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Krugman vs. Emanuel vs. Emanuel


Ryan Lizza has a profile of Rahm Emanuel in the New Yorker, and it contains a telling point about how the legislative sausage is made. Bear with me a moment.

Emanuel had some harsh words for Paul Krugman, who has been critical of the Obama stimulus bill. Krugman's critique has come mainly in two forms. 1) On the merits, the stimulus isn't big enough or targeted enough to give the economy the boost it needs. 2) On the politics, the White House never should have started with a half-loaf compromise to appease Republicans, since the bill would inevitably be watered down further in the legislative process.

Here's what Emanuel has to say in response:

"They have never worked the legislative process," Emanuel said of critics like the Times columnist Paul Krugman, who argued that Obama's concessions to Senate Republicans--in particular, the tax cuts, which will do little to stimulate the economy--produced a package that wasn't large enough to respond to the magnitude of the recession. "How many bills has he passed?"...

"Now, my view is that Krugman as an economist is not wrong. But in the art of the possible, of the deal, he is wrong. He couldn't get his legislation."

OK, so in Emanuel's telling, Krugman's an ideologue who's correct on the policy but naive about what can get done. Sounds reasonable. But Emanuel doesn't address Krugman's political critique. Via FireDogLake, Krugman replies:

Eh. The question is why Obama didn't ask for what the economy needed, then bargain from there. My view is that Collins et al [the Republicans with whom the White House negotiated - JL] would have demanded $100 billion in cuts from whatever they started from; and that's not the case he answers.

So we basically have two views on the art of politics: both Krugman and Emanuel acknowledge that compromise is inevitable, but the former says you start with what you want and then negotiate, and the latter apparently says you start with less than what you want and then negotiate further. (Emanuel doesn't explicitly state that, of course, but he defends the strategy that contained that approach.) I don't have enough legislative expertise to say for sure which path is best. But toward the end of the New Yorker piece Emanuel relays a stimulus-related anecdote that hints at the answer -- though not in the way he intended:

Emanuel laughed as he recounted the final sticking point in the negotiations. It was not, as many people have thought, an argument between the five centrist senators--Ben Nelson, Joe Lieberman, Collins, Snowe, and Specter--and the House but a debate among the centrists themselves. The dispute was over a formula for how Medicaid funds in the bill would be allocated to the states. In the House version of the legislation, fifty per cent of the funds would go to all states and fifty per cent would go to states with high unemployment. In the Senate, where rural interests are more dominant, the formula was 80-20. A deal had been reached between the two chambers to split the difference and make the formula 65-35. "Everybody signed except for Ben Nelson," Emanuel said. "He wants 72-28, or seventy-two and a half, and he says, 'I'm not signing this deal.' Specter says, 'Well, I am not agreeing with you.' " Without Nelson, Collins wasn't likely to vote for the deal, either.

"Collins and Snowe are kind of like, at this point, looking at their shoes," Emanuel went on, "because Specter says, 'Well, why make it seventy-two? What do you mean? We all have it at sixty-five, in the middle.' " Emanuel politely declared that the formula would stay at 65-35. He then asked Nelson to step out of the room with him. After a brief conversation in the hallway, they returned, and Nelson agreed to the stimulus package.

Take note of something important here. Specter's argument -- and the one that ultimately prevailed -- was that things are most fair when we split the difference between whatever options happen to be on the table. One chamber wanted 80-20 and the other chamber wanted 50-50. So the answer is 65-35. Q.E.D.

It stands to reason, then, that if the two starting points were different, we'd have ended up with a different number. Specter and the rest of the centrist gang weren't arguing for a particular number on principle; they just wanted to feel like a compromise had been reached.

The conclusion is obvious: if Obama had pushed a stronger stimulus bill from the beginning, the whole debate would have been shifted to the left. The center would have moved. And the centrists hashing things out at the end would have been haggling over different numbers.

So we have Krugman arguing that Obama should have started higher. We have Emanuel defending the way it was done. And then we have Emanuel telling a story that proves Krugman's argument.

