Don't Let Bi-Partisanship Kill the Economy

In contrast to my last post, this one will be short and sweet! I'd like to call your attention to three great articles by Ezra Klein, Tina Brown, and Peter Beinart. These three articles deal with the utter inanity of bi-partisanship. I especially like this tidbit from Klein:

"It is time to say this quite simply: There is no such thing in Washington as bipartisanship. This is not to say that there will be no such thing as bipartisan bills. Republicans will vote for Democratic initiatives when it appears to further their goals. But insofar as crossover votes have come to be seen as representative of an elusive character trait or political spirit known as "bipartisanship," it is time to let go of an increasingly damaging fantasy. And if we let go of the myth of bipartisanship and embrace the reality of continued minority obstructionism, that may also mean it's time to let go of the filibuster."

As is perhaps obvious, he then goes on to argue for the elimination of the filibuster. While the filibuster came in handy during the Bush years in order to stop egregious initiatives like the privatization of Social Security, the measure is inherently anti-democratic and should be dispensed with. You might argue that Klein is being politically opportunistic, and perhaps he is. Deal with it, Republicans lost the election, go cry me a river. However, Klein anticipated this response and has a handy follow-up post here.

The Stimulus: It Only Gets Worse

Paul Krugman writes:

"What do you call someone who eliminates hundreds of thousands of American jobs, deprives millions of adequate health care and nutrition, undermines schools, but offers a $15,000 bonus to affluent people who flip their houses?

A proud centrist. For that is what the senators who ended up calling the tune on the stimulus bill just accomplished."

Bi-Partisanship or "post-partisanship" which seems to be the en vogue term in DC these days, is continuing it's Sherman-esque march to destroy the American economy. Sen. Ben Nelson (D-NE) and Sen. Susan Collins (R-ME) fashioned a "compromise" stimulus by reducing the $900 billion price tag to somewhere in the vicinity of $800 billion. These centrists, as they so proudly proclaim themselves, fancy themselves the deal makers that will usher America out of this deep recession. Unfortunately, as Krugman and numerous other economists point out, nothing could be further from the truth. Nelson and Collins wielded their pens like sabres slashing away at important provisions in the stimulus that would've helped to ease the pain on those most in need. Included in their cuts: $40 billion in aid to state and local governments and $16 billion allocated for school construction. Instead they stuck in a provision aimed towards reducing housing inventory that will award a $15,000 tax credit for new home buyers. Does this make sense? Well, think about it. The economy sucks right now. Most people are guarding their means and adapting to a more frugal lifestyle. The purchase of a new home is not likely to be high on the average American consumer's list of priorities. This will likely only help those that could afford to buy a home in such economically calamitous times, i.e. rich people. The distinguished senators from Nebraska and Maine also saw it fit to add a patch for the Alternative Minimum Tax (AMT). The AMT was originally levied in order to ensure that the very wealthiest of citizens would pay their fair share of taxes. This patch will instead place more money in the hands of the very rich. Not only is this incredibly regressive and morally repugnant, but it will have egregious consequences for the economy. Rich people are rich because they have lots of money in the bank. Therefore, this money that has been so generously awarded to their coffers by the paragons of Senate Centrism will, most likely, go into savings. What we need now is for people to spend money. Spending acts as stimulus. Poor people, unlike the rich, have immediate needs. If the the government puts money in their hands, they are likely to spend it...immediately. What happens then? I'll tell you! The mass spending by the working and middle class results in a renewed flow of cash into the American economy. American companies then seek to hire new employees in order to meet the demand. Essentially, giving money to ordinary Americans results in economic stimulus, which in turn results in putting Americans back to work. Neat, huh!?!

Well, Senators Nelson and Collins, have other intentions. In fact, if these cuts remain, the effects will be disastrous. Many state governments have already emptied their trusts dedicated to unemployment benefits. They are in grievous need of additional funds. The $40 billion that was originally in the stimulus, was meant to fill this gap. Now (once again, if these cuts remain), with more people than ever needing unemployment benefits, the states will have insufficient funds to meet the demand. Moreover, states will have to lay off hundreds of thousands of workers and reduce services. What do you think about that? Does it sound like a good idea? How about eliminating $16 billion for school construction? With a constantly growing population, and our schools in disrepair, wouldn't it be smart to build more, state-of-the-art schools? Not only would this result in quality schools for American children, but it would put countless Americans to work building these schools.

In closing, I know I'm beginning to sound like a broken record on this, but the situation is very dire. So-called "moderate" and "centrist" senators are given free reign to redistribute the benefits from the stimulus from the bottom to the top. As Paul Krugman laments:

"All in all, the centrists’ insistence on comforting the comfortable while afflicting the afflicted will, if reflected in the final bill, lead to substantially lower employment and substantially more suffering."

Please God, don't let this happen.

Photo courtesy of Flickr user Don lannone, November, 25 2008

Obama Seizes the Offensive

It's good to see that President Obama is taking to the pages of the Post to argue in favor of immediate passage of the stimulus. I especially like this portion:

In recent days, there have been misguided criticisms of this plan that echo the failed theories that helped lead us into this crisis -- the notion that tax cuts alone will solve all our problems; that we can meet our enormous tests with half-steps and piecemeal measures; that we can ignore fundamental challenges such as energy independence and the high cost of health care and still expect our economy and our country to thrive.

