The Political Implications Of The Stimulus
Listening to the heated arguments from both ends of the political spectrum one might be forgiven for believing that President Obama's $800 billion stimulus package is a giant lemon.
The left claims that Obama's bipartisanship has failed. They argue his "centrist" compromises, as well as the failure to offer a bigger initial package, will fatally weaken the stimulus effort. Republicans see "glimmers of rebirth" through their opposition to the Democrats' plans. But both groups are missing the larger context.
Progressives are in the process of winning a transformative political victory that may be the harbinger of a new era of activist government. For conservatives, their unity might be cause for celebration; but from a policy standpoint they have suffered a decisive defeat.
The most striking element of the revolution that is taking place in Washington is how quickly it has occurred. Four months ago, the Democratic standard bearer made the centerpiece of his economic message a decidedly, non-liberal, middle class tax cut. No one was seriously talking about a massive spending package to revive the economy and had Obama made such a proposal then we would likely be discussing the finer points of the McCain Administration.
The shift is a result, in part, of the worsening economic recession; but the specific solution being favored by Congress is more a function of the trust that Americans have in President Obama (as well as the advantage of a Democratic-controlled Congress).
Today, the stimulus package has only slight majority support among the American people. There is even less backing for large government spending; according to a CBS/NYTimes poll, by a 4-1 margin, tax cuts rather than spending is the electorate's preferred approach for responding to the economic crisis.
Yet even though the electorate favors the GOP's tax-cut focused approach, Congress is on the verge of passing a bill with $500 billion in deficit spending. With a minimal use of his vast political and personal capital, Obama moved the direction of the federal government toward the activist approach that he clearly favors - while not yet embarking on major spending initiatives like a green jobs initiative, health care legislation, infrastructure improvement. All of these steps could, in time, pump more money into a struggling economy.
At the same time, Obama has changed the national conservation about taxes, away from the usual conservative mantra of broad income tax cuts, which disproportionately helped the wealthiest Americans, and toward cuts narrowly tailored toward the middle class. Not only is this arguably better from a policy perspective, but it could lead to a more progressive and egalitarian approach to reducing taxes.
While conservatives are putting on a brave face, steadfast in their opposition, they seem oblivious to the fact that the debate in Washington is no longer between big government and smaller government; it's between big government and bigger government. By supporting a slightly smaller stimulus package - and empowering centrist Republicans by giving them the credit for shrinking its size -- Obama looks conciliatory, while actually getting about 80-90% of what he wanted in new spending and tax reductions. Republicans, by holding out for only tax cuts and failing to offer any compromise that included government spending have painted themselves as political losers - a situation that could get worse for them.
Republicans seem to be basing their political aspirations on the hope that the stimulus package fails and the economy worsens. But there is an obvious flip side: what if it works? What if widespread deficit spending is seen as the solution to America's economic woes? Not only will Obama have won a short-term policy battle, he may win the political war as well.
Sixteen years ago, a young Democratic President with control of both houses of Congress, proposed a stimulus package of a mere $19 billion - and was stymied by intractable GOP opposition. Today, a new Democrat President, with the support of a mere three Republicans, is about to pass an $820 billion stimulus plan that represents the most radical transformation of government in 30 years, potentially even 75. Times have most certainly changed. It's about time both left and right woke up to this new political reality.
This is an interesting post. What I was thinking while reading it is why is Obama the only person I hear talking about the crap grinding its way toward us even with the bailout? I should say, Obama and 95% of the economists on any media. Does the MSM think it is being patriotic by not scaring us like they did post-9/11? I can well image why the Republicans want to focus on the conflict of the stim-bill and not on what is going to happen.
I think is it easy to understand what the republicans are up too. They have thier backs against the wall and no brain (I mean thought center for the party ... mostly, the other too a little bit). Do progressives do any politics at the local/state level?
February 12, 2009 10:32 AM | Reply | Permalink
Hmm.