All that's left for the bizarre circle to be complete is for Krugman to identify several Republicans who really appreciated Obama's lowball proposal and decided to vote for it as a result -- and then use that story to try to make his own case. But somehow I doubt that's going to happen.

 

This post first appeared at jesselava.com.


31 Comments

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I will probably come back to this. I think Greenwald was complaining that Lizza was kind of a boot kisser of Emmanuel and that other sources had to be considered.

Rahm is the ultimate politician ON MY SIDE FOR A CHANGE. I see him as being on my side. I really do.

I was reading something last month and then saw it played on CSPAN or PBS concerning Nader. Here Carter went out of his way and hired these Nader's Raiders. And old Ralphy boy just castigated every one of them. And a couple of them were testifying that Ralph would not give an inch on anything. And they were not being reined in by Carter, they had to take into consideration other factors in their deliberations.

What do I know.

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I don't doubt that Rahm wants what's best for the country. This is a strategic argument.

Nor am I saying not to compromise. The point is whether you start with what you want and then compromise, or offer a compromise from the beginning even though that still won't get any Repubs on board.

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Nice post! I was thinking about these issues in my little thing on Krugman today as well.

But I don't think they wanted any more than the 800 bn they got. And THAT is what's got me worried. They had no argument against Krugman's figures for a bigger stimulus, they just went for 'a really big number, but something less than nutty Krugman'. Great policymaking there!

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Emanuel needs to tone it down and listen to Krugman.

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How many bills, of any progressive substance at all, did Rahm Emanuel ever help pass?

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We need to take a step back and look at the big picture. In less than a month, the Obama administration passed a historic and much needed bill that will help the economy in the short-term while simultaneously making strategic investments for the long-term. Funding amounts were historic for clean energy, efficiency, high-speed rail, health care IT, the sciences and other progressive causes. Some of the projects and systems that result from this spending will progressively transform our country for years to come.

The key point I want to make here, is that this legislation passed less than a month into the Obama Presidency. This is important because the stimulus needs to be in place as soon as possible so it can actually start to take affect. It's not a perfect bill, but it's a good bill. The perfect bill never had a chance, so why play DC negotiation games that would have delayed the bills' passage and delayed people from getting unemployment benefits, tax relief, new job opportunities, etc???

I don't see any benefit in spending political capital by negotiating the way Krugman and others wanted. You create a fight with congressional republicans that ultimately will result in Obama compromising. The repubs look like victors because they force the administration to compromise on some of the spending. Average americans see the fight on the surface and think, same old BS from washington.

Instead Obama came to the table with a $820 billion bill that was about 65/35 spending to tax cuts. He ended up with a $790 billion dollar bill that was roughly 65/35 and didn't compromise anything major. Some of the tax cuts help people who need it, some help small businesses who are hurting, and others are garbage. Still, he has a good but not perfect bill passed in record time and increased political capital on top of the legislative success. People see that he listened to republican ideas by inviting them to discuss the bill and incorporating some of their good/not so crappy ideas. They see that he got almost exactly what he wanted. People see that the congressional republicans are out of touch.

Obama spent a lot of political capital to get the bill passed, but he somehow managed to come out of it with even more political capital. His approval ratings are sky high and trending higher amongst independents. The stimulus bill's approval rating went up 8 points a week after his town hall tour.

Now the administration is in position to be aggressive and spend political capital on critical but controversial issues like healthcare and climate change and the second stimulus (it's inevitable). Moderate republicans will see the bad politics of the stimulus opposition and realize they need to start voting for critical legislation that benefits republican constituents as well as dems/indies.

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"I don't see any benefit in spending political capital by negotiating the way Krugman and others wanted. You create a fight with congressional republicans that ultimately will result in Obama compromising."

We all agreed that Obama had to compromise. The question was whether he should with what he actually wanted or start with a compromise and then compromise further. Why do you think there would have been a greater fight if Obama had started with a better number? Wouldn't the process have been largely the same?

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I think the process was very clean with Obama coming out on top (just look at the latest polling). Despite republican grandstanding and no aye votes, they didn't delay the process. There was no filibuster or any other serious opposition. He wanted a bill by mid Feb and congress gave him one by mid-Feb.

