Stimulus Deal: The Banes of Bipartisanship
Barbara Ehrenreich memorably called the talk about the stimulus "clitoral economics." And that was before we got screwed.
The stimulus deal just announced is being praised more for its existence than its content. Much lamented partisan bickering was overcome; bipartisan cooperation that got it done. WIth Wall Street bankers in panic, better something than nothing. So the parties came together and split the difference and created an agreement (which still has to survive the minefield called the US Senate).
It's worth taking a look under the hood. Despite approval ratings rivaling those of Idi Amin, President Bush set the terms: Tax cuts only. No spending on public works (that is nothing for stuff we need that actually puts people to work). No increase in food stamps. No strengthening of our tattered unemployment system. (That is no money to those who we know most need it) Must include a big package of business tax breaks (that is tax write-offs for investments that would be made anyway, according to any reputable economic study). No money for states that are about to be forced to cut billions to balance their budgets, largely by cutting education and Medicaid spending and deferring basic infrastructure spending (remember the bridge that collapsed in Minneapolis or the sewage valve that shut down lower Manhattan?).
Democrats, despite having the majority in both Houses, accepted those terms. They demanded, sensibly enough, that the tax cuts include 45 million people in low income families that the president would have excluded. They demanded the president take extending his top end tax cuts beyond 2010 off the table. They got some help for imperiled homeowners through the Federal Housing Authority and Fannie Mae.
So only $40 billion of the $150 billion package gets squandered on business tax boondoggles. The rebates -- what Jesse Jackson calls Wal-Mart gift certificates -- will get handed out by August at best. It might help a bit, although if the economy is still in bad shape in August, people are more likely to be paying down credit card debt than buying a new TV made in China.
But $40 billion isn't the largest cost. The real price is the continued misdirection of the economy and miseducation of the country. We need what the stimulus package excludes. We need long term investment in rebuilding America -- spending money on mass transit, on basic sewers and water disposal, on the electric grid, on renewable energy, on a green rebuilding of our urban areas, on schools and teachers, pre-K and affordable college. We need to stop squandering money abroad in misbegotten wars -- now approaching $1 trillion spent on Iraq. We need to revive progressive taxation so at the very least hedge fund billionaires stop enjoying a lower rate than their secretaries. We need to develop a national strategy for the global economy, ending our addiction to oil, curbing the casino speculation that will eventually bring down the house, and balancing our trade with the mercantilist nations while capturing the new green industries of the future.
None of this, needless to say, is in the stimulus package. Instead we're taught the wrong lessons: tax cuts are good, particularly business tax breaks; lower interest rates are a free lunch, the "fundamentals" as the president constantly says, "are good."
In fact, the foundation in crumbling. A fundamental change of economic strategy and priorities is vital. And the economic titillation of this bipartisan "stimulus" package will benefit the politicians with their press far more than the economy with its perils.
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The problem with the economy is not that consumer spending is making a downturn-- it's that the entire economy is based on consumer spending.
When the whole economic engine is floated on credit borrowed for conspicuous consumption, it's only a matter of time before it collapses like a house of cards.
Right on the F#%$#&! money. It seems that every elected official must be on the take. With a "proud to take immediate bipartisan action" Pelosi, signing off... Bush's new economic windfall to corporate America moved more quickly than s@#% through a goose.
Will we stop the squandering of lives and treasury money Iraq (and soon Pakistan)? Will we rebuild the country's crumbling infrastructure. Force the wealthy to pay up on their tax load? Income or asset cap Social Security or Medicare. Deal with any of though issues. Hell no!
Bush is an alcoholic and congress is his co-dependent enabler.
Once upon a time a fiscal stimulus package would have a "multiplier" effect. You give a family a few dollars, they'd go out and buy some new clothes, the retailer would make a little, the retail employee would work a few more hours, and more importantly the manufacturer would make a little -- a U.S. manufacturer -- and that manufacturer would hire a few more employees or work existing employees a little overtime to meet the increased demand. Now that manufacturing multiplier is gone -- to China and elsewhere. So now the government goes deeper in debt, and borrows from the Chinese to finance a stimulus package that will stimulate the Chinese economy. Ironically it seems that Huckabee is the only candidate that has mentioned this.
No doubt spending on infrastructure would keep more of the stimulus in the U.S. , but of course it would take longer to see any impact – well beyond November.
Mr. Borosage what you propose makes too much sense. Maybe someone out there can explain to me how our goverment spending 170 billion dollars it does not have will stimulate the economy. I know, we'll all get our $600 - $1200 checks, but really big damn deal.