Cohen doesn't see that Americans still favoring tax cuts over pump priming 4-1 (if the poll results are true) is a failure of leadership?
February 12, 2009 10:47 AM | Reply | Permalink
I think he is noting that the two competing numbers (high approval for the stimulus in particular versus a more general approval of tax cuts) goes to show just how big a job this is.
Deprogramming America won't be done with a cudgel and an afternoon of beating heads. It is going to take a scalpel cutting away the political detritus over the next four years.
I think the failure in leadership from Obama here initially was trusting his teammates not to drop the ball. It's much too early for me to draw any conclusions beyond that one.
February 12, 2009 11:10 AM | Reply | Permalink
I wonder if those Americans are part of the 20 percent who believe the sun circles the earth every 24 hours?
Maybe one of them is the guy who said, "If English was good enough for Jesus Christ, it's good enough for the rest of us."
Or maybe those Americans are part of the 40 percent of us who are functionally illiterate?
February 12, 2009 1:20 PM | Reply | Permalink
Great post. This stimulus debate is just more evidence of Obama's chess skills. I would have preferred he went bigger and then compromised back to a trillion or better, but hopefully this helps change the nature of the conversation.
I guarantee Barack won't be letting the democratic Congress lead any of these efforts again if this is the type of performance he can expect. I wouldn't be shocked if Geitner is in for a rude awakening as well. I am fully confident that what has returned to Washington, after an absence in excess of 40 years, is the Era of Accountability. Both for politicians AND voters.
The 2010 primaries will be the first big test of Obama's vision for the country. Without a lot of Congressional turnover, the institutional liabilities and systemic inertia he needs to overcome are just too great.
February 12, 2009 10:51 AM | Reply | Permalink
It looks to me like Obama's team got just about what they were looking for. In late December, it was reported they were seeking a bill between $675 and $775 billion. They introduced a plan which Congress duly amended up to $900 billion, and then had a compromise process which brought the bill down to a number that was still more than the high end of the December package.
http://archives.chicagotribune.com/2008/dec/20/nation/chi-081221-obama-expands-stimulus
February 12, 2009 3:46 PM | Reply | Permalink
I would agree that the plan he mapped out seems to be have been on purpose and delivered the results he was looking for.
I just wonder if he missed a chance to better position his efforts in the interest of building a national momentum. It wasn't until the road show that support started to edge back up among certain parts of the electorate.
I think he made a mistake letting our dysfunctional Congress take the lead on this.
February 12, 2009 3:50 PM | Reply | Permalink
No one was seriously talking about a massive spending package to revive the economy and had Obama made such a proposal then we would likely be discussing the finer points of the McCain Administration.
Yes, a reminder that the world changed under everyone's feet is needed, and that it didn't just happen here. Anyone attributing things to Obama's "chess skills" might also be mindful that the world changing may have contributed some to his being able to win the election, simply by virtue of not being the same guys as running the show before. How does our resulting stimulus package compare to what other countries have managed to do?
February 12, 2009 1:27 PM | Reply | Permalink
I didn't say those skills will prove to be enough to win the game, but he is certainly much more than just Not The Other Guys and seems to have a bigger plan. If that feeling turns out to be a mirage, I will support someone new in 2012. Greatness is only obvious in hindsight.
February 12, 2009 1:47 PM | Reply | Permalink
I don't mean to imply there isn't some there there, I just think it's quite wise and reasonable to point out how much wind he has at his back and the big global picture.
If you compare the first 100 days with another with significant wind at his back, Jimmy Carter, Obama's certainly doing better. I don't see real evidence for chess master yet, though, only lots of diehard fans saying that and hoping that it is true.
Which reminds me, I see little commentary about how we've got a Senator President and Vice-President and how conventional wisdom in the past for a few decades was that was supposedly impossible. (Side note: We even had a Senator as the opposition candidate.) We also have a chief of staff that is more than pretty well versed with Congress. Quite a change from the idea that governors make the best presidents because they are executives, not lawmakers. (Which also reminds me that one thing famous about Clinton as an executive, from his Arkansas days, was that he liked to hang around the legislature, and really get involved with its members, along the lines of LBJ.)
