Yesterday, the House voted by 224-199 to move the "stimulus" bill to the floor, where it will be debated along with almost a dozen possible amendments. The margin of victory was short by 24 economic know-nothings, mostly "Blue-Dog" Democrats, who extracted a promise that Congress will return soon to "pay-as-you-go" budgeting.
That was predictable. It’s often helpful to assume that support for doing something really good, or stopping something really bad, is usually between 30%-40%, so the rest of the votes needed have to be bought for a high price.
The WaPo has a helpful article today, Democarts Among Stimulus Skeptics, describing the different expectations different groups have for this bill.
– Is this bill the "big one," so we need to cram everything we always wanted to do in it, because this may be our best/only chance? Or is it just a down payment on more to come?
– Is it relief for those most hurt by the worst recession since WWII? Or is it meant to get us out of the recession?
– Is it just making up for the last eight years of underfunding of worthwhile programs, a collection of pet projects? Or is it supporting new initiatives that will be transformative?
The answer seems to be "yes, all of the above," and that’s why it seems such a hodge podge of stuff. If we look at this only from one lens — e.g., are the pieces all good at providing economic stimulus — we’ll find some good things, but not enough, along with lots of stuff that doesn’t measure up because it doesn’t work fast enough, that seems a lost opportunity.
But if we ask, is it transformative with respect to health care, energy, education, the answer is there are some good things here. [Udptate: Today's NYT has good articles on the transformative elements regarding education and health care, along with the predictable howls from conservatives for whom Obama's "I won" is just sinking in. There is more for energy efficiency and renewables and some but not nearly enough for what the American Society of Engineers calls infrastructure's "dire straits."] These are at least a down payment, though not always well directed.
Does it provide sufficient relief? Well, there’s a lot of money for helping the states continue projects (and jobs) that might be cancelled and funding Medicaid that might be dropped, and helping those who’ve lost their jobs get health care. But it probably won’t be enough as the economy worsens, because to do that, you’d have to ignore everything else.
The result is a bill trying to do several things at once, and thus easy to criticize as not doing enough on any one thing, neglecting things that should be done or compromised for the wrong reasons. It comes off as a reflection on Obama’s team and the Congress, an inability to focus. But I disagree. Virtually everything on the spending side of the bill, plus some of the tax credits/incentives for energy, need to be done, and more, and the sooner the better.
And we need to remember how we got here. This bill reflects the Reagan/Bush legacy. These clowns did so much damage, left us such a monumental mess, and were so criminally negligent in the fundamentals of governance, that it’s impossible to fix the catastrophic mess they left us any time soon, even with a trillion dollar bill, or several trillion dollar bills. And the nation is left floundering about where/how to start climbing out of the massive hole we’re in.



41 Comments




Yes, but the overarching question is: Will it work? And the answer to that is probably not. It will do some good for a while but overall much more is needed than a short term stimulus, especially one structured and the size of this one.
Here’s my question: “Do any of the ‘Blue Dogs’ understand fundamental concepts of investment?” In other words, do they understand that in order to make money, you have to spend money?
Knowing where congress critters generally come from, i.e., lawyers and community activists, with an occasional no-nothing former football player thrown in for good measure, I think the answer is an unqualified “no.”
As Krugman said in a recent blog post, we have entered the Macro Economic “Dark Ages,” not because knowledge isn’t out there, but because the scientific knowledge that we have acquired over the years is just completely ignored.
If I may use another analogy, from the sports world, my hometown Orioles refuse to spend what it takes to compete even though they are in one of the larger media markets and have a large cable network providing revenue. They constantly state that they need to “balance the budget” without any notion that they perhaps have to spend some extra money in order to bring in extra customers. They also refuse to understand that the overall value of the franchise itself has increased over the years, just like our overall GDP has generally increased over the years (up until now). Not surprisingly, the Orioles are run by a lawyer.
As long as you have congressman and senators running on the premise that they understand “kitchen table issues” without understanding that a family budget and a government budget are diametrically opposed things, nothing is going to change. When you CNN running IOU USA without comment or opposing argument on their network, you have a problem.
As usual, Digby is on top of this whole issue, here.
Actually, according to this guy, the bill is “remarkably clean.”
Also, grassroots efforts, such as this one in regard to SUPERTRAINS, can work.
h/t Digby, this is a synopsis of the linked post, above under #2.
