The Stimulus Package", which included a chart from adapted from a presentation by CBO Director Peter R. Orszag.  Here's what my reformatted version of the chart looked like:

PolicyCost-
Effectiveness
Time-LagUncertainty
Individual Tax Proposals
Lump-Sum RebateLargeMediumLarge
Temporary Tax Reductions
Withholding Holiday for the Employee Payroll TaxLargeMediumLarge
Across-the-Board Tax Rate CutSmallShortSmall
Deferring or Eliminating Scheduled Tax Increases
Extending the AMT PatchMediumLongMedium
Deferring or Eliminating Tax Rate Increases Under EGTRRA or JGTRRASmallLongSmall
Business Tax Proposals
Cut in Corporate Tax RatesSmallLongSmall
Incentives for New InvestmentMediumMediumLarge
Extending Operating Loss and Carryback ProvisionsSmallMediumLarge
Spending Proposals
Direct Transfer Payments to Households
Extending or Expanding Unemployment BenefitsLargeShortSmall
Temporarily Increasing Food Stamp BenefitsLargeShortSmall
Providing General Aid to State and Local GovernmentsMediumMediumLarge
Investing in Public Works ProjectsSmallLongSmall

As can be seen at a glance, the only options that are marked favorably in all three categories--for cost-effectiveness, speed and certainty--were unemployment insurance and food stamps, the two programs that Perino singled out as reasons for vetoing the proposal.  Thus, this isn't even a matter of cold-heartedness.  It's plain, outright stupidity. And unlike the first package, this one comes up directly opposite the proposed Wall Street bailout, so that the utter perversion of economic reality has a lot more political downside to it.

If only a spotlight were shown on it.

Such as, oh, I don't know.... forcing the Senate Republicans to attack the substance of the bill, and echo the White House's anti-reality economics?  And forcing them to do this for hour after hour after hour....

Let's face it.  The Democrats held all the cards they needed on this one.  And a good number of Republicans knew it.  Dole voted to proceed, as did Coleman and Collins.  OTOH, Evan Bayh voted to block it.

In a post mortem, AP reported:

With the economy still sagging, Democrats have pressed for a follow-up plan that focused on extending unemployment benefits, boosting food stamp payments and building infrastructure projects like roads, bridges, water and sewer projects and school repairs.

They got no interest from President Bush and his GOP allies in Congress. "Record spending that could lead to record tax increases or higher deficits will not advance our economic recovery," the White House said.

So, $700 billion for Wall Street?  To important to even ask questions.  But $56.2 billion for Main Street? "Record spending that could lead to record tax increases or higher deficits..."

What could be clearer?  And what more could a politically relevant opposition party want in the way of a showdown?


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But why? ... (4.00 / 1)
Markos is over at the Book Salon at FDL right now ... and he says he knows that Reid's staffers do read the blogs .. so his staffers know that we know that Reid sucks .. and is basically letting the Republicans gum up the works with out having to pay a price for it? .. My question is .. why? ... Are you that stupid Harry?  Why do you hate the American worker, Harry?  Why do you cower in the corner from Mitch McConnell?  Do you want to be remembered like Ted Kennedy? .. or Senator Geary?

Is it possible (4.00 / 4)
that you are over assuming the difference between Republicans and Democrats?  Being more progressive than Republicans is not the same thing as being progressive.



Why Write The Bill In The First Place, Then??? (4.00 / 4)
They can't just be going through the motion to fool folks like me.  And low info voters won't even know it happened.

The hard work is crafting the legislation and getting it onto the floor.  The easy part is making Republicans squirm.  Why do the hard part, and not the easy part?

"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


[ Parent ]
Why do you think this is? (4.00 / 2)
I can only guess that their motivation is assuaged by the influence of money.

[ Parent ]
The Democrats Have Lost Their Way (4.00 / 3)
They've been out of power so long that they've literally forgotten what the purpose of governing is.  They seem to think it's just getting stuff passed, as Matt has argued more than once.  After years out of power, this seems like a really big thing.  Too bad it's not intelligently connected to anything else.

And so when something really important is threatened, they lack the deep-seated motivation to fight for it, and there is not a well-organized constituencie to keep them motivated when they falter.

Essentially, the integrated mechanisms of party power that functioned through 1994 have been dismantled, and the result is that most Democrtic Congressmembers operate much more as individual actors than they previously did.  This is much more noticable with the Blue Dogs, but I think it's more subtly visible in the behavior of progressives as well,  That's because individual initiatives are--or seem to be--much more likely to succede.  They may be much less significant in the grand scheme of things, but a win beats a loss.  It just feels better.  And after getting beat up a whole bunch of times, you can't really blame people to much for wanting to feel good.

I know that's just part of it, but it's an important part, I think.  Political culture shapes perception, perception shapes motivation, and motivation shapes results--which in turn further shape political culture.

