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Judging The Stimulus

In his first hundred days in office, President Barack Obama will do nothing more important to his political future and the future of the Democratic Party than enact stimulus measures to revive an economy spiraling into depression (I think that he has already done the most important thing he could substantively, end torture as sanctioned US policy.) And of course, it is extremely important on substance. How should we judge Obama's performance on the economic stimulus plan? I think politically and substantively, the criteria is the same - will it work? E.J. Dionne writes a good piece reviewing the strange obsession with bipartisanship, the possible reasons, and even benefits, for it, and the extreme pitfalls it presents:

The coming week will test the strength of President Obama and the Democrats: Will they lose their nerve, or will they face down a rapidly forming conventional wisdom that would allow them to claim victory only if their economic stimulus package passes with substantial Republican support?/p>

. . . The president's quest for a new tone in Washington also has a practical motive. He believes that economic recovery is about psychology as well as money and that Americans will have more confidence in the future if they see the nation's politicians cooperating to resolve the crisis. This may be true, but it creates a problem. If achieving bipartisanship takes priority over the actual content of policy, Republicans are handed a powerful weapon. In theory, they can keep moving the bipartisan bar indefinitely. And each concession to their sensibilities threatens the solidarity in the president's own camp.

That's why last week's unanimous House Republican opposition to the stimulus plan was so important. For the most part, the Republicans escaped attack for rank partisanship. Instead, what should have been hailed as an administration victory was cast in large parts of the media as a kind of defeat: Obama had placed a heavy emphasis on bipartisanship, and he failed to achieve it.

The administration's assumption is that the Senate will make modest changes in the bill -- adding a few tax cuts and shaving some spending to appease Republicans -- and that the package will arrive on the president's desk having received enough cross-party support to carry that treasured bipartisan label. This process could have the ironic effect of making the package even bigger, because of the inclusion of extra tax cuts and infrastructure spending meant to win over Republican senators. The GOP may be rhetorically anti-government, but its politicians still love to deliver roads, bridges and water projects. That might be an acceptable outcome for the White House, since there is a strong strain of economic opinion that views the current stimulus plan, large as it is, as still too small to give the economy the jolt it needs.

. . . No doubt our supremely calm president is certain that, in the end, all will be well. But Rahm Emanuel, his spirited chief of staff, had it right: "You never want a serious crisis to go to waste." Just how high a price is Obama willing to pay for a handful of Republican votes?

(Emphasis supplied.) In my view, President Obama paid too high a price in his opening bid -- his initial proposal was woefully inadequate and the current House bill will fail, imo. But Dionne points to an important potential saving moment for Obama and the Democrats - Senate Republicans (and Blue Dogs like Ben Nelson and Clair McCaskill) want to expand the bill (the problem is they want to cut out significant programs, claiming they do not belong in a stimulus bill. Assuming they are right, which I think they aren't, what difference does it make what bill the programs are in?

President Obama has a path to fixing his own inadequate plan and achieving the "bipartisanship" he craves - agree to the extra spending Senate Republicans are demanding while rejecting the cuts they want. Now there is bipartisan compromise we can all believe in.

The biggest fear I have is that no one in Washington seems to grasp the magnitude of the problems we face in the economy. When FDR came to Washington in 1933, he understood the severeness of the crisis before him. And acted accordingly. He did not strive for "post partisan unity," he strove for solutions.

When it comes to the economic stimulus, President Obama has been more about post partisan unity than actual solutions. That has to change. NOW.

Speaking for me only

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    Bipartiship was one of his highest goal (5.00 / 1) (#1)
    by Saul on Mon Feb 02, 2009 at 08:49:54 AM EST
    though as compared to FDR.  I agree with you that the solutions outweigh any points on bipartisanship but Obama IMO bet the farm that his legacy would be the one that reached across, the one that stopped the bickering, etc, etc.  Bipartisanship to Obama  is more important than running his legislative agenda like FDR or Johnson did.  Although he does not need the republicans to pass anything especially if he get the veto proof majority that is lurking in the very near future he might want the republicans on board so if the plan fails then he can say it was passed with an overwhelming  majority of the Republicans so just don't blame the democrats if the plan fails.

    What kind of learning curve has (5.00 / 2) (#2)
    by ThatOneVoter on Mon Feb 02, 2009 at 08:57:35 AM EST
    Obama displayed in the past?
    Hillary showed great adaptability, just in the course of the campaign, but Obama seems to have been the same creature since I've been following him.
    He has plenty of room to change his tune, and dump PPUS. Will he?

