In a major victory for President Barack Obama, Democrats muscled a huge, $787 billion stimulus bill through Congress late Friday night in hopes of combating the worst economic crisis since the Great Depression. Republican opposition was nearly unanimous. The Senate approved the measure 60-38 with three GOP moderates providing crucial support. Hours earlier, the House vote was 246-183, with all Republicans opposed to the package of tax cuts and federal spending that Obama has made the centerpiece of his plan for economic recovery. The president could sign the bill as early as next week, less than a month after taking office. Supporters said the legislation would save or create 3.5 million jobs ... Vigorously disagreeing, House Republican leader John Boehner of Ohio dumped a copy of the 1,071-page bill to the floor in a gesture of contempt. "The bill that was about jobs, jobs, jobs has turned into a bill that's about spending, spending, spending," he said ... Republicans complained they had been locked out of the early decisions, and Democrats countered that Boehner had tried to rally opposition even before the president met privately with the GOP rank and file.
Didn’t Rush Limbaugh say early on in the next Administration that he wanted our new President to fail? Boehner marshaled the House Republicans to follow Limbaugh’s lead even if it meant endorsing Herbert Hoover economics. And of course Jonah Goldberg had to follow suit:
The stimulus bill has failed. Barack Obama has failed. The Trojan Horse of Hope and Change crashed into the guardrail of reality, revealing an army of ideologues and activists inside. Now, before I continue, let me say that Barack Obama will still be popular, he will still get things done, and he will declare victory after signing a stimulus bill. But Obama’s moment is gone, and politics is about nothing if not moments. The stimulus bill was a bridge too far, an overplayed hand, ten pounds of manure in a five-pound bag. The legislation’s primary duty was never to stimulate the economy, but to stimulate the growth of government, the scope of the state. By spending hundreds of billions on things that have absolutely nothing to do with providing an immediate stimulus for the economy, Democrats hoped to make a down payment on their dream government.
The only manure I smell is the nonsense emanating from rightwing hacks such as Boehner and Goldberg. The main problem with the U.S. economy is a lack of aggregate demand - but these economic know nothings cannot understand that increasing aggregate demand via more government spending is indeed stimulus that will create more jobs. Brad DeLong makes this point:
Had John McCain won the presidential election last November, a similarly-sized fiscal boost bill--more tax cuts, fewer spending increases, tilted toward the rich rather than toward the poor and middle class--would now be moving through the congress with genuine bipartisan support. But Barack Obama won the presidency. And so the Republicans decide to try to make America a poorer nation with higher unemployment: 246-183-1 in the House, with not a single Republican representative voting yes
When Bill Clinton first became President, certain Republicans such as Bob Barr were hoping to impeach him on just about anything, which eventually became known as the Monica Lewinsky scandal – all gift wrapped by Jonah Goldberg’s mother. It seems that these hacks are still putting partisan politics ahead of the nation’s interest even as we desperately something to reverse this recession.
Update: Rush Limbaugh wants the stimulus bill to fail – so do certain GP Congressman. It follows that these rightwing hacks actually want this recession to continue. Those of you who are suffering from being unemployed – guess this in mind.
I tend to think that neither the republicans or democrats have the correct vision to solve the economic disaster.
ReplyDelete1) We need lots of investment in longer term stimulous for energy, technology, infrastructure. THings that provide a big carrot for businesses to go after. We need a long term plan!
2)Forget Moral hazard with housing, this is an emergency!!! Give any person with a loan the opportunity to refinance at a low rate, cram down mortages, and give low rate purchases to anybody that can qualify to pay. HUGE STIMULOUS EFFECT!
3) build low cost community centers to feed and shelter people on hard times. dont hand out money, but keep people warm and fed. It's the right thing to do. These can work as community centers later on if not needed any more.
Mark R.
Anonymous said...
ReplyDelete"I tend to think that neither the republicans or democrats have the correct vision to solve the economic disaster."
I am going to suggest that the way to get the wealthy people to invest is to control the economy in such a way as to make it personally disastrous for them not to invest. Simply stated, "Wage push inflation hurts people that _HAVE_ money. It doesn't hurt people who have no saved up money and instead are buying (have a mortgage on) a house." So no matter how you increase wages you will be arresting the decline of housing prices by inducing inflationary pressures on the economy. We had and continue to have a huge imbalance in the value of labor as opposed to the value of assets. We have a huge asset bubble because wages have been destroyed by immigration, H1B visas, offshoring, and tax breaks for the rich.