That is exactly what I've been waiting for the President to say. By rejecting the primacy of tax cuts, President Obama is taking a shot across the bow of conservative thought. Conservatives believe (well, as I've argued previously, pretend to believe) that tax cuts for the wealthy will stimuluate the economy. Let me ask you this, do you think the middle and working classes benefit when the government gives more money to the upper class? Just think about that for a few minutes, and I'm sure you'll reach the same conclusion that I have. President Obama is beginning to realize (at least I hope) that Republicans are not negotiating in good faith. They simply want to ruin the bill, and then vote against it, so they can avoid responsibility for it's ultimate failure. Unfortunately, I think the bill has already been riddled with bullets, and is much weaker than it could've been. However, what's left of it must be passed now in order for us to have the best chance at avoiding calamity.

Photo courtesy of Flickr user Korean Resource Center, February 4, 2009

The Land of Zero

As a follow up to my previous post on the stimulus, I wanted to let you know that the House passed the bastardized stimulus bill last night. Guess what President Obama got for all those concessions in the form of tax cuts for big business? Nothing! Despite all the stuff that the Democrats removed from the bill and exchanged for tax cuts to people that don't need them (all done at the behest of the Republicans), the bill passed without a single Republican vote. Zilch. Nil. Nada. It was apparent from the start, that the Republicans were negotiating in bad faith. This was their strategy from the beginning: 1) whine about the bill as much as possible, 2) allow the Democrats to add tax cuts for business and the wealthy, and 3) vote unanimously against the stimulus citing excessive spending and the failure of Democrats to cooperate. John Boehner, the House Majority Leader, has been whining on the TV every day about how the Democrats aren't including them in the discussions. This is odd since Obama went to Capitol Hill on Tuesday to meet with Republicans. He also hosted Republicans and Democrats at the White House to try and work out a deal. Well, I wish I could say that I'm surprised, but I'm not.

Now for a lesson in civics, I will let the geniuses at School House Rock review what happens to the stimulus now that it has passed the House:

Everybody Get Together, and Let's Stimulate!

Scotty Doesn't Know has been on a month long hiatus. Today, at this moment, I'm announcing that the hiatus has come to an abrupt end. President Barack Obama (damn I like saying that!) has assumed his office as the 44th President of the United States, and the big topic on everyone's mind is.....the economy. Economics, it's a perennially boring subject, one that is tackled by numerous intellectuals, and legions of idiots that have no idea what they are talking about. I think I fall somewhere in between. The economy is in dire need of a jump start, and the consensus opinion is that Congress needs to pass, and President Obama (there it is again!) needs to sign into law a stimulus bill to get things back on the right track. Simple, right? Well, actually, not so much. While Democrats and Republicans both agree that a stimulus bill is needed urgently, they disagree as to what shape it should take. Democrats generally favor a bill that would spend the bulk of the money on spending projects. There's lots of stuff in this country that needs to be built, rebuilt, or revamped. Our infrastructure is crumbling, we could use far more investment in high-speed rail and Amtrak, etcetera, etcetera, etcetera. The Dems also favor that a substantial portion of the bill be allocated as aid to state and local governments. The logic behind this position is that state budgets (most of which are required to be balanced, by their respective state constitutions) are in rough shape. What this means is that inevitably, states will have to cut services for their citizens. Now, cutting services in a bad economy is like burning lifeboats on a sinking ship. These services are needed more than ever, and if the federal government can help shore up these state budgets, many of these cuts could be avoided. Alright, well our friends in the Republican Party see things differently (go figure!). The Republican party led by House Minority Leader John Boener and Senate Minority Leader Mitch McConnell want the stimulus to be made up largely of tax cuts. They would like to see taxes on businesses cut, because they believe that the extra revenue that firms have in their coffers would result in them hiring more people. Basically, cutting taxes for those on the top will provide benefits that will trickle down to the bottom. I could at least respect this idea, if Republicans actually thought it would work. The problem is you know how I just said they believe tax cuts would result in job growth? Here's the thing, they don't actually believe that. Let's face it people, the constituency of the Republican Party these days is made up of Wall Street fat cuts, rich people in general, evangelicals, and Sarah Palin loving idiots that feel they are besieged by supposedly "liberal" America. Therefore, Republicans simply want to line the pockets of their constituents. That's why I share Matt Yglesias' view of Obama's strategy regarding the stimulus bill. Seriously Obama has been great so far. The speed in which he's undertaken the massive task of erasing 8 years of "misgovernment" has been astounding. Ordering the closing of Gitmo, banning torture (well almost), and higher fuel efficiency standards on automobiles are all great things that he's accomplished after one week in office. That's amazing, and he deserves all the positive buzz he's been receiving for it. However, his approach to the stimulus is misguided at best, and potentially devastating at worst. Republicans are disingenuous on this issue. They don't care about fixing the economy. Why should they? The majority of their constituents and fundraisers are rich enough that only the most catastrophic of economic collapses (Iceland style) will harm them. They are completely insulated. Obama has stated that he wants massive bipartisan support for any stimulus bill that passes through Congress, massive to the tune of 80 votes. That's all well and good, but Obama can either sign into law a stimulus that has bipartisan support, or he can sign into law a stimulus that will work. Our nation hasn't been in such dire straits for a long time. Critical action is needed, and there's plenty of evidence that Republicans are not negotiating in good faith and are generally cynical about any stimulus whatsoever. I understand that Obama campaigned on the promise of bringing an end to partisan bickering (and he still can do that) but he should not do so at the cost of effective policy. What we need is a stimulus that provides for upwards of $1 trillion worth of infrastructure projects, investment in high speed rail and other transportation systems, aid to state and local governments, as well as increases in unemployment benefits, food stamps, and other programs that help those in need. There are other great projects that could (and should!) be included in the stimulus, but these things are merely what I'd like to see. I really hope that Obama wakes up tomorrow and realizes that all this bipartisan stuff is a waste of time. I hope he says to himself "I have high approval ratings. I have lots of political capital, and my party has massive majorities in both houses of the legislature. I should pass a stimulus that helps ordinary Americans!"