The unprecedented global economic crisis has provoked unprecedented levels of doubt: Are Congress and the administration competent to write an innovative and effective stimulus bill?
"The tip-off is fear," says Paul Sniderman, Fairleigh S. Dickinson Jr. Professor in Public Policy at Stanford.
"Those responsible for dealing with the economy fear they may not forestall a free-fall. That was true for those in the Bush administration; true for those in the Obama administration; true for everybody everywhere. They are afraid for five reasons: (1) no one before has faced a problem of this magnitude and complexity; so no one really knows what will work; (2) even if they thought they knew what would work, they also know that because of the complexity and conflicting incentives in the political system, they don't have a prayer of getting just what they want through Congress just as they want it; (3) there is not much time to get things right; or the business/credit system will conclude they're not going to get things going in the right direction and then the free-fall they fear will start; (4) the failure of Lehman Brothers has driven home how just one mistake can trigger a free-fall; so there is hardly any time and not much margin for error; (5) if they don't get the economy right, however many other things they get right, the administration goes down as an historic world-class failure."
Fred Wertheimer of Democracy 21, a long-time, respected proponent of government activism, was not reassuring.
"Washington is not well-equipped analytically to judge programs -- the system is just not equipped to do that." In this case, we have elected a new president and the country is going to take its chances with him and the people he has chosen."
Pollster John Zobgy warns that "even though economic busts are cyclical and to a great degree predictable, we are in a new world. Current mechanisms are not sufficient to prevent a worsening of the situation, do not allow for enough time for risk assessment, nor a big enough in scope to handle a massive global crisis... On a positive note, there is plenty of data, the means to share that data, no short supply of talent, and some recognition for the need for global governance mechanisms. Obviously, there are also opportunities for blowback from national regimes still utilizing nationalism as a means to assert power and stirring up feelings of national destiny. Nothing like a huge downward spiral to force people to innovate. This is a transformative period but new systems will be created because they simply must."
Colby political scientist Sandy Maisel says that "[While] it is too much to expect legislators, who are primarily politicians, to be policy experts with the detailed level of knowledge you talk about, it is not too much to ask them to have staff who have that expertise, rather than just constituent service 'experts' and political experts."
Steve Ansolabehere, Harvard political scientist, raised a number of very practical reasons why it may be difficult for Congress to hire the kind of staff it needs. "there has been tremendous brain drain among the Congressional staff," he said.
"First, Republican term limits on committee chairs led to departures of members and their staff. Second, seeing the early signs of the 2006 election, many staff on the majority [Republican] side started looking for other opportunities... Third, the Obama victory has pulled many Congressional Staff into the Executive, especially Peter Orszag's shop at CBO. CBO is one of the most important sources of information about the economy and the budget for Congress. With Orszag's departure to the White House, that must be rebuilt."
Yale political scientist David Mayhew noted succinctly that in government, "it isn't clear that possession of adequate 'expertise' is enough of an achievement. Will, good sense, and an ability to withstand crowd behavior can be in short supply even if technical expertise is on hand."
Columbia political scientist Robert Y. Shapiro notes that there will be pressure on legislators to find qualified experts. "First, if they don't fully have the expertise, they will be under a microscope and will have incentives to get up to speed."
As the debate has started this year, Democrat Robert "Rob" J. [no relation to Robert Y.] Shapiro, former Undersecretary of Commerce for Economic Affairs and founder of the economic advisory firm Sonecon LLC, cautions, "It's clear that some Congress, including some leaders, have already absorbed these issues into an 'us-versus-them' political story line, in which the substance and impact is largely irrelevant for their calculus. It's the worst impulse in American politics - now that we don't torture anymore - and under these conditions could substantially harm the country."
Harvard economist David Laibson points out that "The current crisis has challenged the belief (championed by Alan Greenspan among others) that financial markets can be trusted to self-regulate. Most observers now believe that government regulators have an enlarged role to play. The age of deregulation has ended. This is probably a good thing, but it is nevertheless a two-edged sword. We should not fool ourselves into thinking that a heavy-handed regulator is going to prevent future financial crises. All of the Wall Street banks failed to anticipate the current storm. It is unlikely that an activist government regulator would have done much better. It is naive to believe that our regulators will be smarter than our bankers. Indeed, usually things work out the other way around."
Harvard government and sociology professor Theda Skocpol argues that "The challenge for Obama and all of us is to . . . build effective regulatory and administration capacities at the same time that brand new policies are launched on a huge scale. . . . Of course this crisis is an opportunity for reform. But crises often lead to the intensification of previous pathologies. So the dangers are very great that we will get more of the same. . . . Overall, it is clear that many in Congress and beyond are approaching this economic crisis with pure ideology."
With all the uncertainty surrounding the economic crisis and the competing approaches to dealing with it, Colby's Maisel describes how he believes the process will likely work:
"So you do the best you can--'muddle through.' Where we get into trouble is not when legislators push for passage of legislation that will achieve its goal in a way that benefits those for whom they are most sympathetic or based on assumptions of how to move the economy forward--the Democrats thinking you must assist those in trouble making ends meet; the GOP thinking that you have to get those at the top of the economy investing in the economy to move it forward. That is part of the process of digging behind assumptions. Where we get into trouble is when the two parties march in lockstep and no one thinks independently. To me, that is the difference between the Senate and the House this week."
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At a more crassly political level, was the decision of House Republicans to vote unanimously against the legislation last week politically smart or stupid?
Matt Dowd - former Democrat, former Republican, and now independent political consultant believes in party unity but brushes aside the possibility of effecting stimulus through cutting taxes: "The strategy of [the GOP] of trying to stay together is always better than getting into a bidding war [with Democrats] to get a little of this, a little of that."
At the same time, Dowd argues, the Republican call for sweeping tax cuts, instead of supporting the Democratic bill, was a mistake. "The argument for [tax cuts] is long past, it's an old Republican argument that no longer resonates."
Republican National Committeeman and lobbyist Ron Kaufman - a supporter of tax cuts -- argues that the unanimous GOP 'no' vote was crucial if the GOP is to regain viability. "In '08 and '06, we were fired for not doing what promised, ethically, morally, fiscally. The House package was a bad, bad bill. The bill is so bad, you could not vote for it."
Republican pollster Whit Ayres basically agrees with Kaufman: Voters "want Republicans to work with the Obama administration within the context of their core values. The stimulus bill was a Christmas tree of spending on every desirable program known to man regardless of short-term stimulus effects. If Republicans had voted for this stimulus bill, they would be saying they no longer cared about fiscal responsibility."
Democratic political operative and strategist Joe Trippi takes a different tack in assessing the House Republican strategy. Instead of "a goose egg" [a zero] in the Republican column, he says, a far more effective approach, with a high chance of paying off down the line, would have been to permit a small percentage of House Republicans, say 10 to 20, to vote for the bill. That would have diminished the hard-line partisan appearance of the vote.
"It was a mistake to make it zero," says Trippi. "People don't want to see polarizing politics right now. A strong 'no' vote with modest dissension would have achieved the same goal while making is look less like "a crass political move. This is clunky. I don't think Newt Gingrich would have done it this way."
Democracy 21's Wertheimer is sharply critical of the political strategy behind the down-the-line GOP 'no' vote. Republicans calculated, he says, that "Maybe they could go back to 1993 and 1994 when they blocked everything, became complete obstructionists in the Senate" and won a sweeping Congressional victory in November 1994. According to Wertheimer, the politics of the country have changed dramatically from the early 1990s, and "the Republicans are dead right now. Can they turn around their standing by a status quo type of politics? This is not what they need."