This is the reality of a depression and until such time as the disparity of wealth (which is a reflection of the asset bubble) can be properly addressed the depression will remain. Conservatives love a depression and they love the nobility and the aristocracy of the rich. I do not have a "silver bullet" or even 2 or 3 that can be fired at the heart of such despotism so as to dispose of it. Other than a broad based lower house of the legislature acting on behalf of the common people and a Senate that is not totally corrupt can we hope to resolve the problems.
It is said in many places that 60% of the people want a Canadian style health insurance system in the United States. This is true in spite of the massive amounts of money spent on convincing people that such a system is not a good one. The solution to this problem and the problem of depression does not lie in "proper economics" unless the people understand basic economics and they have the power to compel government to act accordingly.
So the real solution to the problem is to use the Nuclear Option in the Senate so that the Democrats can be held accountable for the economy. No more blaming the Republicans. It is assumed that without the Republicans screwing up everything the Democrats try to do that the recovery will actually happen and that will increase the number of Democrats in both Houses of Congress in 2011.
The importance of Democratic control in 2011-12 is that this is the time for the reapportionment of the House of Representatives and the enlargement of that body. And once the House is sufficiently enlarged then the people will actually regain control of their government, taking it from the lobby and the TwoParty. So long as the Democratic Party holds true to its namesake and early history we will never again succumb to the party of the powerful minority. And, oh yeah. We need basic classical economics taught in the high schools.
"I know no safe depository of the ultimate powers of society but the people themselves; and if we think them not enlightened enough to exercise their control with a wholesome discretion, the remedy is not to take it from them, but to inform their discretion by education." - Thomas Jefferson
I want to address two points raised by Trucker. First he admits with some regret:
ReplyDeleteI do not have a "silver bullet" or even 2 or 3 that can be fired at the heart of such despotism so as to dispose of it.
To which I would reply "I do! I do! and it's proven to work!!". You just need to tax gains from capital at Kennedy level rates with a generous rollover provision. I understand the theory that increases in taxation at the margin discourage investment. The problem is that there seems to be little evidence that humans really think that way now or in the past. If the choice is between paying a huge chunk to the government and something else the very rich have chosen to do something else which usually comes down to reinvesting those gains or some sort of tax sheltered spending like a charitable foundation. On the other hand lowering rates on capital simply lowers the marginal cost of consumption leading to the Gilded Age style excesses we have seen increasingly since Reagan. (And for those who say 'spending is investment' anyway so 'so what'. Well sorry billionaires investing in a villa on the Riviera overseeing the harbor and their 130 ft yacht may do wonders for the economies of Southern France and the style shops of Milan but it doesn't do much for our national economy).
We almost certainly won't get back to Kennedy 70% rates or Eisenhower 90% rates but surely it shouldn't be impossible to get back to Reagan's 50% rates and so spur reinvestment simply of the basis of tax aversion.
The second point.
ReplyDeleteThe importance of Democratic control in 2011-12 is that this is the time for the reapportionment of the House of Representatives and the enlargement of that body. And once the House is sufficiently enlarged then the people will actually regain control of their government, taking it from the lobby and the TwoParty.
Well normally reapportionment doesn't enlarge the House, instead in 1911 the membership was fixed at 435 where it remains today. (There was a temporary bump when Alaska and Hawaii were admitted, but the reapportionment after the 60 Census restored it to 435 {wiki}).
There are proposals to increase that number to 437 so that the District can get a voting Representative, but the second seat is slated for Utah meaning no change in net power. But dreams of a bunch of new empty seats that can be grabbed by the people at the expense of the TwoParty are just that: populist dreams.
To modify a Viagra caveat, whom will the Republicans have to call if the stimulus is effective in four years?
ReplyDeleteBruce:
ReplyDelete"You just need to tax gains from capital at Kennedy level rates with a generous rollover provision. I understand the theory that increases in taxation at the margin discourage investment." and "If the choice is between paying a huge chunk to the government and something else the very rich have chosen to do something else...."
Thank you for articulating a point I have been thinking about recently. I can clearly remember that new investments by business people who were earning large off of their former investments was always seen as less of a gamble because most of the newly invested money was thought to be going to the tax man. If the highest marginal rates were 70% then newly invested money was only a 30% risk.
Putting new funds at risk in such a tax environment was thought to be smart business.
Lowering tax rates for the wealthy only has the opposite effect. Why risk new funds if the return on current assets was so lightly taxed? The money saved from taxation is only thought to be safe if put into established asset investments leading to consolidation of those assets into fewer hands. Not a smart governmental approach to taxation.