Three (sorta) "positive" stories about economic stimulus all came together in the last couple of days. They suggest that even when the forces of darkness are trying their hardest to make us stupid, it’s possible we can actually sort out the truth.
1. Did the President stumble onto the correct framing for economic stimulus?
You’d think Democratic strategists would have figured out by now that the Republican hopes for the midterm elections rest on keeping the economy depressed. And the way to do that is by preventing Democrats from doing anything sensible to boost the economy and reduce unemployment.
I thought it was obvious that a central Republican tactic is to make the the words/concept of "economic stimulus" politically toxic, and thus discourage Democrats from doing exactly what they should have been doing more of from the moment Obama took office and it became clear that the Bush era had left them with a virtual depression. For 18 months, the political imperative has been: Stimulate the economy, stupid!
But of course, the dumbest Democrats fell for the Republican trap, helped by the political geniuses in the White House who, having squandered their strategic electoral mandate to reverse the colossal economic and financial blunders of the Clinton/Bush deregulation era, allowed Republicans to label another needed stimulus as politically unacceptable.
So with Obama coming out with a new package of "not stimulus" ideas, you could have predicted that someone at the President’s press conference would play gotcha! with Obama to see how well he could evade and mangle English to avoid calling his recent proposals another "stimulus." And sure enough, when the question came, the President’s advisers had him well prepped: if you’re asked, "why aren’t your recent economic proposals another economic stimulus," avoid the word but talk about everything you’ve done to help the economy.
As you can see from the transcript, Obama spent several minutes dutifully following that script.
But watch what happened when CBS’ Chip Reid did his predictable gotcha followup:
CHIP REID: And on the stimulus part, we can’t get people in the White House to say it is a stimulus — $50 billion for roads and other infrastructure, but they avoid the word "stimulus" like the plague. Is that because the original stimulus is so deeply unpopular? And if so, why is it so unpopular?
PRESIDENT OBAMA: Well, let — let me — let me go back to when I first came into office. We had an immediate task, which was to rescue an economy that was tipping over a cliff. And we put in place an economic plan that 95 percent of economists say substantially helped us avoid a depression.
[. . . and Obama went on like that, blah, blah, blah for several minutes without ever saying the word "stimulus" . . . until Reid springs his gotcha:]
Q: So this is a second stimulus? (Laughter.)
PRESIDENT OBAMA: (Chuckles.) You know, the — here’s — here’s how I would — there is no doubt that everything we’ve been trying to do — everything we’ve been trying to do — is designed to stimulate growth and additional jobs in the economy. I mean, that — that’s our entire agenda. So — so I — I have no problem with people saying, "The president is trying to stimulate growth and hiring." Isn’t that what I should be doing? I would assume that’s what the Republicans think we should do: to stimulate growth and jobs. And I will keep on trying to stimulate growth and jobs for as long as I’m president of the United States.
In that possibly unscripted statement, the President not only retrieved the word "stimulus," but he reestablished the legitimacy of pursuing economic stimulus policies and made it the job of the President to pursue those policies in a near depression. By implication he also made it relevant for the media to ask John Boehner, as well as Dems, "where is your economic/jobs stimulus plan?"
It’s about time. Were you listening White House advisers? See how easy that was to change the terms of the debate?
Now, if we can just get the White House economic and political advisers to follow up, to come up with a jobs and economic growth plan commensurate with the massive hole Obama inherited, we might have an interesting discussion and midterm election.
And while they’re at it, how about appointing someone to the Federal Reserve and its Open Markets Committee that takes its full employment mandate seriously; how about offering legislation to reform the way these MOTU are chosen, to make sure they get the point?
2. Credit where due: Dana Milbank does some homework, gets the economics right and debunks Republican nonsense, in John Maynard Keynes: GOP’s Latest Whipping Boy
If the Republican strategy is to tank the economy (and hence the Democrats) by making stimulus efforts politically impossible, then part of the strategy is to denigrate the economists who explained why stimulus was essential. So props to the Washington Post’s Dana Milbank for making the effort to sort out economic history and debunk the Republican’s cynical gibberish.