I also don't think he started with a compromise and compromised further. He started with a balanced bill and got almost exactly what he wanted. If he started with a bill that was closer to a trillion, it would have gotten bogged down in the legislative process and there would have been more opposition from the 'centrists'. I don't think it would have been passed as fast as it was and I don't think he would have come out in such a great political position with the American people.

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We won't know whether he came out on top until we know whether he succeeds in reviving he economy in time to be re-elected. The efficacy of the stimulus over that period matters a hell of a lot, the political optics of it as of February 2009 matters not at all in the grand scheme of things.

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If the White House started with what they wanted on this bill, then Rahm lied when he said he thinks Krugman's right on the economics, since Krugman wanted far more. Either that, or Rahm was sayinh Obama was wrong on the economics for disagreeing with Krugman. Pick your poison.

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When the trillion dollar amount was being floated around, the GOP took to the airwaves and began to fight a bill that had not seen the light of day - just based on others saying the stimulus should be $1 Trillion. They fought against $800B and they would have fought harder and told more outrageous lies to kill approval of the bill.

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Excellent diary. I agree.

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I take the pov that much of what goes on is due to complicated processes we don't observe much and that part of the reason Krugman gets his soapbox at NYTIMES is because public intellectuals don't have much of a track record in swaying policy-making historically. If they want to keep their position of prominence, they gotta be willing to take the fall...

I think a more sustainable strategy is to push for the use of proportional representation in state legislative elections and, in tandem, the proliferation of local third parties that focus on contesting local elections and voting strategically otherwise and generally increase voter participation and political literacy, while keeping the two main parties accountable and more dynamic thru offering exit threat to groups of voters so more tails can wag the dog.

My views on election reform are at my blog "A New Kind of Third Party".

dlw

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I agree with Glenn Greenwald that Lizza's piece was crap boot-licking that's largely unnecessary. I also agree with Krugman that they should've originally started with a larger number and then began the process of compromising. Even crazier, I also can understand Emanuel's more pragmatic opinion. I can't speak to their thinking behind closed doors but they knew they needed something done quickly and decided on a number that they felt they could get. It's difficult to piece this all together, except I still think that this was just a beginning--the budget process will build on what was an Obama Administration victory. So: Emanuel looks smart in the short run politically, but eventually Krugman will see that his ideas were not shoved aside, there will be more stimulus to come.

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very well said (although i can't comment on the new yorker piece because i haven't read the whole thing)

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So the White House should have started at $10T, because unless the GOP could come to the table with negative numbers, meeting in the middle means the Stimulus would have been $5T given the meet in the middle principle. And if the Dems came with $1T the GOP could have came with -$1T so then the stimulus would have been $0.00.

Krugman might be the smartest man in the room, but Obama and his advisers are no dummies either. I have a feeling Obama got exactly what he wanted by playing the progressives against the Republican minority.

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I think Obama knows the most important thing was to get SOMETHING passed before the states had to finalize their budgets. We just needed to get the ball rolling with enough in it to allow states to keep their workers employed and to be able to plan some expansion - the bill achieved far more than this. Now everything that was missing can be added into other legislation.

This bill was as much about psychology as stimulus; people needed to feel like progress was being made. My problem with Krugman is that he seems to think that this is the ONLY spending that congress will be doing. He's right that IF this was the only thing congress was going to pass, indeed it is wholly inadequate. But it's impossible to analyze the real situation until we see the entire output of this congressional session. In that respect Krugman is somewhat myopic - he sees this battle as the whole war.

IMO Rham Emmanuel is still an asshole - I think he's just as myopic as Krugman. He's a fighter not a strategist.

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Every WH CoS is an asshole. You have to be to last more than five minutes. :-)

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I'm not upset with Obama. In fact I'm impressed and grateful for what's been done so far, and for the way in which it's been done. But I also think the analysis in the post is probably right.

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It stands to reason, then, that if the two starting points were different, we'd have ended up with a different number. Specter and the rest of the centrist gang weren't arguing for a particular number on principle; they just wanted to feel like a compromise had been reached.