Bottom line - Bush should come on national T.V. and say to the country, "country, Iraq was a boondoggle disaster, the cost now stands at 1 trillion dollars (a billion billions of dollars). So country for the first time you will make a sacrafice for this war and do without any checks and you will have to ride this thing out as best as you can. Remember, when you reelected me you gave me "political capital" and I have spent it as promised. Hope you enjoyed the ride".
Dan Ashe
I'm so sick of politics as usual. No back bone. Are they all bought and paid for? This is our country and they will not make Bush do what is needed.
Every person in America should read this article. What is to become of us if the Democrats wil not do the job we elected them to do?
There was a time when it was an accepted fact that there would be bear markets as well as bull markets. Periods of market correction were and are necessary.
Since Greenspan's time, the Fed has come to think that the market should always move up, month after month, year after year. If it doesn't there needs to be intervention to make it so.
As regular percentage growth is based on an ever increasingly larger number this vision for growth becomes exponential. Therefore unrealistic.
Throwing more tax breaks at business doesn't foster business growth. Only the consumers can cause growth if they possess more purchasing power.
Dear Mr. Borosage,
Just three words: Elooquently express.
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Agape.
The culprit of this crisis besides the lie about many more new homeowners was the gas price that put us over the edge. It affected everyone. Rather than address this issue, they are putting a bandaid on this oncoming tsumami,
in the meantime oil went up because of the package and $ 3.50 is being forecast for this summer. But congress/senate makes money off their Hedge Funds and the oil future's markets.
Oh I did not see Hillary or Obama rush off and save us from the Bush/Cheney FISA Bill.
Don't tell me later you did not know!
If our leaders knew that a Crash was certain, the actions they would take would be different from what they are doing in an effort to avoid crashing.
The current 'Stimulus Package' is not an action to be taken if you had knowledge that a crash could not be avoided. It simply wastes resources that would be better spent in establishing a safety net.
When one is free-falling, and thinks impact will be fatal, one opts for a few more seconds in the air. If one believes that impact can be survived, delaying impact to extend the fall is a mistake.
Because we have lost the confidence that we can survive a 1930s type Depression, we are open to any scheme that may delay impact. The current 'Stimpak' is ill conceived and will advance us toward out-of-control inflation, a weaker dollar but will not prevent crashing.
More ominously, the American Public is being led by the MSM to believe that its best hope to avoid impact is to embark on further militarism. The consequences, if we go that route, will be far worse and more enduring than suffering through a Depression.
Here is Senator Clinton's economic stimulus proposal:
http://www.hillaryclinton.com/news/release/view/?id=5460
Of all the plans I've seen, it seems the most real, pragmatic, and progressive. Comments?
Democrats never draw a line in the sand. Republicans know that the Democrats will fold when push comes to shove because the Democrats feed from the same trough. The Democrats want to have it both ways on the war and free trade. On this issue of entitlements, the Democrats caved long ago. Only the multinational corporations and hedge funds get corporate welfare and bailouts.
You would think that, if the wealthy want tax breaks that they would want to put an end to the war. The mantra of "national security" is their sacred cow and creates a political power base and a reason to exist for the Republicans.
The debate last night revealed that have troops all over the world was the express goal of all but Ron Paul. If this isn't an undeclared empire, I would hate to see an empire.
The folks at home are left out. Does the war "the general coffers fill," or coffins fill?
People are tired of the petty political bickering in Washington. That is why every candidate for president is running on a change platform. United we stand--divided we fall. I agree. There is middle ground on almost all issues that well over 50% of citizens in this democracy can support. The problem is that that 50%+ is not vocal and does not give money which leads to power to the elected reps. They don't express themselves in blogs and many of them don't even vote. So the same group keeps control. Bad or good, agree or disagree, we in the middle have no voice. The only recent example of the middle rising up is the furor over the Kennedy-McCain Immigration bill. And the middle won. That was good. And many of us have lost faith in the government to spend our money wisely. We see the waste. We feel that there is enough money being spent on roads and education--but it is not spent to our benefit. Politics is different from business but we would like to think that some business principles should apply. I live outside Boston and I watched the contractors, the unions, and the government overseers waste(steal?) billions on the "Big Dig" and we can't afford that. A father of an elected state rep made $300,000+ one year as an electrician on that project and that is but one bad example. There are hundreds and thousands. Government should be able to help all our lives but the politicians are only interested in their share. So, $1200 may not change my life and my wifes, but if we all spend it or invest it, it will make a difference in the economy. I will have a pretty nice HDTV with mine.
F***ing Politicians and Bankers calling 911, though the house has been burning for years.
I guess it wasn't that important when it was only us peons in the servant's quarters who were in flames.
But now the big house is getting hot! Holy mother hand out the bottled water and hope the 'people ' use it to put out this fire.
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Posted January 25, 2008 | 07:25 AM (EST)