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Negotiating With Themselves
NEGOTIATING WITH THEMSELVES....Paul Krugman surveys the current political scene and wonders if Barack Obama is going to be undone by his insistence on bipartisanship:
Here's my nightmare scenario: It takes Congress months to pass a stimulus plan, and the legislation that actually emerges is too cautious. As a result, the economy plunges for most of 2009, and when the plan finally starts to kick in, it's only enough to slow the descent, not stop it.Meanwhile, deflation is setting in, while businesses and consumers start to base their spending plans on the expectation of a permanently depressed economy — well, you can see where this is going.
So this is our moment of truth. Will we in fact do what's necessary to prevent Great Depression II?
I've been getting the same sense recently: Obama's team is so focused on getting a big bipartisan majority for their stimulus legislation that they're negotiating their goals down even before they actually start negotiating. I'm reluctant to critique Obama's political instincts, since they've proven shrewd so often in the past, but I gotta say: this isn't going to work. Obviously Obama needs a modest level of Republican support just to get the bill passed, but he doesn't need 80 votes, and straining to get there will just produce a watered-down plan without getting anything in return.
The American public really doesn't know or care if this bill passes by one vote or thirty votes. So why waste time on this? It's just a gold-embossed invitation for Republicans to obstruct and posture endlessly, something they hardly need any encouragement for.
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It's not going to matter how the Republicans feel about the stimulus if it's too anemic to change the economic forces pulling down the country (and now the global economy as well).
If Obama's first 100 days don't start getting America's people to work, with faith in the government's ability to get things back on track, the economy will continue to devolve rapidly. That's what Krugman is afraid of?and I agree that actually having an effect on the economy is Job One.
Worry about Mitch McConnell and Co later. Get Olympia Snowe's vote, and maybe one more to break a filibuster, and then run with a program that works. If a successful stimulus doesn't happen, and fast, all the Kumbaya in the world won't bring us together on any economic plans after that.
... and the $300 Billion in tax cuts for the stimulus package, as reported in the wsj? ...
... and the compete silence on Gaza?
I'm starting to worry. (But then, I'm a worrier.)
Kevin,
Can't we start calling it the great BUSH depression already?
Watching Hyer (D) say that it may not be possible to pass the stimulus package by a given data and the Republican Majority leader dictating how the Dems should behave and be his bitch reminded me and confirmed for me the old axiom that you will never lose a Dem if you bet that the Dems will always take the position of the weak, the spineless and the powerless, independent of whether or not they are in the majority.
by a given data -> by a given date.
never lose a Dem -> never lose a dime.
Sorry.
Amen. Obama's faith in his ability to 'change the rules of Washington' is about to run into its biggest test, and I think he's going to lose big.
You are right that Obama's desire for an overwhelming majority is not worth the candle. Bill Clinton's first budget just squeaked by, but it set the stage for a huge surplus. Policies are lauded based upon their success, not on the number of votes they garnered.
Here's what Obama should do: Propose a fiscal package of spending for infrastructure, education (human capital), and new energy. Let the Senate Republicans whine that there aren't enough tax cuts for businesses. Then relent (as little as possible, to pick up a few Rep senators) and include a few business-friendly tax cuts so that Republican legislators have a fig leaf to wear when they vote for the stimulus package. The end result is that Obama gets 85% of what he wants.
But--if 40% of the package is Republican-friendly from the start, the Right will still bitch just as loudly, and we'll end up w/ a package that looks like it came from the Bush White House.
If Obama really thinks that he can head off opposition by granting the other side what it wants from the start, then he needs to talk to Hillary about health care reform.
Obama is soon to learn a brutal lesson about negotiating w/ the Right. He's going to get his ass handed to him on this one. Let's hope he does better the next time.
I'm going to be optimistic and hope this was just a dishonest strategic leak from the GOP leadership to their pals at the WSJ, and that Obama is not actually going to open with this show of naivete and weakness.
