Will The Stimulus Do the Job? What Should we Do?

It is time for a euphoria check or maybe a check on euphoria, a time to start raising our own questions about government plans rather than reflexively rallying behind the Democrats just because the Republicans are so obstinate and revolting.

It is important to recognize that behind the GOP's "Just-Say-No" rejectionism is an calculated reaction. If it succeeds, they look stupid. If it fails as many expect it will, they can say, "see we told you so" as part of a plan to stage a political comeback in two years. Rush Limbaugh may have the moxie to call for its failure bit many of his party mates are more cagey.

They know that time may be on their side, and can read sentences like this from financial writer David Leonhardt in the New York Times magazine:

(The economy) won't recover anytime soon. It is likely to get significantly worse over the course of 2009 no matter what President Obama and Congress do." ) If you look at the world through a hyper -- partisan lens like they do, the silver lining is clear. Wait it out and then make political hay off everyone's misery.

So we need to forget them and stop bashing them as if they are important. Let's instead temper our outrage and focus instead on what can be done and what we want done.

Also note that while Obama is in office it is not the same thing as being in absolute power, especially power over the dynamics of an interconnected global economy. He has done what politicians do -- compromise -- and has his cast his and our fate with some of the same people who created the crisis.

That said, we have to recognize we do not live in a perfect world or a world of our choosing. There is no question that the government must act. But how -- and what is the likely impact? Already there is fear and loathing in liberal circles. Tom Friedman assures us 'there is no magic bullet." Frank Rich concedes that the "house stimulus bill is an inevitably imperfect hodgepodge in process." Barney Frank tries to turn the tables on adversaries by reminding them how wasteful Iraq spending was.

The plan to be announced this week touches many political bases, and predictably has already attracted flak from right and left. The Repugs are always on the lookout for pork -- except in their own an military industrial complex subsidies. There is no question that there is money in the bill that is unlikely to lead to job creation. Despite the failure of tax cuts in the past, the Repugs crank up that broken record as their panacea.

On the left, there is concern that despite all the Wall Street bashing from the White House, the financial services industry has already deeply infiltrated itself into the new Administration which is still committed to transferring public funds into private hands. Economist Michael Hudson who is quoted in my book Plunder reminds us that a crisis caused in part by zooming debt can't be solved by taking on more.

The government's solution, placed in its hands by the financial lobbyists, is to bail out the bankers and Wall Street while leaving the 'real' economy even more highly indebted. Families, businesses and government are having to spend more wage income, profits and tax revenues on debt service instead of buying goods and services. So why is the solution to this debt overhead held to be yet MORE debt? Is there not something crazy here?

David Sollars of Washburn University raises some questions we also can't avoid, writing,

Even a cursory look at the bill being rushed through the Congress reveals its Frankenstein-type nature. It is a wish list for unrelated spending programs that, on their own, would not be considered reasonable. Even the parts that make some sense, like the much-touted infrastructure spending, are small potatoes in the bill. Instead we get millions for the National Endowment for the Arts. The Department of Education gets $66 billion for . . . well, we aren't sure, but how can you oppose to education?...

According to some analysts only 5 to 10 percent of the total bill is actually related to stimulus spending. Even worse, the "buy-American" requirements will likely result in WTO sanctions and encourage retaliation by our trading partners, hurting U.S. companies and workers in the export market -- one of the few remaining shining lights in our current economy. Just ask Caterpillar (CAT).

I don't support this argument fully but there are many among us who support the Obama plan but also worry it won't work. That's why progressives need to push for a more thorough transformation. We need to press for the end of no-win costly wars and rise in military spending. We need to insure that health care reform is part of the reform along with a moratorium on foreclosures. We need curbs on credit card interest charges and relief for students with onerous student loans. We need a campaign for economic justice from below including a jailout for Wall Street moguls who are still profiting from their scams.

Obama has to keep hope alive. We need answers to critics who warn that the impact of the bill will be slow and not even be felt this year. Sollars reminds us: "We seem to forget we tried the lump-sum tax rebate trick last year. The emergency TARP bill that was passed year is starting to reveal its immense shortcomings. Why do we expect this outcome to be different?"

We can't raise expectations too high, and at the same time, we can't do nothing. We can, however, be honest with the people and each other, as writer David Lindorff counsels,

...because with honesty, we could have a recovery program that would actually address the real critical issues facing the country--the decline of our educational system, the irrationality of official promotion of home ownership that has led to the proliferation not just of suburbs but of exurbs, the over-reliance on the automobile for transportation, the unprecedented waste of resources, the pillaging of the environment, not to mention the decimation of the retirement system and the creation of a vast medical-industrial complex that is sucking the life-blood out of families and businesses alike.

Wow, there's a lot of issues to address. Change demands more than money. And we can't rely on Congress to bring it about.

Mediachannel's News Dissector Danny Schechter investigates the origins of the economic crisis in his new bookPlunder (Cosimo Books via Amazon) Comments to [e-mail].

