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Bringing Us Together
BRINGING US TOGETHER....The LA Times reports on Barack Obama's attempt to get wide bipartisan support for his fiscal stimulus package:
Despite Barack Obama's decision to include as much as $100 billion in business tax breaks to his economic stimulus package to woo reluctant Republicans, obstacles to speedy, bipartisan passage remain.
...."I think he would like to have a large bipartisan vote in favor of this package. And he knows, even before we mentioned it, that the way to do that is obviously for it to have elements that are appealing to Republicans," Senate Minority Leader Mitch McConnell (R-Ky.) said after a 90-minute meeting that Obama held with Democratic and Republican congressional leaders Monday.
....At the same time, McConnell and House Minority Leader John A. Boehner (R-Ohio) said they were not ready to endorse the overall stimulus proposal....House Minority Whip Eric Cantor (R-Va.), speaking after the closed-door meeting with Obama, said, "I think there would be a lot of support" for tax cuts among the GOP rank and file. But, he added, "we cannot afford to be burdening our children and our grandchildren with an extra trillion dollars in debt."
The more I read about this, the more perplexed I get. What is Obama's goal here? He's already tossed in something like $300 billion in tax cuts to curry Republican favor, and his spending plans amount to about $200 billion per year for two years. That's a big number, but it's also only about 1-2% of GDP. It's not that big a deal, and as a response to a massive recession it ought to be a no-brainer, even for Republicans.
But they're playing the game anyway. By pretending to be skeptical, they're hoping to wring yet more concessions out of Obama. Which is exactly what you'd expect them to do. It's politics.
But what does Obama get out of this? He's got the votes to pass his package already, and it's hard to see what a bigger vote total buys him. In fact, considering what a crowd pleaser this bill is likely to be (jobs + tax cuts + aid to states = wild popularity), it's not entirely clear why Obama is working so hard to get Republican votes. Wouldn't it be better if the public saw this bill as a Democratic victory enacted over the meanspirited, neo-Hooverite obstructionism of a dying and bitter Republican Party? Besides, when push comes to shove, my guess is that plenty of Republicans will be clamoring to vote for this bill no matter what Obama does. Who wants to be left off the gravy train with elections coming up in a mere 22 months?
(And if, against all odds, the bill ends up being unpopular, or viewed as ineffective? Or the economy continues to suck no matter what? Well, all the Republican votes in the world still won't help Obama. They'll attack him viciously whether they voted for the bill or not, and he'll own the economy, for good or ill, regardless.)
I guess this all comes down to whether you really believe Obama can change the tone in Washington. He seems to genuinely believe he can, and his actions on the stimulus bill make sense if you see them as the opening move in a long-term project to dial down the bitter partisanship of the past couple of decades. The press might eat this up (or might not, since they generally dismiss this kind of talk from Democrats), but I continue to wonder what makes Obama believe he can pull this off? There's just no evidence from history to suggest that this can work, and no evidence from the recent history of the conservative movement to suggest that they're planning to adopt a more conciliatory tone over the next few years.
So I continue to wonder: What does Obama see that I don't? What does he know that I don't? I'm flummoxed.
If government spending is the answer, clearly Bush has been doing the right thing all along. LOL. Or maybe the Obmessiah has the "touch" and his expected profligacy is somehow "different"?
http://www.independent.org/newsroom/news_detail.asp?newsID=31
Under Bush, Federal Spending Increases at Fastest Rate in 30 Years
Since 2001, even with record low inflation, U.S. federal spending has increased by a massive 28.8% (19.7% in real dollars)?with non-defense discretionary growth of 35.7% (25.3% in real dollars)?the highest rate of federal government growth since the presidencies of Richard Nixon and Lyndon Johnson. This increase has resulted in the largest budget deficits in U.S. history, an estimated $520 billion in fiscal year 2004 alone. Furthermore, the projected spending for 2005 is a conservative estimate, since it doesn't include at least $50 billion for the 2005 cost of the Iraq occupation.
What is Obama's goal here?