OTOH if this is really true then the good news is that Obama will be quickly schooled in how useless it is to treat the GOP with anything less than hardball tactics. Clinton, after initial stumbles, eventually learned to run rings around the Gingrichites. Still, it'd be better to avoid the initial stumbles.
I'm going to be hopeful and cut Obama slack for the first few weeks to see what really happens. A certain amount of bipartisanship is fine. There are a handful of moderates left to talk to. Talking about bipartisanship is fine. Putting your own neck on the line betting that it will work is terribly risky. I'm guessing for now that the far right can't be trusted and that he'll be civil with them but won't cave to them.
"It's just a gold-embossed invitation for Republicans to obstruct and posture endlessly, something they hardly need any encouragement for." -Kevin
That's because Pelosi and Reid are Reagan democrats, like Zell Miller and Lieberman.
They are not on OUR side. (The side of the average working and middle class American.)
There is at least one very good reason that Obama wants the Republicans on board, and it is that the stimulus will be a failure. It won't be a failure in the sense that it is worse than doing nothing, but it will be a failure in the sense that it will pass and our economy will still suck.
If the GOP is not on board for this bill, then they will blame the economy on Obama, and by 'they' I mean the media mouthpieces of the GOP. If they are on board, then they will still blame the economy on Obama, but it will take more work for them to do so.
Still, in the end the Dems will be forced to go this alone, since it is impossible to get Republicans to agree to anything that is reasonable, and the Republicans have no interest in going on the record in support of any economic legislation now that they have destroyed the economy.
"I'm reluctant to critique Obama's political instincts, since they've proven shrewd so often in the past"
Ugh.
Winning a party nomination doesn't equal good political instincts.
Winning a general election in a year when a stuffed ferret running on the Democratic line could win doesn't equal good political instincts.
I was opposed to Obama for the nomination precisely because it seemed as if he had such lousy political instincts.
Events are such that Obama still in good position to maintain his favorability ratings for the foreseeable future, but that's a bit of a different kettle of fish than the merits of his political instincts and inclinations.
I tend to agree with Reino. It doesn't matter which way he steers or how hard he hits the gas, the car has already gone off the cliff.
Republicans shouldn't only be in the car with us I'd mount them on the hood like deer and pitch them into the gorge if I could to cushion the crash at the bottom. Of course they won't be willing to go along with that plan. So we'll have to keep reminding the American public who actually was asleep at the wheel when the car went over the cliff.
Where are those tax cuts. If they drop the middle class brackets they might be helpful. If they target job growth they would be more helpful. Being a liberal doesn't mean being against business and job growth. It means doing things smart.
That said as part of the stimulus packages I would like a proposal that says the government will fund health care for all children. I would also like a proposal to subsidized retrofitting existing structures to make them more energy efficient. I would also like to see a strong expansion of the fiber optic network to increase connectivity. Most importantly, I would like to see all of the crumbling bridges and roads replaced as well as the electric grid completely modernized.
There was report in the NY Times that almost have the stimulus package will be tax cuts. As much as I would like my taxes lowered, this would be a huge mistake that will result in a larger deficit and a smaller stimulus, a lose-lose situation.
Very few seem to understand the point of stimulus spending, even on the left. It's to spend the money quickly, and not necessarily on "worthwhile" projects.
I heard a talking head on a Sunday news show criticize "govt spending on tennis courts." Is that what we're afraid of? Dems used to be proud to build recreational facilities. I say build the tennis courts.
I must confess I love it when Katrina vanden Heuvel calls Mitch McConnell "the Dr. No of the Senate." But my amusement quickly dissipates. Can't these a-holes just one time stop playing games and do the right thing for the country as a whole, and not just for their pet projects and favorite lobbyists? I guess not. Fasten your seat belts.
Excellent post.
Maybe a bit off topic, but I have to say that consumers don't base their spending plans on "the expectation of a permanently depressed economy" or any other such high-end thinking.
Peoples spending plans are based on whether they expect to be able to pay their bills going forward, whether they expect to still be employed; little things like that.
zak822,
I agree, and I think right now people are not making *any* medium or long range spending plans. Because the future is so uncertain people are looking at the money in their pocket and deciding how to spend it.