February 12, 2009 2:05 PM | Reply | Permalink
P.S. Carter is quite willing to admit now that he was clueless about Congress in the beginning; I am not saying anything he wouldn't.
February 12, 2009 2:09 PM | Reply | Permalink
Good points. Good timing has made many men (and women) throughout our history appear to be larger than life.
Beyond winning the election in the first place, I see indications of the chess master all around, though I will agree some of Obama's moves have been fairly pedestrian so far. I am willing to give the guy his entire term in office before I judge his fitness for a second term.
Interesting point about having two long-time legislators as number one and number two in the country. That hasn't happened for quite some time and the last time it did, we actually got a lot of progress made in this country.
Should be an interesting four years.
February 12, 2009 2:13 PM | Reply | Permalink
Could you forward this post to Elana? Thanks.
February 12, 2009 1:46 PM | Reply | Permalink
Some points of interest along the way:
"For conservatives, their unity might be cause for celebration; but from a policy standpoint they have suffered a decisive defeat."
Their apparent unity might be strength or weakness, and how it develops is now uncertain (they could stay weak or find strength in opposition).
"The most striking element of the revolution that is taking place in Washington is how quickly it has occurred."
The Shock Doctrine, applied on the flip side? Klein writes about "disaster capitalism". Maybe it's not "flip side"... while it's tempting to call the Recovery bills "disaster socialism", it might be more insidious than that. Clearly the phrase resonates with the "socialize the losses" line. But is there an element of corporatism which is being supported when we should do just the opposite?
"according to a CBS/NYTimes poll, by a 4-1 margin, tax cuts rather than spending is the electorate's preferred approach for responding to the economic crisis"
That could be the voice of short term self-interest winning out over macroeconomic theory. OTOH, maybe it's the beginning of a taxpayer revolt against bloat in government and deficits alike. Tax cuts are the worst way to "stimulate" the economy, according to the experts and nevermind the cost (a stimulus must generate enough tax revenue increases to cover at least the debt service costs if not to also pay off the principle. I haven't seen a sound favorable argument on this point)
"the debate in Washington is ... between big government and bigger government."
And thus a political disconnect between DC and the public. But let me quibble that the stimulus package doesn't grow government all that much. Rather it is welfare FOR government, because government (at all levels) depends strongly on economic growth for its own income, taxes. Government (the administration thereof) continues to be the main beneficiary of government (the laws and policies thereof).
This is as much a problem in politics as it monetizing money a problem in economics. When money becomes its own purpose, other values are left behind or trashed. So too with government.
Will we find political reform before economic chaos takes the choices out of our hands?
I am reminded again of Klein's comments on disaster capitalism in South Africa. A apartheid between whites and blacks was transformed into an apartheid between political and economic activity. Blacks got economically impotent political power, and the moneyed whites kept control of their wealth.
Enduring democratic socialism must be smart and must be able to pay its way equitably.
February 12, 2009 2:33 PM | Reply | Permalink
How come you don't connect that the Banks are getting bailed out with disaster capitalism. They threatened disaster and got bailed out that's a form of what Naomi was talking about. No? You keep acting like it's not their responsibility.
February 12, 2009 6:16 PM | Reply | Permalink
Disaster capitalism is usually the intrusion of "free market" economic thinking into socialist settings.
The current situation is mixed but generally not Friedmanesque overall. Maybe you missed this from my comment:
"The Shock Doctrine, applied on the flip side? Klein writes about "disaster capitalism". Maybe it's not "flip side"... while it's tempting to call the Recovery bills "disaster socialism", it might be more insidious than that. Clearly the phrase resonates with the "socialize the losses" line. But is there an element of corporatism which is being supported when we should do just the opposite?"