"Impovernment of the booble by the bauble for the bubble."
James Joyce, Finnegans Wake
The question is, when they jerk the football away, will Obama continue to make the same mistake of trusting them (like Charlie Brown and the Congressional Democrats) or will he grow a pair and fight back?
Obama isn't trying to "curry favor" with Republicans.
Obama is trying to curry favor with the people who own the Republicans, namely America's Ultra-Rich Ruling Class, Inc.
That's how Obama hopes to get the ruling corporate oligarchy to acquiesce to "spreading the wealth" just a teensy, tinsy bit: the ultra-rich will continue to get richer, and get richer faster than any one else, but the rest of us will get some crumbs from their table, rather than a kick in the teeth.
Kevin, I gently suggest that now that the war in Gaza is reaching horrendous proportions that you at least give us an open thread for its discussion. Your blogs on the economy, favorite US presidents, football, etc., make me feel like I've entered a surreal world. It's not like this is a foreign affair with which we have little connection. The US is in this up to its eyeballs in several important ways, and I'm not simply referring to lack of support for a ceasefire.
I actually think it will be Obama who takes the football away. Once it becomes clear that the GOPers won't move forward with more goodies, he will throw up his hands, say "I tried" and remind Americans that the current crisis is too large to wait to act. Then he'll get a bill passed with about 65 votes, hopefully sans a bunch of stuff he will offer during the beginning of negotiations.
Substantively, there probably aren't many worthwhile, shovel-ready, stimulative government spending projects.
My guess is that's the biggest reason tax cuts are playing a prominent role. It is a concession to reality.
Of course a bigger concession to reality would have been to simply shrink the size of the stimulus package, but this is a start, anyway.
Obama is suffering from two huge misconceptions. First, he thinks republicans want him to succeed in fixing the economy. Second, he thinks republicans care about what Americans think of their behavior.
Neither is true. They want him to FAIL and they only give a shit about what their BASE thinks.
His approach to the stimulus package -- negotiating with himself upfront -- is infantile and extremely disappointing. Barely winning the nomination, and winning the presidency in the worst economic times of the last 50 years do NOT translate into knowing how to win in Washington.
I was hoping that the Obama team understood that this post partisan bullshit was just that--a trick to get elected. I now fear they believe their own bullshit.
I think SecularAnimist is on the right track. I also read some reader comments posted on TPM (I think) that suggested two other things. One is that this is a divide and conquer strategy trying to peel off a few Repubs from their leadership, which supports SecularAnimists theory above. The other was suggesting that Obama is including his pledge to cut taxes for the middle class in the stimulus package. In this way it is a threefer: divide the Repubs while appearing (and being) bipartisan, fulfilling his middle class tax cut pledge, and stimulating the economy.
This is looking like pretty shrewd politics to me. Just because Obama came out with this offer initially doesn't necessarily mean it is an offer from which he'll move toward the Repubs. It could also be a first blow to put them off balance, and I think it has.
Maybe this is more of the rope-a-dope style that we saw in the election campaign. Look soft to put the opposition off balance, then come back strong.
The train is ready to leave the station and Obama is inviting the Republicans to get on board.
The tax cuts will have an income limit, so this is not a concession to gain Republican votes, it's implementing the middle class tax cuts he promised during the campaign.
This is an easy one for Obama, the Republicans can't seriously fight him on this without losing the rest of the middle class. When they decide to turn on Obama, they will be the ones seen as returning to the "old divisive politics."
Obama's in control.
The tone in Washington may change for the worse if Nancy Pelosi carries through with her alleged effort to bar Republicans from offering alternative bills, amendments to Democrat bills or even the guarantee of open debate accessible by motions to recommit for any piece of legislation during the entire 111th Congress. http://www.humanevents.com/article.php?id=30143&s=rcmp
The middle-class tax cuts are something that Obama ran on, so I don't see that as a concession to the GOP. I just don't think that should be counted as stimulus spending since they were planned before the economy went south.