As I say in the same comment, I think the issue is that the actual Congressman just don’t understand Economics 101 or Business 101, for that matter. I don’t know how you overcome that and the rank stupidity that comes from the conservative movement as well.
Agree. It looks like we need a trillion dollar “stimulus” bill, another trillion dollar “relief in the meantime” bill and another trillion dollar “down payment on transforming health, education, energy, etc, and by the way, how about a trillion or so to restore funding and make up for lost years on all the other stuff we should have been doing but weren’t — and can we have it tomorrow, please? So we’re basically getting abou 20% or so of what’s needed in each category, with another 20 percent blown on the wrong tax cuts.
My view on the business carry back tax boondoggle, is that we need to characterize that one as part of the “bailout” bill, not part of the “stimulus.” Bill. Essentially, relieving the banking corporations of billions in taxes (or getting rebates) is the same as recapitalizing via a bailout, except there are not strings. So what the Republicans are asking for is a bailout of banks with no strings — and they’re hiding it as “stimulus.” Change the framing.
it can’t work since it’s not funded, it’s ponzi, you can’t invest by lowering revenue
they need to go back to the tax codes before reagan redistributed tax burden and they need to rescind taxe gifts given to the wealthy under bush
we need to fund this stimulous not borrow against the future for jobs today
Change the framing
Exactly – this is about investment in the overall economy.
In other words, if I were a business man who wants to build a factory in the business world, I don’t have to take 1 million dollars from my savings account, I go to the bank and get a construction loan, which is funded in pieces based on certain benchmarks. The expectation is that when my factory is built, I make money, but the bank makes extra money, as well.
To take that back to government spending, the money that the government spends is not wasted per se, it goes somewhere. The problem with tax cuts is that, in contrast to what Conservatives and Republicans constantly state, that they don’t go back into the economy or provide future revenue, in fact funds either flow out of the country or are saved in their bank accounts. Furthermore, Republicans have an intrinsic distrust in anything government in the first place, incompetence is a self-fulfilling prophecy on their part.
The first main difference between Obama and Bush is competence borne out of the fact that Obama actually believes that government can work where Bush never believed it could ever work.
Also: “we need to fund this stimulous not borrow against the future for jobs today”
is part of the thinking that we don’t need right now. Yes, revenue and paying back the debt should be a paramount issue, but first we need to get back to full employment in order to make it easier to pay back in the first place. From a pure political standpoint, the way in which the media industrial complex is currently constituted, it is political suicide to raise taxes in a recession because that is considered outside the realm of accepted thought.
We also live in an entirely different world than we do in 1982 in that interest rates and therefore deductible interest are much lower now than they are then. Furthermore, due to advances in electronic banking, outsourcing and offshoring, it is much easier for wealthy people to shift money around. In other words, just simply reinstituting the “tax codes before Reagan” will, in my mind, not have the effect of restoring US prosperity.
It is about what we can do now. To use my factory analogy, part 1 of the construction loan on the factory. Check out the link in my comment, above. It appears that the “stimulus” (I prefer investment) portions of the bill are pretty clean. Let’s let the Obama administration prove how competent they are – I am pretty hopeful based on what I have seen so far.
What Horn doesn’t address in the link you give is how the other tax cut features of the stimulus would be divided up. If there are only around $20 billion of them for buiness, then what is going on with the other $255 billion? Inquiring minds would like to know. And even if as he asserts that this is all very progressive, it still doesn’t change the fact that tax cutting has much less economic effect than spending. This brings me back to the point I was making originally. The stimulus probably is not big enough, in terms of its size, the split between tax cuts and spending, and where tax cuts and spending are going.
It could keep us out of depression but will likely be insufficient to lift us out and keep us out of recession. We could easily go back into recession when it’s done. And as I like to add, we need a new and comprehensive plan to re-industrialize the economy, and move it away from its unhealthy addiction to the paper economy and back to a real and sustainable one. I don’t see the stimulus as a transition to this.
Thanks Scarecrow.
digg
The breakdown of all of the tax cut spending is in the actual CBO report (link in Horn’s piece), as follows:
I have bolded the provisions that flow to the bottom part of the population. I agree with you that investment/spending would probably be more effective, but part of the problem is that this was a campaign promise of Obama’s in the first place. He took a lot of wind out of the sales out of Repub. windbags by saying he was going to offer tax cuts to 98 percent of the people. While I think it has put him in a hole from a policy standpoint, it did get him elected.