February 12, 2009 6:59 PM | Reply | Permalink
If I am watching Chris Matthews, I am a center-center left Democrat. If I am listening to Jughead on Mornin Joe, I am a far left Democrat.
If I am listening to a snippet of Orally on Fox, I am a socialist.
If I am stuck listening to a snippet of Lush Rimjob, I am more of a Maoist.
I have always thought of myself basically as a left wing, liberal/progressive.
Everything is relative. It is just after the last 8 years, after all of the abominations committed by w and his evil compatriots, the last three weeks look like heaven.
I do not understand why we should be attacking the first left wing legislation in a generation.
I agree with your points and I hope for the best and it is not like this is the third strike of the ninth inning.
We have a long way to go.
February 12, 2009 2:49 PM | Reply | Permalink
For 8 years we were informed over & over again that bills sent to the White House were 'altered' by our Fearless Leader with a signing statement. I urge BO to do a little of the same. Just write a little line or two so that no state represented by a Republican legislator gets a single dime of the Stimulus package. Divvy up the rest to all the other states. Tim Pawlenty, who I just watched on MSNBC, said he's against the bill but he'll take the money. Well, Tim, I say kiss my merry you know what. If you're an obstructionist Republican you get nothing.
February 12, 2009 3:22 PM | Reply | Permalink
I think it is particularly important that the $50 'nuclear pork' provision (which could have been used to expand nuclear energy or push
"clean" coal, rather than conservation and truly alternative energy sources.
As for the slashing of state aid, I think that progressives need to formulate ways to come back with this provision, either in parts or in forms that are more concretely earmarked (no doubt with a generous slice for the State of Maine, in the final version). I think that many of the provisions, such as those excluded on the grounds that they weren't really a "stimulus" package measure can and should be brought back to the table, especially once Franken is seated, in such measures as an 'energy conservation and environmentally sound energy promotion' bill, and such. The most POPULAR parts of what was cut should be easy to get through, but no doubt at least SOME of the concessions to the GOP should remain.
I believe that here on TPM, measures that would increase transparency were proposed that were BOTH progressive AND more likely to make support from swing GOP votes more likely. Obviously, only those who really know what Snowe and Collins might accede to are the ones who will know what to do concretely, where the rubber hits the road.
February 12, 2009 3:37 PM | Reply | Permalink
I think there's a mistake here -- the electorate doesn't favor the GOP's tax cut approach, the electorate favors the Democratic tax cut approach and this is a key distinction.
Our tax cuts are for working people. Their tax cuts are for rich people. Our tax cuts are progressive.
February 12, 2009 9:54 PM | Reply | Permalink
I, also, wonder what the phrase "tax cuts" means to the average American or for that matter to moi.
The payments made to individuals under the 2008 Economic Stimulus Act were denominated "tax rebates." Semantic games.
They were an increase in the money supply created by deficit financing and were distributed relatively fairly among the population. They had almost no nexus with income taxes and weren't tax rebates or tax cuts.
Not to mention that they should have been 5 times (now, if repeated, 10 times) as big as they were.
To hell with asking about "tax cuts." Ask the American people if they want the government to Show Them the Money!
February 12, 2009 10:26 PM | Reply | Permalink
"a new Democrat President"?
No, it should read a new "Democratic" President. You got it right in the previous reference, but not in that one. I hate to nitpick but I cannot abide our own side repeating the insulting Republican method of refering to the Democratic Party.
February 13, 2009 1:49 AM | Reply | Permalink
.
Yup . . .
But that's usually what happens when being around idiots in "...the 'village' on the Potomac."
~OGD~
February 13, 2009 4:16 AM | Reply | Permalink
"the insulting Republican method of refering to the Democratic Party"
You mean the insultin' Republicanian method?
Do good unto them that hate us! When they take away one syllable, render unto them two.