The big concession is not to do anything active to end the Bush tax cuts. Since they expire in 2 years anyway, it probably makes no sense to expend any energy on them. The business tax cuts are a concession, but Obama was moving in that direction anyhow.
So I don't think Obama has really conceded that much. Instead, it seems to me that he's not that comfortable being bold on the real stimulus spending. And I think that's because he is essentially a very cautious person. He's a small-c conservative. It's disappointing, but that's how he ran, and that's how he'll govern.
Obama is the establishment's president, and he will ensure the establishment's share of the economy's wealth and political power is not diminished. Obama is inclusive of Repubican partisans because they represent the kind of wealth he hopes to earn over the next 16 years from their constituents. Cleverly, he cloaks his goal with bipartisan cloth.
At this point at least I'm inclined to agree with abjectfunk. I think/hope that this is Obama trying to further marginalize the Republicans by painting them into a corner - either vote for a bill you hate and betray your base, or try and stop it and get tarred as obstructionists.
Seriously, folks, stop looking at the politics. Look at the substance here, look at Obama's of economic advisers. They don't believe, as you all do, that stimulus is virtually all about government spending. Tax cuts are a vital and significant part of stimulus. Is it surprising that Christina Romer would have counseled in this direction? No, it isn't!
Maybe Obama has been convinced by his economic advisers that tax cuts are a good idea, and he is putting forward the best plan he can.
(And if, against all odds, the bill ends up being unpopular, or viewed as ineffective? Or the economy continues to suck no matter what? Well, all the Republican votes in the world still won't help Obama. They'll attack him viciously whether they voted for the bill or not, and he'll own the economy, for good or ill, regardless.)
There you have it. For the majority of the country, politics are about substance. For an ethically and intellectually bankrupt minority party, politics are about position. If you can't win, you can at least try to harm your opponent. Too bad it's our livelihoods and our lives that hang in the balance.
This is Republican pass-fail politics. It's important that Congress pass a bill at Obama's request, and it's important that the law fail in execution. At the first sign that he is not turning the plummeting economy around, Republicans will note that they gave him what he asked for, so he must have been so stupid or evil that he asked for the wrong thing. Or too little, too late ... The likely variations are endless.
They are fighting for their power, perks, and paychecks as if they mattered more than welfare of the nation and all of its people.
I agree with MK, above. Past studies have found that the most effective stimulus packages invariably include both increased government spending AND tax cuts. Don't fall into the trap of believing that tax cuts are inherently evil. The major problem with W's was that he skewed his cuts to the wealthy, leading to increased income disparity between the poor/middle class and the wealthy. Tax cuts are just another economic tool which, used appropriately, can be an effective way to stimulate the economy.
PE Obama wants Republicans on board to avoid "I told you so's" from them if the stimulus doesn't work.
I realize that such things are the way the blogosphere operates, but I think it is pretty darn difficult to judge how effective Obama is as President so far given the fact that he is not the President so far.
We are now looking at the leak of an initial offer. Some people are upset that it contains tax cuts, but the general populace likes tax cuts and now is as good a time as ever to implement them. Furthermore, Obama campaigned on tax cuts.
Before concluding that Obama is ineffective, let's see how this thing plays out. Let's see how the GOP idiots look when they have to work with somebody who is not an idiot. Let's see what actually passes, which we should be able to do in a few weeks.
Also, let's consider the alternatives. Should Obama have come out of the gate with a bill that Conservative can easily demagogue against and told them to suck on it? Should he have announced that the only solution available to Conservatives is the filibuster?
The question in my mind is about the stick. Where is it, what is it? We see the carrot, where's the stick. I think Obama's style is to show the carrot first. Show it broadly and loudly. See how the voters respond.
Show the legislators the stick in private. Let them imagine how much it would hurt to get hit by the stick. Let them think about it for a while, while you are talking up the carrot. The trick is to mean it when you say, "this bill is worth these carrots, we're going to solve problems for all Americans".
I've seen enough of Obama now to know that there's a stick. I just don't know what it is.
The middle-class tax cuts are something that Obama ran on, so I don't see that as a concession to the GOP.
