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Slam the Door on Compromise

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Posted on Feb 9, 2009
Barack Obama
White House / Pete Souza

By Eugene Robinson

    Bipartisanship is safe and effective, when used as directed. In the present circumstance, however—dire economic crisis, hardheaded Republicans, time running out—bipartisanship is doing more harm than good. President Obama and the Democratic majorities in Congress can no longer afford to let comity defeat common sense.

    An additional 600,000 Americans lost their jobs last month. If the loyal opposition chooses to obstruct economic recovery, those who hold power are obliged to use it.

    Begin with the most fundamental question: Does the U.S. economy desperately need a massive stimulus, or not? There are economists who doubt it’s possible for the government to effectively stimulate an economy of such size and complexity. Those economists, however, are in the minority.

    The most respected economic wise men and women of both parties believe a huge stimulus is needed quickly to keep a dire economic situation from sinking into catastrophe. Even most of the Republican senators who’ve been working so hard to sabotage the Democrats’ stimulus package acknowledge that the nation needs one, just not this stimulus. Their position is either ignorant or disingenuous, and in either case has been given far more consideration than it merits.

    Normally, it would be insane to spend upward of $800 billion so fast. Given the hole we’re in, however, it’s insane not to.

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    Nobody said it would be easy to spend so much money in so little time. Obama’s plan was criticized by some Democrats for including a heavy component of tax cuts; that’s the Republican prescription that helped get us into these desperate straits, and voters made clear in November that it’s time to try something else. But Obama and his economic team found that there were only so many “shovel-ready” infrastructure projects to fund, and while straightforward government spending packs a bigger stimulative punch, tax cuts would help to some degree. So, from the beginning, the plan accommodated Republican ideology.

    The House of Representatives loaded up the bill like a Christmas tree, as powerful Democrats found room for their pet projects. This was a good thing, not an outrage. Hundreds of millions of dollars for contraceptives? To the extent that those condoms or birth-control pills are made in the U.S. and sold in U.S. drug stores, that spending would be stimulative in more ways than one.

    One of the most effective items in the House bill was $79 billion to be transferred to state governments, which are hurting; in California, our most populous state, Gov. Arnold Schwarzenegger is ordering furloughs of state workers. Any dollar given to the states will fly out the door by sundown. That $79 billion would have instant impact.

    But in the Senate, the ad hoc “gang” of moderate Republicans (all three of them) and conservative Democrats cut those state funds to $39 billion. It’s wrong to see this as the normal give-and-take of legislative sausage-making, the usual trek down a well-worn path toward the golden compromise that everyone can live with. This is not, repeat not, a time for compromise. Meeting in the middle, which the Senate sees as its role in our democracy, renders the whole exercise potentially useless. If we don’t get enough money into the economy, and if we don’t do it soon, we risk wasting a king’s ransom on a stimulus that’s too puny to stimulate.

    This is not an issue where the answer is to be found in the “middle.” This isn’t a matter of left, right and center; it’s a matter of yes or no: Does the federal government try to get the economy moving again, or not? This will sound ridiculous, but the fact is that the details of Obama’s plan don’t matter that much. If anything, many economists believe, the government needs to spend even more than Obama proposes.

    Republicans are using this debate as a branding opportunity, positioning themselves as careful stewards of the public purse. This is absurd, given their record when they were in charge. It’s also cynical. They know that some kind of stimulus will get passed anyway. If it works, they’ll claim their principled intransigence made the plan better; if it doesn’t, they’ll say “I told you so.”

    Obama and the Democrats have public opinion on their side and the wolf at the door. Republicans need to get out of the way—or get run over.
   
    Eugene Robinson’s e-mail address is eugenerobinson(at)washpost.com.
   
    © 2009, Washington Post Writers Group


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By Common Sense, February 10, 2009 at 5:29 am Link to this comment
(Unregistered commenter)

Actually ever since the Alternative Minimum Tax (AMT) began to effect those that is was never intended to touch, the republicans proposed indexing the AMT to inflation during the Clinton Administration but could not get backing from the White House b/c their balanced budget and surplus would disappear so they continued doing exactly what has been done since then…passing legislation to provide relief to those middle class tax payers who fall under the AMT.  Which by the way takes up $70,000,000,000 of the so called stimulus package. 

Also, the assertion that tax revenues have gone up on the backs of the middle class has no basis in fact.  In the last twenty years a larger and larger portion of tax revenues collected have come from the top 10% of earners.  The same was true even after Bush’s tax cuts. 