The section on state and local governments is also important, as part of the problem which is occurring is that states are cutting back on spending because they have all of these pay-as-you go rules as well. While these measures are listed as “tax cuts,” it in fact serves as spending on the state level as this will be spending by states that would otherwise not have occurred.
Part of the problem on the state level which is occurring is the unfunded mandate problem in which programs such as Medicare and the No Child Left Behind Act mandate state spending through federal legislation. If the feds can alleviate those mandates somehow through “tax cut” measures, I am all for it.
The stimulus probably is not big enough, in terms of its size, the split between tax cuts and spending, and where tax cuts and spending are going.
I agree, but the main issue, which Scarecrow addresses is the fact that the “Blue Dogs” (and their supporters in the MSM – or is it the other way around?) are pivotal whether ANY kind of stimulus gets passed in the first place. Remember that the neo-Hooverian Republicans would rather do nothing at all. In fact, it is no coincidence that academic claptrap such as Amity Shlaes‘ or Burton Fulsom’s novels are doing the round on Fox. It is part of an overall strategy from the conservatives to do nothing at all and it not easy to overcome, especially as most people fail Econ 101. See this TPM thread (here, here and here) for a prime example.
To add to Hugh’s point that tax cuts are indeed mostly counterproductive, this post from TPM is also instructive, as it lays out in a concise manner how effective various budget measures are. Of note is the fact that tax rebates deliver anywhere from 1.02 to 1.28 for every $1 spent. If there are going to be any “tax cuts” we might as well as have those, especially if Republican such as Jeff Flake are opposing them on the basis that “they would go to those of us that don’t pay any income taxes.”
[A nice shell game that GOPers love to play for a willing MSM audience, as they are never countered on it]
The breakdown per the JCT is as follows:
Total cost of tax cuts: $266 billion
$144 billion to taxpayers
$13 billion for businesses
$13 billion for higher education expenses
$51 billion for aid to states
$20 billion renewable energy
$25 billion increases in earned income tax credit program
Now this says only $13 billion is going to businesses not the $20 billion that Horn was talking about. Now a few points should be made. The first item of $144 billion is spaced over 3 years and phased out during that period. This amounts to on average to $48 billion a year. This is considerably less than the $160 billion Bush stimulus whose effects were barely noticeable.
As tax cuts their contribution to stimulus and recovery are small. It doesn’t really matter if the stimulus is progressive or not in the sense that if it is insufficient it is insufficient.
Re Obama’s campaign promises, he pledged change we could believe in and then larded his Administration with Clinton era retreads and even one Bush Administration holdover. So I wouldn’t put to much credence in the notion that he had painted himself into a corner on to whom tax cuts would go.
Just a small note, I think you meant Medicaid not Medicare in terms of unfunded state mandates.
I agree. Tax cuts can be useful especially if targeted to those most likely to spend them quickly on real items like food and clothing, which would mostly concentrated in the earned income tax credit segment.
The bond issues for states probably also does not something useful. I never quarrel with aid to students but it might have been nice to see some focus on strategic areas like engineering, the hard sciences, and foreign languages. Same thing with renewable energy, I would have liked to have seen energy tax credits for ordinary Americans who were doing things to conserve energy, or to kill two birds with one stone, who wished to be buy a car that had high fuel efficient, not just hybrids because that’s mainly Toyota. All in all I would approve about half of these tax cuts. I might consider even the taxpayer directed tax cut but would reduce its scope to perhaps families earning $75,000 or less and individuals $50,000 or less.
That should read: The bond issues for states probably also does something useful.
Has anyone asked the republicans what their president, George Bush, did in the last two years of his presidency to stimulate the economy? Oh wait! I forgot. Michele Malkin reminded us today about how all republicans are:
“Since when did it become the Republican Party’s top priority to “get things done?”
They’re the Do Nothing Republicans Accept Blame The Democrats For Everything They Don’t Have The Stomach To Fix.
Wasn’t balancing the budgets (Blue Dogs) a primary concern of some pols while the U.S. plummeted into the Great Depression? Sounds familiar.