I understand what you mean here but, remember, it was a concession to begin with -- to win the election.
Given the challenges facing our nation, tax cuts make NO economic or social sense whatsoever -- whether temporary or permanent. We need government spending to boost the economy and increase jobs and family income. Not tax cuts.
Tax cuts are "a vital and significant part of the stimulus" for POLITICAL reasons, not because they make any sense in terms of the nation's needs.
That tax cuts -- especially permanent ones -- are good is republican bullshit. Tax cuts are BAD -- at best, a necessary evil.
Obama should take Cantor at his word, reduce the corporate tax breaks and say he's doing it for our children and grandchildren. (And be sure to credit Cantor for the change -- his corporate patrons will love that.)
Is it possible that Obama really does want bipartisan support and he is trying to get it. But, if he does not, would he not employ his substantial rhetorical skills and public support to pillory the Republicans for pretending to want bipartisanship but when given a chance to act, they'd rather not. I think that the GOP is running a risk here if they won't participate in the process. I think he can further marginalize them.
Tax cuts and increased spending (without off-setting tax increases) both lead to increases in deficit spending. However, as a temporary measure in difficult times such as this, tax cuts are a useful device and not inherently evil. If targeted appropriately, they can assist in reaching a desired economic goal. The positive and negative benefits can be analyzed using standard economic tools. There are some economic advantages of tax cuts over increased spending as outlined in the white paper by the National Bureau of Economic Research (a non-profit research organization) at:
http://www.nber.org/papers/w14551
Morality comes into the picture when choosing which groups benefit by the economic actions chosen, less so with the choice of tools used.
Econobuzz,
Talking pure policy, I doubt that tax cuts would have much of a stimulative impact. That's why I agree and would like a pure spending bill.
But I do think a good case could be made for making marginal tax rates a lot more progressive by lowering taxes for the moderate income people and raising them for the wealthy. As long as it is done in a way the raises overall revenue.
That's what I don't like about Obama's policy, beyond the stimulus plan. He lowers overall revenue even after the Bush cuts expire. That makes no sense.
The tone in Washington may change for the worse if Nancy Pelosi carries through with her alleged effort to bar Republicans from offering alternative bills, amendments to Democrat bills or even the guarantee of open debate accessible by motions to recommit for any piece of legislation during the entire 111th
I think Dems have to take the lead in the original structure for bills on big issues like health care and energy. I think her adjustment of the rules on 'recommit' is good and should make things run smoother.
I'm not so sure about limiting all debate and amendments. I think that's where she needs to give everyone some room. I know a lot is worked out in closed rooms before the bills are released, but even so the politics has to be given room to air and play out.
That said, on legislation relating to our current crisis I think the time for debate has to be severely limited. Timeliness is essential, as it was for the Bush-Paulson $700B bailout.
Offering Repubs a voice doesn't mean letting them anchor Dems to the shore. It's an opportunity -- that's all.
There are some economic advantages of tax cuts over increased spending as outlined in the white paper by the National Bureau of Economic Research
I believe the paper contends, contrary to what Keynes would say, that a "temporary" deficit-financed tax cut of a given size may increase GDP more than would an equal-sized "temporary" deficit-financed increase in government expenditures.
Let's suppose this is true; let's suppose a $400 billion government spending increase would be required to produce the same effect on GDP as a $300 billion tax cut. I would still opt for the $400 billion government spending increase, because even "temporary" tax cuts have a way of politically becoming "permanent."
That's what I don't like about Obama's policy, beyond the stimulus plan. He lowers overall revenue even after the Bush cuts expire. That makes no sense.
Exactly.
Two things are getting confused here. Whether permanent tax cuts make any sense, given the nation's needs vs. whether temporary tax cuts make sense as part of a stimulus. If the latter will inevitably or likely become permanent, they make no sense, despite their presumed efficiency in increasing GDP in the short run (as alleged in the NBER paper).
