A Stimulus, Yes, But At What Cost?

The latest lefty talking point is that Republican opposition to the Obama stimulus bill means Republicans would rather score partisan points then rescue the economy.  That is, of course, nonsense.  Let’s start from the reasonable assumption that both parties want desperately to get out of the economic slump we are in.  The stimulus package as proposed by Obama is one possible solution – it’s not the ONLY solution.

Phil Levy, writing in Foreign Policy, identifies three types of thinkers as relates to the current downturn: Scientific Keynesians, as typifed by Krugman (what is the economy capable of, what is it actually producing, government spending efficiently plugs the gap); the Cost-Benefit Covey (Levy identifies himself as one of these, as do I), who do not see all government spending as being equal, but rather see the type and cost of spending as relates to the benefits as critically important; and Animal Spiritualists, who believe that perception is everything, and the public basically needs to be conned into thinking everything will be okay because we’re working on it.

Levy goes on to look at the cost of Obama’s victory, including the death of Obama’s transparency pledges, the fear-mongering and demagoguery that, so ironically, is reminiscent of nothing so much as what the Left accused Bush of, and, of course, the embrace of protectionism:

Politically, President Obama seems to have dashed many of his major thematic campaign promises in his very first foray into large-scale policy-making. The crafting and selling of the stimulus package have been neither transparent, innovative, calm, nor bipartisan. Much of the package was crafted behind closed doors. The rush to push money out quickly left no time to develop creative new approaches. The president’s dire warnings of doom did little to soothe fears, particularly in those who had doubts about the stimulus package’s efficacy. And hopes for bipartisanship may have been the biggest victim of the endeavor. While President Obama was willing to exchange pleasantries with Republicans, those Republicans were largely excluded from the crafting of the bill and voted overwhelmingly against it.

Of course, a natural response by the Obama administration is that the Republicans were just engaging in rank partisanship. There are certainly Republicans motivated solely by politics, but this is why Sen. Judd Gregg’s withdrawal as Commerce nominee is so devastating. Even President Obama’s hand-picked reasonable Republican found the process unpalatable. [emphasis mine]

On the international front, the bill portends trouble. The original excesses of the Buy American clauses were trimmed back, but President Obama missed a golden opportunity. Had he embraced Sen. John McCain’s amendment to remove the clause, he would have demonstrated bipartisanship, assured the world that America was not embracing protectionism, and still retained existing legal authority to direct some contracts toward domestic producers. Instead, Sen. McCain’s amendment was defeated. The remaining clause sends a bad signal, allows protection, invites retaliation and risks provoking numerous trade disputes.

If worried allies wish to call up and seek reassurance, they likely won’t find the right person on the other line, as key international economic positions remain unfilled: Ron Kirk, the nominee for United States Trade Representative, has not yet had hearings scheduled, and there is a new vacancy at Commerce. The Treasury, meanwhile, may be otherwise occupied.

President Obama got the stimulus plan that he wanted, but at potentially a very high cost.

Obama accused the Republicans of trotting out the ‘same old tired solutions that got us in this mess’ in their preference for lower taxes and less regulation as a stimulus, but regardless of the truth of that assertion, he resorted to the same old tired Washington strong-arm demogaguery and horse-trading that his election, or so we were assured ad infinitum, had put an end to.

15 comments to A Stimulus, Yes, But At What Cost?

  • steve

    Postscript to the sometimes heated discussion about the stimulus package of last week:

    Obama took time off this weekend to be with family and plans to sign the bill sometime this week (I saw a report saying Tuesday).

    As communicated by team Obama on the Sunday morning shows, and reported in, among others, The Boston Globe today: “Speedy recovery is called unlikely.”.

    So, remind me why Mitch McConnell is the bad guy for not doing something (I can’t remember what, exactly) to make sure Senator Brown didn’t have to leave the wake. I mean, Gergen likened our situation to our house being on fire (or was that Peter). Obama said we would have a catastrophe if we didn’t act immediately.

    We couldn’t take a week or two to allow a full reading of the bill, to discuss its relative merits, to debate what should and should not be included?

  • Peter

    Simple answer.

    1) When the bill passed, CNN reported that it would not be available for signing until at least Monday because it has to be registered first. Apparently there is a paperwork process which needs to be completed before a bill can go from Congress to the President’s desk, and this process takes a few days.