"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


[ Parent ]
Pragmatic, automatic, symptomatic (4.00 / 2)
I think maybe Harry Reid sees himself as the Democratic Leader of the Senate, and forgets that he is also a national Democratic leader. So he sees his job as to pass what he can, to move the legislation along, and make the judgments, like a good traffic cop, about clearing a lane for emergency vehicles when he hears the siren. He does not really see his job as helping to set the national agenda.

Well, who does? Obama plays his cards close to his vest. He may talk about changing the map with his campaign, but he doesn't much try to change the issues under discussion. The only new topic he's brought up that comes to mind is the early childhood education he mentioned in the debate last night. Otherwise he kept up with Hillary and Edwards, but broke no new ground.

And I know without looking that there's nothing new in the Democratic Platform. Does anyone know anything that's in it? That's a relic of another era.


[ Parent ]
firstly the bail out (4.00 / 1)
has to be separate from the very ill conceived term stimulus (not the agenda).

Secondly you have lobbyists and special interests pouring on the hill and I'm quite sorry but Democrats are having these people write their legislation just as badly as Republicans do.

The color green knows no political loyalties.  

Then, on the bail out...they need to listen to the many experts who themselves are turning to youtube, the Internet and blogs to promote policy plans that might actually work

This is very complex.  Not for the faint of heart and these various economists should absolutely be listened to and they are the ones who should navigate a bail out plan.

I wrote up some of the more serious proposals and their analysis in Alternative Bail Out Plans.

Many are pointing to a HOLC (which Hillary actually has had in place for a while due to her Presidential bid).

On the bail out, one thing Democrats did, literally was in cause 3.c tried to funnel 20% of any potential profits to some special interest external parties (really not a good idea with $700B dollars at stake!)

So, what I am hoping the blogs do is get over the outrage frenzy and start wrapping their heads around what will work and promoting that because if they do not...either nothing will be done or the wrong thing probably will be done.  Not good.

NoSlaves.com  


The Economic Populist


So Why Not Restate What You See As Key Points? (4.00 / 1)
What do you regard as essential, and what's a must to avoid?

"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

[ Parent ]
avoid (0.00 / 0)
is giving $700B on top of the $800B already given and assuredly not let Paulson be Tzar.

I have so many posts on EP on this so.

I pointed to a series of quick fixes to immediately loosen up the credit markets, but more importantly, I think we need to listen to the many experts, economists, former Fed chairs, people who were involved in the S&L bailout...

and do what they say.  Hillary has a good plan that I notice a lot of economists have supported and she's being completely ignored.

But, they should not just pass this bail out plan.

NoSlaves.com  


The Economic Populist


[ Parent ]
Paul (0.00 / 0)
Maybe I can get you all to put The Economic Populist in your blog roll?  We're growing like mad and I'm really busy writing for the site.  It's a lot of research to cover topics like this so cross posting material ...well, just plain can't do it.

I try to put links to main points but that starts looking a little "promo" vs. what I'm trying to say.

EP is nonpartisan officially (although loaded with Progressives) because it's a pure all things economic community blog.

NoSlaves.com  


The Economic Populist


[ Parent ]
I second Paul's suggestion (4.00 / 2)
and just printed out a few things from your web site to read later on.

Perhaps if you/we can come up with a few fundamental "should do" and "shouldn't do" kernels based on what's been proposed (e.g., your Alternative Bailout Plans), we can help generate some consensus within the progressive blogosphere on core principles and priorities, and perhaps even fairly specific proposals, which could be packaged within a fundamentally progressive political framing of the core issues and solutions.

Assuming this reflected proposals from some of the experts who are proposing alternatives, might it then be possible for the netroots to unite in a focused and relentless effort to push these experts and their proposals in front of Congress' field of attention--especially key members that are positioned to influence the direction of the bailout momentum. In that way we could provide some political muscle to back up these experts, who could provide the white papers, testimony, etc. to make the case for sensible and progressive alternatives.

One thing I find very compelling amidst all the data is the monstrous magnitude of the valueless gambling that has run rampant in our financial system under Bush (and, to a lesser extent before)...especially when contrasted with the dollars involved in REALLY HELPING REAL PEOPLE WITH REAL PROBLEMS AND BASIC NEEDS.  When you consider the enormous but worthless bubble we call the market for CDSs and other derivatives, its hard not to think, "we've gotta do something completely different than put any more money into this system."  

Congress needs to understand that it needs to stop feeding cancerous cells and begin feeding healthy cells that can keep the patient alive.  This metaphor may not be the best one to use, but I think it would help if we could present some kind of dramatic picture of the true nature of the problems and solutions.