Remember Obama wasn't proposing "temporary" tax cuts for the middle class to provide a stimulus. They were to be "permanent," as a post above makes clear. They were a political stunt designed to defend against the republican attack that Obama would raise taxes.
They were a campaign promise long before we knew the financial system was collapsing -- long before we knew a huge stimulus was needed. I distinctly remember a post by Kevin complaining about the proposed cuts on policy grounds.
Econobuzz, good point that lowered tax rates are hard to re-raise. But similarly, raised government spending is hard to cut.
To conservatives, the "ratchet" nature of lowering taxes is a feature, not a bug.
To liberals, the "ratchet" nature of raising spending is a feature, not a bug.
In the real world, a "temporary" tax cut is a permanent tax cut, which long outlives its temporary purpose.
In the real world, a "temporary" spending increase is a permanent spending increase, which long outlives its temporary purpose.
Pick your poison...
Let me also say that what I really want is for Obama to put this contradiction squarely before the American people, since after all they should decide whether we should cut spending or raise taxes.
It makes little sense that the voters punish politicians for talking about raising taxes, and punish politicians for talking about cutting spending. One of the two has to happen, and Obama could play a role in getting people to accept the need to choose, and to voice their preference.
But that's a longer term concern, to be discussed after the recovery is well underway. (Sorry for the multiple posts).
If government spending is the answer, clearly Bush has been doing the right thing all along. LOL. Or maybe the Obmessiah has the "touch" and his expected profligacy is somehow "different"?
http://www.independent.org/newsroom/news_detail.asp?newsID=31
Under Bush, Federal Spending Increases at Fastest Rate in 30 Years
Since 2001, even with record low inflation, U.S. federal spending has increased by a massive 28.8% (19.7% in real dollars)with non-defense discretionary growth of 35.7% (25.3% in real dollars)the highest rate of federal government growth since the presidencies of Richard Nixon and Lyndon Johnson. This increase has resulted in the largest budget deficits in U.S. history, an estimated $520 billion in fiscal year 2004 alone. Furthermore, the projected spending for 2005 is a conservative estimate, since it doesn't include at least $50 billion for the 2005 cost of the Iraq occupation.
Luther, don't be an idiot. Not all government spending is stimulatory, and the economy has not been in recession for all of the last eight years.
The Republicans who vote for it will have to face the ire of the Joe the Plumber vote, who threw McCain under the bus after the election. What did Joe say? McCain made him sick.
So the hope is that in 2010, the Seante Republicans up for reelection see primary challenges from the loony right who are sick and tired of these moderate nervous nellies. Sarah Palin for everything!
Self-Destruction of the Republican Party or uhm, fascism?
It's quite a gamble.
By pretending to be skeptical, they're hoping to wring yet more concessions out of Obama. Which is exactly what you'd expect them to do. It's politics.
I disagree. I think a majority of Republican voters and politicians believe in keeping the government out of the economic system, and so they honestly think the stimulus package is a bad idea. You can see this in how a great many of them eventually became very unhappy with Bush's profligate spending, even though he was their president.
As for Obana, I think he just honestly believes in bipartisanship, and so he is bending over backward to try to achieve it.
"I think SecularAnimist is on the right track. I also read some reader comments posted on TPM (I think) that suggested two other things. One is that this is a divide and conquer strategy trying to peel off a few Repubs from their leadership, which supports SecularAnimists theory above. The other was suggesting that Obama is including his pledge to cut taxes for the middle class in the stimulus package. In this way it is a threefer..."
Another scenario is that the size of the stimulus needed is so huge that we can't hope to spend it all well. This is OK in the case of an emergency (which we're in now): you just want the injection of money as fast as possible before unemployment reaches double-digits and we risk sinking into deflation. A couple of billion in misspending are an OK price to pay for keeping us out of a Japan-like deflationary zone.
But we won't remember the urgency to get the money out 2 years from now when the stories about corruption and waste associated with the stimulus package hit the press. So Obama, strategic thinker that he is, is inviting the GOPers to sink their noses into the trough so that the stink of the future scandals will be bipartisan.