Perhaps these Republicans don’t realize that some of their tax-cut proposals are as "Keynesian" as Obama’s program. There’s a fierce dispute about how best to respond to the economic crisis — Tax cuts? Deficit spending? Monetary intervention? — but the argument is largely premised on the Keynesian view that government should somehow boost demand in a recession.
Or perhaps, more ominously, these Republicans know exactly what they are saying when they reject Keynesian intervention: that the government should do nothing to help the millions out of work or to rebuild confidence in the economy.
The Obama stimulus may have been misdirected by too many tax cuts and insufficient spending, but the general policy was correct. Morever, Milbank echoes the arguments Krugman, DeLong and others have been making about those who criticized the theory out of ignorance or worse:
With so much of Keynesian theory universally embraced, Republican denunciation of him has a flat-earth feel to it. Will they next demand the abolition of NASA because it’s "Galileo on steroids?" Shut down the National Institutes of Health for being a "Hippocratic mistake?" Strip funding for those "Einsteinian experiments" at Los Alamos? Demand a halt to public schools teaching from the "failed Darwinian playbook?" (Oh, wait. They did that last part already.)
Keynes’s place in economics is similarly unassailable, and the assault on him lends credibility to the charge that the Republicans lack ideas of their own and are merely generating opposition for its own sake. There’s a cogent argument to be made that Obama’s stimulus was ill-designed and ineffective, but dismissing the most important figure in economic thought in the last century says less about Obama than about his accusers. . . .
With business and consumers refusing to spend, Keynesian theory says it’s up to the government to stimulate consumption — by spending more or by using tax cuts to stimulate demand.
There is an alternative to such "Keynesian experiments," however. The government could do nothing, and let the human misery continue. By rejecting the "Keynesian playbook," this is what Republicans are really proposing.
Well done, Dana. And good luck explaining the implications to WaPo’s editorial Board.
3. If Ezra Klein can solicit plausible plans to put millions back to work, what is the Administration’s/Congress’ excuse for not doing so?
Serious kudos to Ezra Klein for soliciting proposals from prominent officials/economists on how to put millions of Americans back to work. That’s exactly the discussion the country needs but the politicians have refused to have.
Now that Obama has figured out how to say "stimulus" without blushing and has reminded himself, his own staff and the country his job is to stimulate economic growth and jobs, maybe his economic advisers can take up Andy Sterns’ challenge to meet or beat Stern’s suggested jobs plan. He proposes a jobs sharing plan, an infrastructure bank, and a youth jobs program (think CCC):
Cost: $30 billion
Pay-for: One-time repatriation break for corporate earnings
Jobs created: 8.4 million
Youth Employment Programs.
Cost: $46.5 billion
Pay-for: Financial Speculation Tax
Jobs created: 3.1 million jobs
Total $130.5 billion 11.8 million jobs
Net Cost to Taxpayers = $0
In the latest installment (more will follow), economist Dean Baker picks up Stern’s challenge, explains additional elements, and then summarizes:
So, how does my scorecard look? I’ll take my top two items from Stern, then throw in $100 billion a year for infrastructure spending, and $15 billion a year for home retrofits.[yes!]
Job Sharing $ 54 billion 2.4 million jobs
Youth Employment $ 46.5 billion 3.1 million jobs
Infrastructure $ 100 billion 1.6 million jobs
Energy Retrofits $15 billion 0.5 million jobs
Fed Inflation Target 1.4 million jobs
Total $215.5 billion 9.0 million jobs
This is a desperately needed conversation. Why can’t our public officials engage in it and make that the basis for the midterm elections? As we keep reminding the Democrats, it’s good policy, good politics, good economics — and good for the country.
4. NYT article noting that tax cuts for the rich provide the least "bang for the buck."