They really have a hard on for people such as myself. I don’t pay taxes anymore. Of course, I now live on disability and receive much less a month than I once made in a short week without any O/T, and I had all the overtime I wished to work. They insist you expend everything you have before you can get any kind of assistance, bank accounts, CDs, 401Ks, you have to be flat broke. People struggling don’t deserve any consideration, Flake probably will propose some alternative to eliminate the drag placed on the economy by noncontributing people such as myself-like euthanasia…
I meant to say Leonhardt at the NYT had some 7 page article up about the economy. I could only get through the first page. He seems to have a genius for missing the point. He quotes Rahm doing a perfect paraphrase of the Shock Doctrine but then makes it sound like this is some backdoor and kind of dubious rationale for healthcare reform. Do you know much about him?
Nope. There’s something vague in the back of my mind about him. If I can dredge it up, I’ll let you know.
So I wouldn’t put to much credence in the notion that he had painted himself into a corner on to whom tax cuts would go.
It was the main part of his stump speech – “I will give 98 percent of the American people a tax cut.” That is, in essence, the $144B tax cut portion of this bill. If Obama would not have stuck to that, I think we would have seen the John Kerry windsurfer come out of the woodwork again (or the HW Bush pledge).
This is considerably less than the $160 billion Bush stimulus whose effects were barely noticeable.
That’s partly because those $300 checks went to everyone. This is much more targeted. I think that those type checks only worked as a 48 cent on the dollar stimulus, as the people that didn’t really need it used it to pay down debt (that’s what I did) instead of spending it.
Speaking of paying down debt, that’s what those tax credits for education are about. The Dept. of Ed is getting very aggressive through garnishments and withholding tax refunds about collecting old student debt, partly because it’s all tied into the credit crunch. [I misplaced the link to the article I saw about that]
If those recent students get some assistance in paying off this debt, and hence getting more available disposable income that is otherwise garnished, it helps the overall economy as the below 35 crowd is much more apt to spend than save.
“Change we can believe in” was also part of his stump speech and again look at how that has turned out in his appointments and in his economic plan.
And in the final analysis, the ultimate legacy of Reagan/Bush is Bush/Cheney. Heckuva job, Poppy.
People such as Flake are not arguing in good faith. They read the Wall Street Journal and make the assumption that they are not being lied to and are too intellectually lazy to research what they read.
Slightly OT, but apropos I think, there was a Col. on The Young Turks this morning who wrote a book called “Gitmo, the real story” or something like that. He based his entire book on the premise that the soldiers were getting a raw deal and that the FBI report (which was commissioned by the Bush DOJ) was truthful in stating that there were “only a few bad apples” and only “a few minor instances.” When confronted by Cenk Uygar that perhaps that FBI report might be a tad biased, the Col. said “well I guess you can’t believe anything the Bush administration does.” For conservatives it is always black or white, the Wall Street Journal is right or it is wrong, but sometimes is never an option.
Leonhardt is my hero.
Not the same – the “tax cut to 98 percent of Americans” was a specific enough policy proposal as opposed to the nebulous “change” meme that Sarah Palin attempted to adopt as well.
Are you saying that Obama, once he got in office, should have just proposed a $2 trillion stimulus, not put in any tax cuts or rebates whatsoever? I might agree with you that that would be the right thing to do, but how would such a thing get through the Congress, especially given the pay-as-you go Blue Dog Dems, as described in the above post?
I will also say to you that I think Obama is a Chicago Boy in the economic sense, so that I am not surprised, nor should you be, that some of their memes would find their way into his stimulus package.
In short summary, did you ever expect an Obama administration, based on his voting record and his policy proposals to have a radical spending stimulus package?
Dugg and Recommended!
You forgot the snark tag.
I rarely read the economics in the MSM because over the years, my bullshit tolerance has been exceeded. The analysis you were so patient to do is illustrative. They conflate, they issue half-truths, they use throwaway qualifiers, etc.
Whatever is in the back of my mind is not flattering, but I still haven’t been able to retrieve it. I even googled him and learned that he has some kind of math degree from Yale. Guess he is really happy to be doing baloney economics.
new post from kirk: Is Cass Sunstein, Obama’s Pick to Regulate Regulations, Too Fond of Cost-Benefit Analysis?