When Kennedy cut taxes in the 60s revenue went up and we came out of a deep recession.  when Nixon imposed price and wage controls in the 70s we slipped into a deep recession that lasted until Reagan came in and cut taxes and Paul Voker held interest rates artificially high to break the back of inflation.  Laffer may not have known the precise point at which the curve breaks but history has shown that the most effective way of stimulating the economy is to money back into the hands of the people.

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By Inherit The Wind, February 10, 2009 at 4:51 am Link to this comment

Well, time to do a little MORE research!  As much as you like to deny the truth, like all Republicans, tax cuts FAILED.  “But government revenue went up!” you say.  Yeah. Know why? Because more and more middle class Americans saw their tax bill go UP as they were forced to into the stealth tax INCREASE—The Alternative Minimum Tax.  Yeah, that’s right.  Taxes went DOWN for the wealthy and corporations and went UP for the middle class—the burden was shifted down and increased. That, and only that is why revenues went up.

“Tax cuts increase revenue” is based on the Laffer Curve.  Laffer showed an ignorant Ronald Reagan that when the tax rate is zero, revenue is zero, and when the tax rate is 100%, revenue again falls to zero.  So at some point increasing taxes acts as a dis-incentive to production.  But where IS that turning point?  Laffer drew a smooth curve making it look like it was at 50% and Reagan drew the INCORRECT inference that ALL tax cuts increase revenue.

Fact is, Laffer was merely showing a mathematical model but had NO idea where that turning point was.  Was it 50%? Reagan thought it was 30%.  But empirical evidence shows it’s much, much higher, perhaps as high as 75-80%.  If so, then raising taxes on the wealthiest will INCREASE revenue until you hit that point.

Simple math. Simple economics.  Deliberately mis-interpreted.

I think the Re-thugs fell into Obama’s trap, despite the incompetent actions of his two un-trustworthy Congressional stalwarts, Pelosi and Reid.  Now, only Susan Collins, Olympia Snowe, and Arlen Spector will have any say in the stimulus package and, (from a tactical POV), they used it brilliantly.  These 3 have just put themselves in a position to be the most powerful Senators in Washington—nothing gets done without their assent.

But for the rest? Nothing!  As for the Congressional Whining Society, the GOP STILL can’t figure out that it’s now in the MINORITY in House, and with less clout than they’ve had since the 60’s.

President Obama, with this stimulus bill, which is less than perfect, is illustrating the old adage brilliantly: Politics is the art of the possible.

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By khouston, February 10, 2009 at 4:24 am Link to this comment

Question to the writer for this comment:

“Nobody said it would be easy to spend so much money in so little time. Obama’s plan was criticized by some Democrats for including a heavy component of tax cuts;

that’s the Republican prescription that helped get us into these desperate straits,”

You believe that this is true.  Can you tell me why?  Have you actually researched the economic data and government budgets over the past 8 years where you can show

how this happened?  Or are you just jumping on the bandwagon that the Obama train built to steamroll the Republicans during the election season?  Since its seems you

have done the latter, let me clarify something for you…Since the truth seems to be far more complicated that most people can process….

1. The federal government’s income has remained at a steady 19.5 percent of the GDP and it due to something called Hauser’s Law.  Research it.  I beg you.  Basically

when the GDP goes up the fed government’s income goes up, when it goes down the etc….

2. Check the GDP over the last 8 years and the federal governments take.  It has increased.

3. The REAL REASON why we are in such bad economic shape was a massive increase in federal spending championed by the Republicans who also cry to to control it. 

Obama knows this but he is betting the American doesn’t. (I mean its patently obvious to anyone that has half a brain)  However, I wager that as country of people we

have become to stupid and dependent upon what the media feeds us to figure this out.  I mean you have an article written for TruthDig for God’s sake and you don’t

even know it.

4.  The only way to increase the Federal Government revenues is to find ways to increase the GDP.  Any idiot economist who hasn’t sold his soul to appease political

nonsense will tell you that. My friend, raising taxes DOES NOT raise the GDP.  When the GDP falls (and it will) our idiot Democratic controlled congress will raise

taxes, when they do this, the GDP will fall even further.  The will spend more money in an effort to stimulate the economy and China will end up owning so many

worthless T-Bills they will wonder why they ever started buying them.

5. Even time I hear Obama say the tax cuts were a failed policy I cringe because I know the truth.  Why is he lying to the American people? In this respect, he is no

better than Bush. Why is he not telling them, point blank, the Republicans spent too much when they held the houses and the white house and thats why the deficit is

so large.