And, heaven forbid, people are actually thinking of trying to save at least a tiny bit of it.
I'm serious. And there goes the world economy, down the tubes because people are being sensible.
Yeah, this is sarcasm. Yeah, I'm crabby today. No, I don't see a solution on the horizon. Not this year.
I actually heard one of the talking heads on the ABC Sunday Morning show poo-pooing the idea of creating jobs by building infrastructure. According to that genius most of the unemployed are in the financial services industry and they aren't going to dirty their hands digging ditches. My grandfather would have laughed. He would have taken any job after his business failed in 1931.
According to that genius most of the unemployed are in the financial services industry and they aren't going to dirty their hands digging ditches.
They aren't qualified to dig ditches anyway, and would need expensive retraining.
The American public really doesn't know or care if this bill passes by one vote or thirty votes. I bet this is etched into a bronze plaque above [insert partisan here]'s desk. 50+1 has been a political disaster for America for the past decade. You think Obama should pursue that course of action for the sake of political expediency? Thankfully, I think Obama himself disagrees.
Mr. Karak--
Obama should aim for 50+1 because it will allow him to get the best bill possible, not for political expediency. It is a lot easier to get 51 people to agree with you than to get 100 people to agree with you.
The rest of you--
The ditches are for the people in the financial services industry, not by the people in the financial services industry. On a more serious note, whoever was on Byers' TV is missing a brain. Why that person has a job when other people are unemployed is a deep mystery.
Speaking of laughing cruelly, I remember one of the newly laid off Young-Republican millionaire-wannabes coming out of a Manhattan office building saying he planned to go to Japan and get a job in the financial industry there.
I guess he never heard the saying "When America gets a cold Japan gets the Flu."
So yeah, my laugh was a cruel laugh. It was also mean. I guess I'd been saving it for awhile. All the time the College Republican know-it-alls were telling me I was the one who was wrong.
Yeah. Sure. Whatever.
I save my sympathy for the hard-working sensible people who are affected by this global eff up, not for the greedy bastards who drank the kool-aid and crowed on the way up.
I'm sure there were others, but the last time I remember the Senate coming together in a hugely bipartisan way was the vote to give Bush the power to invade Iraq. Got a really queasy feeling from that one too.
No amount of deficit spending will be able to rescue America's economic overconsumption. Overconsumption was a major cause of our economic problem, attempting to return to it with increased deficit spending will only make the problem worse. What is required is an unprecedented transfer of wealth from the wealthiest to the working class to correct the economic imbalance of so much wealth being misallocated to those who add little or no value to goods or services. Attempting to return to the phantom economic prosperity of the past ten years with more deficit spending to spur more overconsumption will fail unless the fundamental imbalances of the economy's distribution of its wealth are remedied. No one on Obama's economic team wants to do this because it is politically abhorrent to the establishment wealth they represent.
It's not going to matter how the Republicans feel about the stimulus if it's too anemic to change the economic forces pulling down the country (and now the global economy as well).
If Obama's first 100 days don't start getting America's people to work, with faith in the government's ability to get things back on track, the economy will continue to devolve rapidly. That's what Krugman is afraid ofand I agree that actually having an effect on the economy is Job One.
Worry about Mitch McConnell and Co later. Get Olympia Snowe's vote, and maybe one more to break a filibuster, and then run with a program that works. If a successful stimulus doesn't happen, and fast, all the Kumbaya in the world won't bring us together on any economic plans after that.
It would seem obvious that a lot of this infrastructure building will be done in the Republican south. What's there to say no to when so much is to be had by the local business and development crowd. The Republicans will make noise and then vote for their local graft.
Kevin, you gave us Krugman's nightmare scenario.
Here's mine: That President Obama actually believes that the GOP will work with him to do things he wants done. Without him having to sell his soul to get their support.
tpx: What is required is an unprecedented transfer of wealth from the wealthiest to the working class to correct the economic imbalance
Any concrete suggestions on how to do that?