The conclusion is obvious: if Obama had pushed a stronger stimulus bill from the beginning, the whole debate would have been shifted to the left. The center would have moved. And the centrists hashing things out at the end would have been haggling over different numbers.


The hell you say!

What stands to reason are the facts. ANd the facts are that not once did Krugman in any of his pearls of wisdom over the past few months propose much less pass ANY legistlation even in broad outline. He stated no maximum number. He stated no minimun. He didn't say which tax cuts he wanted in the stimulus if any, all he did was throw spitballs

Rahm acutally passed legislation.

Krugman took pot shots


By any measure, what Obama’s White House has achieved in passing the stimulus bill is historic. The last President to preside over a legislative victory of this magnitude so early in his Administration was Franklin Roosevelt

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How would Krugman pass legislation when he's not in Congress or the White House? Are you saying that no one outside the legislative process should be able to critique it? This is democracy, brother.

Krugman has made many arguments about the kinds of things that should be included in the stimulus and roughly how large it should be. Read up.

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Rahm was being kind

Should have sent him a dead fish

"They have never worked the legislative process,” Emanuel said of critics like the Times columnist Paul Krugman, who argued that Obama’s concessions to Senate Republicans—in particular, the tax cuts, which will do little to stimulate the economy—produced a package that wasn’t large enough to respond to the magnitude of the recession. “How many bills has he passed?”Now, my view is that Krugman as an economist is not wrong. But in the art of the possible, of the deal, he is wrong. He couldn’t get his legislation.


Rahm's being kind. Krugman didn't even have any legislation

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Why is noone commenting on how Rahm probably chewed Ben Nelson out. He came back like a cyborg and said he would vote for the bill.

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I agree with Rahm and his point doesn't just apply to Krugman but also to columnists, pundits, msm or anyone who is NOT a politician. Another post mentioned how Krugman shows lack of patience when he appears as a guest on a news show. How much patience would he have when dealing with the legislative process?

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Hi Jesse. Good blog, as usual. However, I disagree with it. Because, when you're making sausage in Washington, the process is as important as the product.

I suspect that, in Krugman's approach, Obama should have started with a stimulus of $3 trillion. On the economics, Krugman is right. $3 trillion would have been the right number to start.

However, the *politics* are a *totally* different issue. I submit that the legislative difference between $800B and $3T would have been a lockstep Republican vote in the Senate. NONE of the moderates would have come along for the second number - and the stimulus would fail.

I don't think a stimulus that big would have ever pulled even one Republican vote in the Senate. In fact, I think it would've struggled to get through the House. (Remember, in the lower chamber, Blue Dogs + GOP > Other Dems.)

I respectfully submit that Emanuel did, in fact, respond to Krugman's political critique with this quote.

"Now, my view is that Krugman as an economist is not wrong. But in the art of the possible, of the deal, he is wrong. He couldn't get his legislation."

What Rahm is saying here is that no trillion-dollar stimulus would have ever passed. He can't say that directly, but he's clearly telling everyone that Krugman's idea of starting way high is an academic's pipe dream.

I also think that Krugman (and others leveling the same critique) take a woefully short-sighted view. There will be other spending bills in this Congress. Further, I am convinced that there will be additional stimulus measures (at least one more before the year is out). Emanuel's acknowledgement of Krugman's economic point only underscores this theory for me.

Everyone seems to know that this stimulus, by itself, is not enough; it's now the second worst-kept secret in our political discourse, next to Israel's nuclear stash that we never acknowledge. Given that, I'd be stunned to not see the White House looking for some more economic stimulation once they have some short-term numbers to demonstrate that ARRA is helping.

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Good points, though I think you're overestimating how big a stimulus Krugman would have wanted, given his past statements. There's also the issue of why we included non-stimulative measures like alternative minimum tax cuts while reducing things like aid to states. Point taken, though, that Rahm probably was saying that he doesn't think the number could have started high.

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Yes, I assumed you, Jesse, meant if they initially asked for, say, 980B, they might have come out a bit higher. They wouldn't have gotten anywhere asking for $2 or $3 T this time around.