As to conjugatin' the verb in a specifically Wingnut City way when there are Republicanians or neoterics in the sentence, I promise to give that method up as soon as the sham populism associated with Governess Heath-Paling of Alaska has had its full fifteen minutes. But not before.
Happy days.
February 13, 2009 9:33 AM | Reply | Permalink
"The left claims that Obama's bipartisanship has failed. "
Can't say that yet. Obama's overtures may be props. I don't expect the RNC to do anything but campaign and try to steer the public's monies toward magnates, and I think I'm better than 80% in agreement with this President so far. I think his steps in the bipartisan direction already have value, but I can't say whether they will generate any more value than the simple completion of the act, taking the steps necessary to fulfill at least the bare essential of one of his promises.
To the extent that I want RNC involvement, I don't think they're fit to govern and don't appreciate their position as it relates to humans and American opportunity. So it doesn't bother me that they're not coming along. It's too bad they're already firing torpedos.
February 13, 2009 9:39 AM | Reply | Permalink
Over at Politico, there is a rumor of No More Mr. Nice Guy:
That was about Neocomrade Unsecretary of Commerce J. Gregg in particular, I assume, but it could be the opening shot of Phase Two all along the front.
In a way, Mr. Cohen lingers in Phase One himself, though:
Maybe that little bouquet was not motivated by sentimental bipartisanship, but it is wrong no matter what caused it. The brave and steadfast gave up actually believin' in Concord Coalition values way back under Ronald XL Reagan.
George XLI Bush, the notorious reviler of "voodoo economics" in the campaign of 1980, had been thorougly converted by the time he served St. Ronald's third term. Mantras of fiscal responsibility emanatin' from the militant extremist GOP have been pure lip-service for almost forty years. All that happened after 1989 was that the Witchdoctor Party decided to stop bein' honest about their cocktail-napkin economics and go back to recitin' more or less the traditional (186?-1980) Chamber of Commerce boilerplate no matter how little connection it has with the real world.
"BIGGUV versus littleguv" is not a satisfactory analytical tool, though it is quite true there are no littleguv fans left in (the practice of) national politics apart from maybe Neocomrade Congressman Dr. R. Paul of TX. The lip-service angle explains why Heritagitarians and Hoovervillains and AEIdeologues keep on preachin' the Concord Coalition tripe and baloney long after any of their own crew's pols would ever dream of enactin' it.
An earnest attempt by the wingnuts and the neoterics to conduct their Uncle Sam's finances on any other basis than "Borrow and borrow. Spend and spend. Elect and elect" would be utterly flabbergastin' at this point. You might as well expect Hudson Bay to catch fire.
We are ALL Borrowists now!
Differences still remain, obviously, between America's Otherparty and us humble donkeys. I suspect, as a non-economist perhaps worthlessly, that the thing to do analytically is to pin down
(1) exactly who each proposes to borrow from, and
(2) exactly what (or who) each wants to throw the money at once it has been borrowed. Plus naturally
(3) how each proposes to dodge repayment down the road as much as possible.
The size of the Fedguv is immaterial to these questions. Or rather, it is taken for granted by all Borrowists that the Fedguv must be very large indeed, a veritable FEDGUV, so as to impress potential creditors. "Economies of scale," don't you know?
Mais que sçay-je?
Happy days.
February 13, 2009 10:32 AM | Reply | Permalink
The government’s stimulus bill led to political rumors and issues. To find out more about this, you really should check out opportunity.gov. Opportunity.gov is a Federal website that is geared toward people dealing with unemployment. It has helps for worker retraining and Pell grants for people who want to go back to school, and unlike quick payday loans, you don't have to pay them back. The available funding for Pell grants has dramatically increased, and also the tax credits for college students with the American Opportunity Tax Credit, which are both part of President Obama's plans for supercharging higher education in our nation. Taking advantage of opportunity.gov might mean getting a job good enough that you'll never worry about debt relief.
May 16, 2009 5:48 AM | Reply | Permalink