I don't think the Democrats are negotiating down. I think they're doing exactly what they want. The reality is that today's Democratic party is a very right-wing, corporate controlled organization. Their leadership consists entirely of extremely corrupt corporate multimillionaires and lawyers, and their sole constituency is the haves and have-mores. Obama may well be the most right-wing and most corporate president we've ever had. He plans to vastly increase corporate power and profits. His "stimulus" plan is just the first step. Wait and watch.
mikep: today's Democratic party is a very right-wing, corporate controlled organization
Nonsense, it's a very left-wing corporate controlled organization.
Any concrete suggestions on how to do that?
High taxes on the wealthy, spent on infrastructure that employs people at middle-class wages, would do it.
If I were wealthy I'd be trying real hard to figure it out myself. The traditional means is that the working class gets pissed off and starts cutting off heads. I think we've all got an interest in sidestepping that.
whinger,
By my reckoning the head lopping starts in 2021 or so.
But I, like Alex, would like to hear more specifics. For starters what do you mean by 'high taxes' and 'wealthy?'
The devil is in the details.
If I were wealthy I'd be trying real hard to figure it out myself.
The rest of my comment got lopped off somehow.
You'd think the wealthy would be working on figuring it out, but these are the same sorts who still haven't figure out that FDR's "Socialistic" New Deal saved their sorry capitalistic heads from an earlier lopping.
thersites: these are the same sorts who still haven't figure out that FDR's "Socialistic" New Deal saved their sorry capitalistic heads from an earlier lopping
A clear example of moral hazard - going too far in protecting people from their own mistakes. If FDR had allowed at least a few decapitations, I bet you that they'd be thinking pretty hard right now.
Oh heck, even a few ducking-stools might have helped. And Wall St. is perfectly situated for them - two rivers, no waiting!
This blog would be more interesting if I could send beers to people whose comments I like.
whinger: High taxes on the wealthy, spent on infrastructure that employs people at middle-class wages, would do it.
Depending on the details that thersites mentions, I think your recommendation would be a good start. Here's a real simple start: eliminate capital gains rates. Infrastructure: great stuff, but we need more stimulus than just that.
jerry,
I dunno if you mean me, but if you do - thanks but no thanks.
On the other hand I've been figuring my time is getting closer and I need some good lieutenants, so I'm starting to recruit. You wanna sign up?
I offer ENTJ leadership (turns out I have that in common with Teddy R, who knew?) and a high position in the new establishment.
Waddya say?
Bush has been stimulating the economy for eight years with tax breaks and deficit spending, and now we are entering a depression.
Another view of stimulus might be profligacy leading to debt and bankruptcy.
Slick move on the part of Krugman to give himself lots of wiggle room. If the stimulus doesn't work, it is because the stimulus package was too late or too small, which figures can be adjusted to protect butt.
alex, actually it was Tripp who mentioned "details" but I'll take credit anyway.
jerry, I'll pass on the beer, too, but just try and keep the hallucinogens away from Luther, willya?
Traditional methods of governing the power of accumulated capital, such as progressive income taxes, market oversight and social spending, have to be used going forward, but will not resolve the current economic failure. The failure was caused by a huge misallocation of the nation's wealth to the wealthiest for a very long time. A way needs to be found to take some of that misallocated wealth away from the wealthiest and return it to the the lower classes. Progressive taxes take while to work and do not automatically become transfers to the lower classes. Direct seizure and payment will be politically impossible and not a good idea anyway. Too chaotic and disrupting. However, those who have earned the most money as managers of large corporations probably could not withstand a criminal audit of their handiwork. Whether or not hundreds of billions could be earned this way is questionable. Fees for wealth services, like privilege taxes for equities and bond trading, might be a faster way to raise immediate revenues. Returning to a strong inheritance tax regime would be a good start. Those revenues should go to pay for a social service that would most resemble a transfer of wealth. The most salient social service fitting the description would be universal health care. Instead of giving a trillion dollars to Wall St, the government should have fined, taxed and levied fees from the bankers, traders and financiers to pay for universal health care.