I'm trying to get the Washington Post to fess up and prominently correct a bad error they made in their lead story a week ago Saturday on passage of the stimulus bill. In it, they said this package was over 5% of GDP. True. The article went on to say the New Deal was never over 2% of GDP. Very false. Congress in 1933 appropriated an amount equal to 5.9% of 1933 GDP for just one New Deal program, the Public Works Administration. Their ombudsman wrote me that he appreciated my reminder note asking for the courtesy of a reply.

Much as the Post editorially might relish data to support their strong preference for deficit reduction over additional stimulus, should the latter be needed, they got it wrong the first time.

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It may be that I overestimate Krugman's preferred starting point. I've not seen him actually state exactly what that would be.

I based my $2-3 trillion estimate on the number he frequently used to support his argument for a larger stimulus (IIRC, the economy will lose $2.9T in demand over the next two years).

One other thing that people don't often talk about: I am sure that Obama has shifted some of his ideas into his budget proposals. *Those* only require a simple majority in both houses, as opposed to spending measures like the stimulus, which requires 60 votes in the Senate.

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Oh, to be a fly on the wall when Rahm Emanuel took Ben Nelson into the hallway!

Hey Folks! This post is about checkers and Obama is playing chess. When he offered the bill with compromises already in it, he guaranteed his perception would be that he was compromising. He was being bipartisan. No one knew whether any Republicans would sign up for it, but if none did, then he still had that good karma going for him.

Some Republicans came on board and they managed to talk him down $30 billion. As a percentage, it was not much. Although if I had $30 billion dollars I would have to admit that was a lot of money. Nevertheless, the Republicans received a good impression for making a difference.

This was a great sales job, too. First Obama came far below the trillion dollar threat by nearly two hundred billion. So no one perceives he went for the $299 mattress sales trick. Look! it's less then $300 dollars! Then, when he compromised, that trick is in effect. They took out $30 billion, but a shallow perception makes it appear to be $100 billion! The compromisers look like they were big players.

Republicans were forecasting a trillion. Now they are looking like Henny Penny. The sky is falling! the sky is falling! Then it winds up far from a trillion. The Right is appears foolish for overinflating the StimPack's cost.

But it't not a trillion dollars and Krugman ssays we need more! We're not done yet, either. Thank you Mr. Krugman for chumming te waters for Obama and the Dems to go back and do it again. If one is good, two is better and Krugman said there should be more. Always the thoughtful one, Obama will consider this and ask again. He shows flexibility and that he is open to the ideas of others. I wonder if that was the plan all along.

This was a big win. There are shovel ready projects in the bill. This turn around will be slow, but it has begun and this is a great beginning, IMHO. To me this was set-up and executed as good as it could be. It was a good beginning all the way around.

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First off, the whole "Obama's playing chess while we're playing checkers" argument wears a bit thin after a while. At some point we have to look at what he actually does, how progressive it is, and decide the extent to which we support it. We can't just endlessly justify big concessions to Republicans (who generally won't end up supporting him anyway, thereby negating the political value of the concession) on the theory that the guys in the White House are on a whole other level than everyone else. Democracy is about accountability, and now's our time to do that.

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If there is something I missed, you could point it out. But if you're just spouting "it wears a bit thin after a while", show me a few worn threads.

Obama's winning the PR game. He's not just retaining his popularity with independents, but growing it. We need a lasting success, not a one trick pony. He played this just right. He picked off three Republicans and he's got his StimPack. It's a good start and he's only been on the job just over a month. As he pulls the country away from the Right, I expect he will be more in line with what we want.

BTW, did you see Obama tease Eric Cantor that some day Cantor will agre with Obama? Obama set Cantor up to be disagreeable, which is just where we want the Right to be. We are now the party getting things done and they are the Party of Nope! It bodes well for 2010. Obama is thinking ahead. If the Republicans do come around, then Obama gets to cheer twice, once because they came around and again because he told us they would. Of course, it is the people who will do all the cheering for Obama then and he will not have to say a word.

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