Comments

[ImmanuelGoldstein]

What does 'recovered' look like?
Right now the American economy is addicted to bubbles, what we are seeing is the collapse of a whole family of unsustainable asset bubbles in stocks, real estate, consumer credit and a number of other areas.
What we are seeing is not some random 'black swan' catastrophe, we are seeing our economy resetting to what should be a normal sustainable level, given our fundamentals.
My concerns about the 'stimulus' is that it just amounts to a federal spending bubble. What happens when this bubble deflates as they all must do?
This goes to the heart of my misgivings about Obama as a candidate. My suspicion that we won't get Change as much a 'Change drama' is being born out by the fact that no one is discussing this in terms of these fundamental issues.
What does recovery look like?

[joebhed]

There is good reason to support the Obama plan on the spending side.
The economy is becoming paralyzed in unprecedented ways.
Doing nothing is only an option for those with financial immunity.
We have to do SOMEthing.

I am not in favor of the Plan.
I believe it will have many unforeseen negative consequences from drastically increasing the debt load of the United States taxpayers.
Unnecessarily.
So, that would be an objection to the Plan on its "income" side.

There is no need to borrow that money from anyone.
Let the Treasury make these payments directly from its own account to the people and businesses that will receive the benefits under the Plan.
It's like the enhanced Jon Stewart model.
In that, the payments go directly to people and businesses, and then make their way as honest money into the banks.

The money for these payments would not be BORROWED into existence.
There would be no repayments.
There would be no interest.
There would be no increase in the deficit
There would be no increase in the National Debt.
It would be, by nature, anti-inflationary.

ALL of those negative aspects of our money system are due to its debt-money nature.
Unnecessarily.

Debt-free money.
That's the missing component of the Obama Plan.
That's the answer to the question you posed: What should we do?.
Monetary reform as the basis for the new green economy.
Greenbacks as the money-base for the way forward.

[joebhed]

There is good reason to support the Obama plan on the spending side.
The economy is becoming paralyzed in unprecedented ways.
Doing nothing is only an option for those with financial immunity.
We have to do SOMEthing.

I am not in favor of the Plan.
I believe it will have many unforeseen negative consequences from drastically increasing the debt load of the United States taxpayers.
Unnecessarily.
So, that would be an objection to the Plan on its "income" side.

There is no need to borrow that money from anyone.
Let the Treasury make these payments directly from its own account to the people and businesses that will receive the benefits under the Plan.
It's like the enhanced Jon Stewart model.
In that, the payments go directly to people and businesses, and then make their way as honest money into the banks.

The money for these payments would not be BORROWED into existence.
There would be no repayments.
There would be no interest.
There would be no increase in the deficit.
There would be no increase in the National Debt.
It would be, by nature, anti-inflationary.

ALL of those negative aspects of our money system are due to its debt-money nature.
Unnecessarily.

Debt-free money.
That's the missing component of the Obama Plan.
That's the answer to the question you posed: What should we do?.
Monetary reform as the basis for the new green economy.
Greenbacks as the money-base for the way forward.

[cylindar]

Yeah well, the way I look at it, the deal is done and we are done along wth it. People need to rely on their own resources and save themselves. Going bankrupt is a good start, as well as stealing as many pens from your boss as you can. You can later sell the pens from a tin cup on a street corner when your boss fires you.

[DuganS1]

"We need to press for the end of no-win costly wars and rise in military spending."

No one thought the Iraq war would be costly until.... it became costly. The late 90s foray into Kosovo could have been costly too but things went a little more smoothly there. Regarding military spending, this type of spending funds a good share of what manufacturing infrastructure we have left as well as a large share of scientific research outside health care. Our economy thrived in the 1950s and 1960s when military spending made up a very large share of the federal budget. Now most the spending waste is on health care (Medicare/Medicaid) and spent on things like prozac/paxil/xanax, viagra, and hip and joint replacements, which is better for the economy????

[Margary]

Work Together? What is that? They said we wouldn't vote for the black man, and we did! Now this won't work, an maybe not. But at least the Dem's are trying to do something!

[jhNY]

When will the Democratic Party read the newspapers printed Nov. 6th and realize they were swept into power with strong majorities in both houses of Congress , and that now we have a very popular president, also a Democrat, in the White House? Answer: When the Republicans tell them it's OK, so never, really. Why does the author say things like: 'There is no question that there is money in the bill that is unlikely to lead to job creation", as if this somehow disqualifies the expenditure? Is it not possible to have items in a stimulus bill that stimulates the economy without creating jobs?

Our greatest problem now is that the issues in general (and the stimulus bill in particular), are being framed by the press corpse and their Republican buddies (2 Reps for every Dem as guests on MSM television) who are back in the tank for the plutocracy, and so far, the Democrats can't seem to come up with their own frame, as per usual, as if they are still uncertain that, having come into power, it's all right if they exercise it. Which it probably would be, if only the Republicans and the MSM would tell them so.