Whatever.
Just send me a check to bail me out. Everyone else already received lots of cash from my taxes. I promise not to be responsible with my finances the next time around -- there is absolutely no reward in being fiscally responsible.
I don't want to end up with a T-shirt that reads "My country went to Great Depression II and all they got me is this lousy T-shirt."
I'm not convinced that Obama has great political instincts. He was at his best early in the process when he was an underdog. After SuperTuesday it was all about money and numbers (process as opposed to politics) and Obama played not to lose. Same with the general election. At one point, he was briefly losing to one of the worst tickets in presidential history when the organization decided to spend August staffing up.
I think Obama is a great process guy but there are no rules when it comes to dealing with the opposition and the Democratic leadership is not a particularly helpful bunch. Hopefully Emmanuel and Durbin will be pushing Obama to be more partisan.
reino: "On a more serious note, whoever was on Byers' TV is missing a brain. Why that person has a job when other people are unemployed is a deep mystery."
No kidding. The TV "news" person sounds like my unemployed friend, who was complaining the other day about stimulus packages because he didn't want to work in construction. To state the obvious, if construction does well, the people that supply construction and lend to construction and their suppliers do well. The places where construction workers spend their paychecks do well. etc. etc. The stupidity is yet more validation of my decision not to watch TV news...
Safron,
I suppose one bright note about working under our corporate masters is we will soon lose any uppity notions we might have about only working at something we like.
Your "friend" gives the rest of us progressives a bad name.
I've been reading a fair amount about Teddy Roosevelt recently and it feels weird to use the label 'progressive' when it originated over 100 years ago but since we seem to have slipped eerily back into the early 1900's I suppose it is apropos.
Everyone else already received lots of cash from my taxes.
The reason why the fundamental flaw in the US economy, the misallocation of too much wealth to the wealthiest, will not be fixed any time soon is because those who have benefitted from the economy's growth think they earned the benefit from their individual inputs and they will oppose wealth transfers to people who benefitted much less than they did from the economic growth of the past twenty years. The opposition to a redistribution of the misallocated economy's wealth comes from the upper middle classes, who have a disproportionate political voice compared to their population due to the power of their wealth.
tpx,
I dispute your statement - those who profited the most were the ultra-rich and they don't give a rat's ass about the rest of us.
By definition the upper-middle class has their wealth in their homes and maybe some in their 401ks and these people have not profited a bit.
Aim a little harder and you'll have the right target.
The ultra-rich, the corporate executives, are the ones with disproportional power who control the politicians and who fund the spins that confuse some of the people.
You should read this old but still good book: Class: A Guide Through the American Status System
Shoot - aim higher, not harder.
My comment was a response to rational's statement about already paying lots of cash from taxes to everyone else. This sentiment pervades the upper middle classes, who, like the ultra-rich, have enjoyed more of the economy's growth than the rest of the population. This sentiment by a significant segment of the electorate prevents the needed political economy changes to correct the fundamental imbalances of America's distribution of its national income. Not to pick on rational, this sentiment is expressed by many people who inhabit the upper middle classes. Professionals and small business owners are unwilling to relinquish any economic advantage they have, despite having incomes much greater than the median, in order to fix the economy's failures.
tpx,
I see your point. To some degree I think we are talking past each other. In my view (after reading a fair number of books on the subject) the upper class are the people who do not work for a living. The people you talk about, professionals and small business owners are middle class. The upper middle class are surgeons and some lawyers - people who come from enough money to have the wealth to study a long time. They are the people who have multiple degrees and still have a family.
Many of those people are, in my opinion, likely to be progressive.
The upper class and some of the middle of the middle class are the bidness wing of the GOP. Currently the religious authoritarian followers are the other wing, and they span the economic structure although they tend to cluster in the lower end because of their irrationality.
The upper class and the wannabes and the authoritarian followers are the one's who don't value fairness in taxes.