We in the netroots spend a great deal of time bashing the Villagers for the profound disconnect with reality, and the disconnect has rarely been more glaring than over the Stimulus bill and the lack of bi-partisanship in passing it. One of the themes I really admire in Glenn Greenwald's writing is the times he reveals prominent journalists implicitly presuming their own opinions must reflect the broad American polity not merely in the absence of empirical proof, but in direct contradiction to it as polling on that very question had been done.
Note: I'm greatly encouraged by the news that the Collins-Nelson betrayal may be cut off at the pass. But just to make sure we all understand just how bad their proposal is, I'm posting this diary anyway.
To be effective a stimulus requires four things: (1) that it be quick, (2) that it be effective, (3) that it avoid counterproductive measures, (4) that it be sustained long enough for the economy to fully recovery before being phased out. So far, the Blue Dogs have focused on making sure the stimulus will fail because of #4 (insisting on immediate reimplementation of PayGo). Now Collins-Nelson are going to war against #s 1-3.
(1) State spending is quick: So quick that if Congress doesn't give them this money by President's Day, they'll start cutting it from the budgets they are working on now.
(2) State spending is effective: As shown in my diary, "Stimulus Reality: Spending Creates VASTLY More Jobs Than Tax Cuts", "General Aid to State Governments" produces 920,000 jobs per $100 billion in spending, compared to 200,000 jobs created by cutting corporate taxes by $100 billion.
(3) Allowing state government spending to plummet is directly counter-productive to the intent of the stimulus package. "Cuts in state and local government outlays are sure to be a substantial drag on the economy in 2009 and 2010," Moodys.com Chief Economist Mark Zandy wrote in his analysis, "The Economic Impact of the American Recovery and Reinvestment Act Mark Zandi - January 21, 2009" [PDF]. During the Great Depression, state public works spending plummeted so severely that it completely offset the increases in federal spending for the first three years of the New Deal (1933-35). This was a major impediment to recovery.
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