There seems to be very little time, but maybe if the netroots can evolve from "hell no" to "what will work," we can help create a tipping point that can slow the bailout rush enough to provide some additional time to complete the process of tipping Congressional consciousness enough to make a difference here.  Of course this may require an emergency backbone implant that hasn't been successful for many decades.  But, stranger things have happened.


[ Parent ]
A Responsible Plan to End the Debt Crisis. (0.00 / 0)
I've linked to this before.  See what you think:

http://www.alternet.org/workpl...


[ Parent ]
read DeFazio's plan (0.00 / 0)
I'm fairly certain that's a good approach.

I've printed up other's plans that are reviewed, vetted and endorsed by major economists.

What we should do is promote, support and point to those experts and say "hey, this really smart dude is saying this"!

I put up DeFazio's plan on the website.

NoSlaves.com  


The Economic Populist


[ Parent ]
Sorry I can't understand this either (0.00 / 0)
unless they just want to wind up and go home to campaign.

They got it backwards again! (4.00 / 3)
Why should Senate Democrats want to go home to campaign? Not even mary Landrieu is the least bit worried.

The REPUB incumbents need to get back to campaign. Lots of them are in growing trouble -- Collins in ME, Sununu in NH, Dole in NC, Coleman in MN, Smith in OR, (Stevens of AK ain't going nowhere from courtroom in DC or is it VA), Chambliss in GA, Inhofe in OK, Cornyn in TX, Wicker in MS, Roberts in KS, Alexander in TN, and not least Senate Minority Leader Mitch McConnell in KY.

So why hurry to adjourn and give these rats a break?

With this Wall Street crisis they have made, the Senate should stay in session through Monday, November 3, if not later. Let the voters watch them in action in the Capitol and vote accordingly.


[ Parent ]
General Response (4.00 / 1)
We will know that we have reached political maturity when we stop being surprised by this kind of capitulatory behavior from the Dems and accept it as predictable as trees growing towards the light or apples falling downwards to the earth.

It is deeply encoded in their nature to behave in this way.  And attempting to change this underlying nature is a futile as fighting the laws of gravity or genetics

Once we have recognized this fact, we will begin to develop the sorts of independent institutions that are necessary to pursue progressive ends.

For me, I'm ready to start now.


I don't think many of us here .. (4.00 / 2)
are surprised .. I think we are just disgusted that Pelosi and Reid haven't learned a damn thing in 2 years .. if not more

[ Parent ]
If not infiltration, then third party? (0.00 / 0)
Nothing ever changes, and I say that as a voter of 30 some odd years.   Dems are up there demanding Republicans stop playing around and make a deal to enact Bush's plan for a 700B bailout for Wall Street while the Republicans are opposing the Democrats demand for a bailout because they want to protect the little guy.  Republicans keep coupling and repeating that Bush and the Democrats are wrong, thereby effectively distancing themselves from Bush and MCain,   The picture of this threesome was plastered all over the bailout headlines.

bailout

This is not stupidity or timidity.

 


[ Parent ]
Calvin's Right (0.00 / 0)
I'm certainly not the least bit surprised by this.  Nor do I expect the vast majority of readers here to be surprised either.  But outrage can live long after surprise is gone.  And motivating folks to think about and work to create independent institutions is a big part of why I'm writing here in the first place.

The more clearly you see the failures, the more clearly you see the need to correct them, and the fact that they are systemic, and thus require a systemic remedy.

So, the move is on, from "more and better Democrats" to "better Democrats, and a better democratic culture."

"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


[ Parent ]
Paul, what do we do to get the Dem leadership (0.00 / 0)
to actually represent "We the People" until the election? I have called my Senators and Congress critters, written them faxes, and otherwise harrassed them as much as possible.

But they are not giving me any reasonable responses even.

They do not care about "We the People"!!!!

And as far as Obama using the keys to the Democratic Party to lead the congress critters until the election, we see from Sirota's post that he is sending in a wall street guy to guide Dem efforts. We are supporting one branch of the Money party. Where are the pitchforks.

This is coming close to treasonous behavior from the Congress critters, and I am ready for another party. I seem to be losing my loyalty to this one, because they keep screwing working class people like me.


I Think You Need To See The Party Differently (0.00 / 0)
The Democratic Party is a vehicle.  An institution.  The point is that it's there to be taken over, not worshipped or obeyed.  The reason to stay is not out of loyalty, but because the path to real power is much more realistic going through the party than going around it.  This is clear from US history.

Due primarily to the nature of our electoral system, but other institutional factors as well, we are a de facto two party system.  Successful new parties only form when one of the two existing parties falls apart.  This has happened twice: when the Federalists crumbled in the early 1820s, and when the Whigs crumbled 30 years later.  There have been far more examples of progressive forces making major inroads in changing the direction of existing parties.  And, of course, regressive forces, too.

"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


[ Parent ]
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