From reports I am seeing, this stimulus package is a
sham. How does $87billion for Medicaid, $142billion for
education save our jobs and our homes, save businesses
and restart the economy.It is outrageous and time to start e-mailing your congressman and senators. below is an option
Stimulus Payment Information
This year, taxpayers will receive an Economic Stimulus Payment. This is a very exciting new program that I will explain using the Q and A format:
Q. What is an Economic Stimulus Payment?
A. It is money that the federal government will send to taxpayers.
Q. Where will the government get this money?
A. From taxpayers.
Q. So the government is giving me back my own money?
A. Only a smidgen.
Q. What is the purpose of this payment?
A. The plan is that you will use the money to purchase a high-definition TV set, thus stimulating the economy.
Q. But isn’t that stimulating the economy of China ?
A. Shut up.
Below is some helpful advice on how to best help the US economy by spending your stimulus check wisely:
If you spend that money at Wal-Mart, all the money will go to China.
If you spend it on gasoline it will go to the Arabs.
If you purchase a computer it will go to India.
If you purchase fruit and vegetables it will go to Mexico, Honduras, and Guatemala (unless you buy organic).
If you buy a car it will go to Japan.
If you purchase useless crap it will go to Taiwan.
And none of it will help the American economy.
We need to keep that money here in America.
You can keep the money in America by spending it at yard sales, going to a baseball game, or spend it on prostitutes, beer and wine (domestic ONLY), or tattoos, since those are the only businesses still in the US.
Bobhenry
obama’s promised tax cuts were, i thought, supposed to be revenue neutral. do i have that wrong or is what is in the so-called stimulus package something different?
The criticism has nothing to do with what might be expected from Obama. Hugh, selise, myself, others, have been quite crtical of him, his economic advisors, etc. The current criticism has to do with whether the plan will work. Doesn’t look like it to me.
Should Obama show the slightest interest in what might work, what would be politically acceptable would turn out to be a matter of something usually referred to as leadership.
BTW, even a very poor leader, W, was able to cram down all kinds of junk that didn’t work and people didn’t like. Don’t give me a lame excuse about what might be politcally acceptable.
well said.
love your posts scarecrow, I cross posted this crooks and liars who have an excellant post up;
here is my comment on that excellant thread, it belongs on this MORE excellant thread
incredible how the Reagan myth has not been exposed
he raised taxes more then any peacetime president before him, he did not “lower taxes”
worse then that, not only did he raise taxes overall, those taxes rose exponentially for the middle class, a redistribution of tax load so that the incredibly few who did wind up with these tax gifts were funded by the people who needed the money the most
then, while increasing taxes over all AND for the majority of people, he proceeded to dismantle vital services so that states had to add taxes on top of the tax increases in order to keep funding these vital services
Reagan grew government more then any democrat before him
Reagan increased unemployment
Reagan almost eliminated the middle class with his robber baron economic strategy
Reagan removed the important policies that forces business into paying their bills.
most regulations arise from issues industry creates itself, for instance they refused to clean up the bronchitis they dumped in my kids air and the cancer they poured in my moms water
because they wouldn’t clean up their own crap regulations were put into place by the ultra liberal Richard Nixon who created the EPA
Reagan eliminated as many of these bill paying safeguards as possible and the middle class is paying for corporate bills today
Reagan increased industry’s power over labor exponentially
Reagan made it possible for industry to export jobs and allow these depraved corporations to use slave labor, child labor which is obviously contraband
Reagan armed the terrorists today, if not for Reagan it is not likely bin laden would have existed.
the list goes on and on, if not for bush Reagan would have CLEARLY been argualbly the most damaging president in American history
of course bush trumps any other consideration in that regard
Radical? No, what I expect is an effective stimulus plan. The standard appears not what is needed but that whatever is done was better than nothing, even if it didn’t work. I think the stakes are too high and I don’t think we have any more chances to get this right.
Quiet, pweeze, I’m huntin bwue dog’s. Hehehehehe…
I am SOOOOO tired of having go kiss these assholes asses to make any move forward. And for every two steps we try to take forward, they make us take 1 9/10 (sometime is seems like 1 10/9) back, just to get their fucking support.
Look, fuck you, run as the Republican’s you really are at heart. I’d rather fight you too, than have to make concessions, or ask for you stupid vote.