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By khouston, February 10, 2009 at 4:23 am Link to this comment

Sorry a few more questions.  This issue has burned me to a crisp.

Given the sheer enormity of this economic plan.  Can you tell me, how this plan will protect those of us who still hanging on for dear life to the jobs we have now?  Can you show me how this plan will provide relief for the companies that are shredding jobs by the hundreds of thousands to keep cost down in the face of lowered revenue projections? Seriously, what happens to this enormous majority of people who have jobs out there that have no one thing to do with the federal government’s plan for “infrastructure” spending.  Where is our bailout?  We can’t all go work for the feds , the states ,and the cities or is that what you expect to happen?

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By khouston, February 10, 2009 at 4:10 am Link to this comment
(Unregistered commenter)

Question to the writer for this comment:

“Nobody said it would be easy to spend so much money in so little time. Obama’s plan was criticized by some Democrats for including a heavy component of tax cuts; that’s the Republican prescription that helped get us into these desperate straits,”

You believe that this is true.  Can you tell me why?  Have you actually researched the economic data and government budgets over the past 8 years where you can show how this happened?  Or are you just jumping on the bandwagon that the Obama train built to steamroll the Republicans during the election season?  Since its seems you have done the latter, let me clarify something for you…Since the truth seems to be far more complicated that most people can process….

1. The federal government’s income has remained at a steady 19.5 percent of the GDP and it due to something called Hauser’s Law.  Research it.  I beg you.  Basically when the GDP goes up the fed government’s income goes up, when it goes down the etc….

2. Check the GDP over the last 8 years and the federal governments take.  It has increased.

3. The REAL REASON why we are in such bad economic shape was a massive increase in federal spending championed by the Republicans who also cry to to control it.  Obama knows this but he is betting the American doesn’t. (I mean its patently obvious to anyone that has half a brain)  However, I wager that as country of people we have become to stupid and dependent upon what the media feeds us to figure this out.  I mean you have an article written for TruthDig for God’s sake and you don’t even know it.

4.  The only way to increase the Federal Government revenues is to find ways to increase the GDP.  Any idiot economist who hasn’t sold his soul to appease political nonsense will tell you that. My friend, raising taxes DOES NOT raise the GDP.  When the GDP falls (and it will) our idiot Democratic controlled congress will raise taxes, when they do this, the GDP will fall even further.  The will spend more money in an effort to stimulate the economy and China will end up owning so many worthless T-Bills they will wonder why they ever started buying them.

5. Even time I hear Obama say the tax cuts were a failed policy I cringe because I know the truth.  Why is he lying to the American people? In this respect, he is no better than Bush. Why is he not telling them, point blank, the Republicans spent too much when they held the houses and the white house and thats why the deficit is so large.

Report this

By prgill, February 10, 2009 at 3:43 am Link to this comment

I’m not sure that going “fast” is at all a smart idea. And I sure don’t believe that more “consumer-ism” (household expenditures on consumables) is a good idea.

I like the French approach to stimulating the economy while maintaining employment: accelerate public investment programs. If the money is to be transferred to state treasuries (as would be natural in our case), it should be ear marked for public infrastructure and make work programs.

And by the way, forget the condoms!

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By Ribald, February 10, 2009 at 2:00 am Link to this comment
(Unregistered commenter)

I’d be the last one to ask for a kind word for the Republican party, but one must acknowledge that they’re simply playing a more shrewd political game than the Democrats, who have been all too easily swayed into undermining the very purpose of the bill by filling it with ineffective tax cuts and cutting additional expenditures on important—and popular—programs. The Democrats have failed to use their power forcefully. The Republicans are taking that small advantage and running with it.

  Ideally, the Democrats would have shut the Republicans out of the process as much as possible, in order to cement the success of the stimulus as their own. They would have been called all sorts of names for that behavior, but they get attacked for all of their actions equally. Capitulating to the Republicans is politically useless.

  Economically speaking, there is understandable skepticism that the stimulus money will be doled out in an effective and non-corrupt manner. Bank bailouts, after all, continue behind the scenes with no explanations and no accountability. If the administration can’t control the much larger sums manipulated by the Fed, is there any real meaning to the stimulus? All of the benefits could be drowned out by the free money being handed to banks to continue doing nothing.

  As of yet, there appears to be no coherent plan. Government spending? Okay, but what about institutional reform? Why haven’t we been hearing about proposals to reform the SEC? Why is the Fed still allowed to keep its activities (the management of the world’s largest economy, for instance) secret? Why is the largest government pork-barrel project, defense spending, treated as sacred?

  Our lives are in their hands.

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