It’s official: they’ve learned nothing.
Despite all the talks, all the “olive branches” offered by the President, all of the “we so totally respect the President…and just have some minor disagreements” statements by GOP leaders…the Stimulus Bill passed the House yesterday, without a single Republican vote. Yes, the same people who have been making the media rounds stating that it is Democrats who are the ones acting in a needlessly partisan matter, are the ones who just made an extremely partisan “statement” on the Stimulus package. I will attempt to summarize the arguments, for the sake of the many who have become “over-stimulated” by all the media’s stimulus coverage.
A Bit About the Package: The plan currently stands at $819 billion. The Congressional Budget Office describes (put forth in this NYT article) the primary goal of a stimulus package to be stated as follows: “Fiscal stimulus aims to boost economic activity during periods of economic weakness by increasing short-term aggregate demand.” In other words, if more money is put in the hands of consumers, spending increases…and companies aren’t forced to cut services or lay off workers. This plan commits nearly 40% of the $819 billion dollars to tax cuts for individuals and businesses aimed at exactly that goal. Said tax cuts are a focus for Republicans, and some have been added to the bill to satisfy their requests…and said cuts are often the target of criticism from the Democrats. The other 60% of bill consists of spending programs, mostly designed to create jobs by funding infrastructure projects at the State and local levels, which also serve the purpose of providing us with new schools, bridges, expanded broadband networks, et cetera. These programs appeal most strongly to the Democrats, and are often the target of criticism from Republicans. In this bill, some spending (most notably for family planning and contraception programs) was removed to further satisfy the Republican interests.
What Could People Expect from the Plan? David M. Herszenhorn of the NYT (in his article printed on MSNBC) lays out a likely sequence of events. First, people would see a slight reduction in what is withheld from their paychecks…likely only about $12 to $13 dollars per week. Unemployment benefits scheduled for cutoff would continue…those on food stamps would get a bit more to work with. Next, the states would receive money to put towards education, health care, and public works. All of this would happen in weeks. The initiatives the states would form with this money would take months to get on their feet, but would eventually lead to some pretty substantial job creation…in the millions, with a large number of the jobs being created in high-tech areas. Some of the money given to the states would have immediate impact in lessening state budget shortfalls, reducing the need for layoffs (in many states the number one employer…is the state). Last to take effect would be the big infrastructure projects (ie. roads and bridges) which would create additional jobs.
What the Economists are Saying: Any honest economist will say that it is impossible to predict exactly what the full effect (and efficacy) of a stimulus package will be. Add to that that this is a somewhat unprecedented problem, with some elements (ie. credit and lending) that are not easily measured or resolved. As to specifics? The Tax Policy Center, a nonpartisan research group, has both praised and criticized the tax cuts in the plan. The cuts are great because they can be implemented quickly. However, the purpose of tax cuts in a stimulus package is to get people (at least for the immediate, short term) to SPEND MONEY, not bolster savings or eliminate debt. The current cuts cause people to retain slightly more from their paycheck…but that’s it. Perhaps then it is good that Obama conceded to Republicans and added their tax cuts for businesses…which will alleviate some of the burden on companies, reducing layoffs. Also, the cuts include people who earn up to $150,000 a year…they are statistically more likely to save than to spend, defeating the overall purpose. Similarly, analysts tend to agree that the programs which will help the economy the most are the aid to the states (stabilizing their budgets and preventing layoffs), the infrastructure programs (creating jobs), and the unemployment and food stamp benefits (commonly referred to as “automatic stabilizers” which should be a part of any package). In the negative column, the first two of these three take longer to implement…but they have a more profound and permanent effect. One thing they ALL agree on, seems to be that an imperfect package now would be better than waiting months for a “perfect” plan…a notion that may well be implausible (who is really to say what a PERFECT plan would be?).
Why the Republicans are Hurting Themselves: They claim (ie. McCain, Boehner, Cantor, and others) that they have no say in the bill. This is obviously false…tax cuts (plural) have been added at their request, spending programs (note, also plural) removed. They say (ie. Boehner, McConnell, and others), “We applaud the President’s attempts to foster bipartisanship and are following his lead…it’s the Democrats who are being partisan”…and then Boehner tells all members of the GOP to vote against the package. They state that they are the party of fiscal responsibility, and that spending programs in the bill are just another example of Democrats’ “tax and spend ways.” Really? After eight years of UNPRECEDENTED deficit spending and fiscal irresponsibility nearing criminality…they don’t get to use that argument/accusation anymore. They claim that they are the leaders and experts we should be heeding…well, obviously the American public doesn’t think so, having elected a Democratic President, a Democrat led House, and a Democrat led Senate in an election contest that could be accurately described as either “a referendum on the economy and Iraq” or as “a stinging indictment of the practices of the Republicans over the last eight years.” They say (ie. Cantor) that they can’t be the part of “no.” His words: “At a moment when the country needs our help, it would be a great mistake for the House GOP to turn inward and simply become the party of “no.” We want our new president to succeed, and America needs our new President to succeed, which is why we will contribute the full force of our ideas to help him navigate the choppy waters. That’s why our leadership met with the president three times to offer him our ideas on the stimulus, including among other proposals a reduction in small business tax liability by 20 percent.” Then, they universally vote against the measure. They say that report by the Congressional Budget Office indicates that they money in the bill won’t hit circulation until 2010. Only there was NO SUCH REPORT. They chide and criticize (ie. Bennett, Gingrey) Rush Limbaugh for his hopes (and he’s not alone) that the stimulus bill will FAIL just so that the Democrats don’t further increase in popularity. Then they apologize publicly to him for criticizing him. It’s almost as if…they don’t realize that we are ALL WATCHING.
What Needs to Change: Everything. The only difference between the way the Republicans behaved under Bush and the way they are behaving now, is that they are saying pleasant things about President Obama, and claiming to be interested in bipartisanship (before, they made no claim of even TRYING to work together). But just as before, they are interested only in getting what they want, serving their party ideology above the public interest, helping their dear friends in corporate America, and will tell any lie, distort any situation if it benefits them. We sent a message: “Get to work…the Dems are in charge.” That’s it. It’s just that simple. You’re out, they’re in…learn to play nice and compromise. I think economic expert (and Nobel Prize winner) Paul Krugman recently said it best. While he has leveled his own criticism at parts of the plan, he says, “As the debate over President Obama’s economic stimulus plan gets under way, one thing is certain: many of the plan’s opponents aren’t arguing in good faith. Conservatives really, really don’t want to see a second New Deal, and they certainly don’t want to see government activism vindicated. So they are reaching for any stick they can find with which to beat proposals for increased government spending.” In this NYT article, he disputes many criticisms of the plan…it’s worth the read.
UPDATE 3:56 PM: Since none of the Republicans voted for the Stimulus Bill, and some are even going so far as to lie and say they “had no input”…some Democrats are asking Nancy Pelosi and other Democratic leaders: “Why don’t we take all the concessions we gave them back out of the bill?” Wow…good question. The answer: “We’re considering it.” Seriously…if you added tax cuts to make the Republicans happy, and then you took out some of the spending programs to make them happy, and then they ALL refused to vote for it…why not put things back the way the Dems want it, if they’re not going to get any Republican support anyway?