I know that I’m shooting myself and my party in the foot, but these assholes come from red parts of the country and vote accordingly. The “D” at the end of their names helps get them elected because the Rethugs suck so bad that any letter after your name, including “X” ( unless your name is Malcolm), would get you elected.
Vichy Democrat’s need not apply.
Vote them the fuck out. Either put in real Rethug’s or real Democrat’s.
I’m sorry for the language, but I just can’t take it anymore!!!!!!!!!!!!!
Hugh, selise, myself, others, have been quite crtical of him, his economic advisors, etc.
You guys have been advocating against Obama since during the primaries. Correct me if I wrong, but I think you guys are pretty much in the Kucinich side of the fence.
I think policy wise we are pretty close together. I have had discussions with selise in the past, where we disagreed more on the how than the what.
We are working against 40 years of Conservative misinformation that is being spread by the MSM. Liberal think tanks such as CAP have only been existence for 5-6 years. From Media Matters, this is just one week worth of misinformation which is being spread among the American Public. It is impossible to expect that that 40 years can be turned on its head in a mere 3 years, i.e. the time since Katrina. That is when a majority of the American Public, due to the fiasco in NOLA found out that the Republican party and competence were two diametrically opposed items.
I disagree with this: “I don’t think we have any more chances to get this right.” While we have few, I don’t think we have NO more chances.
I should have qualified my “radical” qualifier. Policy wise I certainly think that such a “radical” stimulus is prudent and the right thing to do. I just feel, unfortunately, that such a stimulus plan, given what I hear on the street, on talk radio, on message boards, etc. that such a $2 trillion package, solely based on spending and not on tax cuts is “outside the realm of acceptable thought.” [I am paraphrasing the Jay Rosen/Jane post for a point of reference here].
Remember that Roosevelt’s New Deal started relatively small. In fact, he was quite moderate in that he thought that the budget needed to be balanced in 1937 while more economic stimulus was actually needed.
If I can modify my question, I’ll put it this way, “What kind of stimulus could the Obama administration actually get passed the House and Senate without delay, that you would consider effective?” This in the world where we have the Blue Dog coalition and a non-filibuster proof majority in the Senate.
I don’t want to argumentative here, by the way, I am just trying to figure out how you guys, who seem to be very vocal about what you want to achieve how to actually achieve it.
Finally, I would venture to say that you feel that the statement “Obama is a pragmatist” is nothing more than a myth. Correct?
whoa now. not true.
first, being critical of someone (as ecahn rightly says i have been) is NOT the same things as advocating against them. i don’t think i ever advocated against anyone voting or working for obama although i have challenged people’s reason for doing so.
second, during the primary i was most critical of clinton – although by the time the primary elections were held here, i did not vote in the presidential primary race because i wasn’t sure what to do.
i had planned on voting for obama in the general election until his betrayal on fisa. but i supported other people who decided differently.
none of this is or was a secret.
OK – I stand corrected. I know it always dangerous to make generalizations.
As I said in #36, trying to see where you are coming from.
As far as FISA goes, I think that there is part of the story that we don’t know. If I may speculate, it has something to do with what the Democrats did know about the wiretapping and other surveillance programs and just let them happen in 2002.
Would you mind putting up a link to the place where you get your talking points? We’re not big on plagiarism around here.
thanks.
re fisa, i think it goes much deeper than that. have you read my fisa diaries? not saying you should – there are only 3 but they are way too long. however if you are curious about my thinking on that issue they will give you some of the background (for the house only, didn’t have it in me to do the senate as well)
http://www.dailykos.com/storyo…..75141/9215
http://www.dailykos.com/storyo…..351/549864
http://www.dailykos.com/storyo…..716/550516
Will look at those when I have a chance.
Meanwhile, Think Progress analyzed how the media was covering the stimulus package. I think it makes my point that it is extremely difficult to do the right thing when the Democrats don’t help out.
There is another post on Rush Limbaugh in these diaries. I have to say that while the thought is well intentioned, it does not understand how ideas and policies filter down to the American Public in 2008 (or since 1992 for that matter). “Progressives” have a lot of voices (by nature, I might add), but Rush IS the head of the Republican party right now for lack of anyone else. Look how they come crawling back to him if anyone says anything that doesn’t toe Rush’s line, such as Congressman Gingrey. Drudge comes a close second.
H/t Digby, my second stop on the morning’s blog reads.