    Dance later (5.00 / 6) (#7)
    by mmc9431 on Mon Feb 02, 2009 at 09:11:49 AM EST
    Obama is right that people resent the constant bickering in Washington. They see this as the reason why things aren't being done. What he doesn't realize is that they resent lack of leadership and results even more. The voters spoke in November. Republican's and their economic policies were thrown out by a wide margin. There really isn't anything to debate now. Put the strongest package together that addresses as many aspects of the economy as possible and push it through.

    No one will care if a single Republican voted for it, if it gives them a job and allows them to live in their home with dignity.

    Save the unity shtick for the cocktail parties.

    Naw (5.00 / 2) (#10)
    by jbindc on Mon Feb 02, 2009 at 09:27:41 AM EST
    To quote that great philosopher and orator, President Josiah Bartlett:

    Actually, what you've done in Florida is bring the right together with the far right. And I don't think Americans are tired of partisan politics; I think they're tired of hearing career politicians diss partisan politics to get a gig. I've tried it before,
    they ain't buying it. That's okay, though. That's okay, though, 'cause partisan
    politics is good. Partisan politics is what the founders had in mind. It guarantees
    that the minority opinion is heard, and as a lifelong possessor of minority opinions,
    I appreciate it. But if you're troubled by it, Governor, you should know, in this
    campaign, you've used the word "liberal" seventy-four times in one day. It was yesterday.


    Parent
    Here's some effective bipartisanship (5.00 / 2) (#12)
    by andgarden on Mon Feb 02, 2009 at 09:39:14 AM EST
    related to the economy. Obama has kept on Shelia Bair at the FDIC, who has been focused on saving the banks from themselves by getting them to renegotiate mortgages.  

    Critics say her record of helping consumers stave off foreclosures is mixed and that she has steered the FDIC into an activist role to the detriment of the agency's traditional purpose of limiting the damage from failed banks.

    "She's off on a lot of social missions," said Bert Ely, a banking industry consultant in Alexandria, Va.

    Bair, though, said she remains "very much a capitalist."

    "Sometimes people misinterpret that as somehow I'm not a real Republican or something. I very much am. I guess I'm more of a Teddy Roosevelt kind of a Republican ... It's been said that Franklin would be proud of me, but I think Teddy would be proud of me too."



    Good for Bair (5.00 / 1) (#13)
    by Big Tent Democrat on Mon Feb 02, 2009 at 09:43:22 AM EST
    The difference between 1922 and today is (none / 0) (#92)
    by suzieg on Tue Feb 03, 2009 at 07:04:58 AM EST
    that the country financed itself out of the depression, today we will have to borrow all of it and who knows at what cost.... I'm sure China and Europe are setting their own advantageous interest rate, as we speak. What if, on the other hand, they look at the debt piled on the taxpayers' books and they don't see us as a good credit risk?

    Here we are in the worst economic crisis in a lifetime, perhaps in our history, and on the brink of war in Pakistan and Iran while escalating the war in Afghanistan, and all we get is a government made up of the very people who have brought us to these crises and do not account for these additional costs.

    Can someone, please, explain to me how borrowing this obscene amount of money on top of the present hopeless debts will not prolong this catastrophe?

    Parent

    YOu introduce your bill (5.00 / 5) (#21)
    by BobTinKY on Mon Feb 02, 2009 at 10:03:54 AM EST
    the other side introduces theirs.  You incorporate any helpful ideas and have your whip count the votes.  If short of a majority, you negotiate with the other side until a majority for passage emerges.  That is bipartisanship.

    What you do not do is assume what the other side wants, put it in your own bill up front at the expense of your own desires, and allow the other side to demand more and more.  Then allow the vastly outnumbered opposition, who know full well the bill will pass without their support, to crow & score political points yelling about what is "wrong" with a bill they know already includes more of their precious and useless tax cuts than we need.

    There's (5.00 / 0) (#26)
    by SOS on Mon Feb 02, 2009 at 10:14:41 AM EST
    a growing list of actions by Obama that suggests he can't shake off the old ways of doing things in the nation's capital.