    2) The message that the stimulus bill will not provide immediate relief has been a consistent one. The infrastructure projects will take at least a few quarters to have a measurable effect, as contracts are bid out, contractors are hired, etc. The tax relief will be quicker, but it will also take some time, as payrolls are met over time and not all at once. The banking and housing problems are separate but related issues, and now can be tackled now that the stimulus bill has passed. In any event, with an economy in freefall, expecting an immmediate turnaround is like expecting a car to go from 70 MPH to reverse right away. Or an oil tanker changing direction on a dime. Pick your hackneyed metaphor.

  • steve

    I never expected immediate results (candidly, don’t expect any results given what I’ve seen of the plan’s details). I suggested some measure of calm and for a proper amount of time for consideration of the details, and their possible effects. I asked, “what’s the hurry?” and was told there was no time for any of that, that people had to fly back from wakes to vote, that a catastrophe loomed, that if there were any delay the consequences could be irreversible (the house is on fire, remember?), and now the same people tell us not to expect any results anytime soon, and Obama finds time to take a little vacation.

    That’s all.

  • The country has been debating the particulars of a fiscal stimulus package since November. The Congressional Republicans decided, at that time, to oppose the bill, whatever final form it was to take. I don’t know what another reading of the Reconciliation bill would have accomplished. It certainly would not have changed a single vote.

    This is their standard operating procedure. Same thing happened in 1993.

  • Jacques, debating the particulars of a hypothetical stimulus bill since November is not the same as debating the particulars of a very particular piece of legislation that no one in Washington, Democrat or Republican, even had the time to read…Steve’s point is very well taken: the only reason Sherrod Brown had to rush back from his mother’s wake was to meet an arbitrary deadline that looks foolish when the President goes on a three-day holiday. There would have been not a whit of difference if this bill was passed Tuesday, instead of Friday, except one: it would have given three additional days for legislative aides to have actually digested the bill’s contents…and that’s a bad thing?

    You can beat up the Republicans for many things, and be in the right – but you can’t hang the Sherrod Brown thing around their neck…that’s the fault of President Obama and the Senate leadership…

  • As for Peter’s comment about the tax relief taking some time to have an effect, yes, it will…try forever. $13 a check? That’s Obama’s middle-class tax break? That’s an insult, and worse, a complete waste of money when we have no business wasting money, in that $13 a check is almost worthless to the individual receiving it, but enormously expensive when multiplied across the country…I can’t imagine a tax break package that would be LESS effective at stimulating the economy that this one…

  • The Sherrod Brown thing is of no political consequence. It was an opportunity for the Senate Republicans (or, more precisely one Senate Republican) to show some class and be magnanimous by doing something which would have zero political cost.

    That they chose not to avail themselves of the opportunity is the least of their sins.

  • Certainly, it’s true that Sherrod Brown’s travails are of little consequence (not to him, of course, but to the nation) – but that little brouhaha is symptomatic of the push to ram this thing through – no thinking! No delay! House on fire! Catastrophe! Here’s a bucket full of $800 billion – maybe – just maybe – that will put the fire out…

    This is no way to run the country in the best of times…but certainly not in the worst…

  • Bob from Ohio

    Sherrod Brown thing is of no political consequence

    We’ll see in 2012 if that is the case. Brown is now the decisive vote for PorkFest 2009. When he runs for re-election, if PorkFest 2009 has not worked it’s magic on the economy, then his melodramatic flight will be wrapped around Brown’s neck.

    Again, if this bill is such an economic and political winner, why all the anger at the GOP?

  • We saw what happened the last time we got railroaded into passing a huge economic bill – the $700 billion in TARP funds. That really worked out well, didn’t it?…Perhaps a little more time crafting a bill that actually had accountability and a well-defined purpose would have been useful…but the Bush administration officials turned up the heat, and Congress jumped – and Obama has employed the very same tactics here…

  • Anger, Bob?

    Scorn is more like it.

    If, as you seem to believe, economic failure is the key to Republican political success, then that scorn is richly deserved.

  • Aaron

    So, were the Democrats deserving of scorn when they viewed military failure as the key to their political success for the last six years?

  • Bob from Ohio

    Aaron, not to mention the constant harping on deficits by the Dems. Now deficits don’t matter one bit.

    President PA is spending in one day what President Bush spent in 7 years in two wars.

  • Bob from Ohio

    Scorn or anger. Whatever you call it, if the bill was such a winner, glee at the GOP’s stupidity would be the expected response. Not seeing that though.

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