    We should immediately repeal the bank bailout bill (5.00 / 2) (#27)
    by MyLeftMind on Mon Feb 02, 2009 at 10:16:21 AM EST
    and put the second $350 billion into the stimulus package, specifically directed toward owner occupied foreclosures.  Bank of America, which received $45 billion in taxpayer bailout money, just spent 10 million dollars on a Super Bowl party.  Given this flagrant abuse of public support, including the $18 billion just paid in CEO bonuses, we have the perfect excuse to cancel the bank bailout bill NOW.  

    By redirecting taxpayer resources toward the people who actually pay the taxes, we stimulate the economy via broad based spending across the country.  Suspending interest payments which would result in increased taxes paid due to reduced mortgage deductions, but an even better use of our increasing federal debt would be to actually buy distressed mortgages so the taxpayers can someday recoup our costs.

    We're like an abused spouse (none / 0) (#28)
    by SOS on Mon Feb 02, 2009 at 10:21:11 AM EST
    Our jaw is wired shut from the last smack but we're sitting quietly convincing ourselves "he really loves me".

    Parent
    Are there any tax breaks for seniors? (none / 0) (#93)
    by suzieg on Tue Feb 03, 2009 at 07:08:40 AM EST
    These poor people are getting next to nothing in interest from their retirement funds and eating away at their capital. When their money is gone, it's gone for good as they have no earning potential to recoup their losses!

    Parent
    The problem is not that the parties have (5.00 / 5) (#40)
    by Anne on Mon Feb 02, 2009 at 10:44:58 AM EST
    different ideas about the economy, and what it will take to get it on track, or that even within each party, there is disagreement.  The problem may be that by characterizing the conflicts as "bickering," whatever it is that is being fought over is immediately trivialized into being nothing more than nitpicking over minor and immaterial details.

    Yes, Mitch, we know you want to sit in the front seat, but Harry called it and he gets to sit there on this trip; I don't know if you can sit there on the way home, Mitch - you know Harry gets nauseated when he sits in the back and we don't want him to throw up, do we?

    John, please stop kicking Nancy's chair; Nancy, stop humming.  I don't care who started it; I am telling you both to stop.  Now.  

    Rahm, how many times do I have to tell you that it's not polite to give people the finger?  Especially members of your own family - now just stop.

    JOHN CORNYN THE THIRD!!!  Sit down and stop whining about where we're getting lunch!  I told you we're going to Burger King, everyone else wants to go there, too; if you don't like the food, I guess you'll be hungry.


    Anyone recognize that?  That's bickering.

    To me, what's happening is a failure of leadership.  A failure to be prepared with a plan, and a failure to have a plan to sell the plan.  And it's a failure to understand the nature of two-party government, and the reason we have more than one party: we all do not think alike, believe the same things, share the same goals.  

    I'm not ready to make nice.  I want my way for now; after a while, I may feel more charitable about compromise and conciliation and concession, but right now, I want the chance to do it and have it my way.  

    I mean, as long as we're acting like bickering children, right?


    Too Much Emphasis on Bipartisanship... (5.00 / 1) (#41)
    by santarita on Mon Feb 02, 2009 at 10:46:30 AM EST
    and not enough discussion on the merits.  There is a school of thought that believes that tax cuts are the way to stimulate the economy and there is a school of thought that timely spending programs will stimulate the economy.  I don't know that either school can prove beyond a reasonable doubt that their way is the best way.  But the discussion needs to be along those lines rather than along partisan lines.  

    Obama has only himself to blame for focussing on bipartisanship as an end in itself.

    As to the stimulus package, the Democrats have identified three criteria: temporary, timely and targeted.  The Republicans (and blue dog Dems) complained about the House package because many of the programs were not going to be temporary.

    Reagonomic's never worked (5.00 / 2) (#52)
    by mmc9431 on Mon Feb 02, 2009 at 11:36:20 AM EST
    The problem with tax cuts is that Republican's feel that they should be directed at less than 1% of the population and to corporations that have more money than our government. Then we're all supposed to wait for the trickle down effect. The problem is that it never trickles down.

    Reaganomics worked exactly (5.00 / 2) (#53)
    by ThatOneVoter on Mon Feb 02, 2009 at 11:39:43 AM EST
    as planned.

    Parent
    Reagonomics (none / 0) (#96)
    by Samuel on Wed Feb 04, 2009 at 09:00:29 AM EST
    The government grew dramatically under Reagan.  It is a false metric for judging the effectiveness of tax cuts.  This stimulus bill is very similar to Reagonomics in that sense.  I would not be shocked to see wage and price controls hastily introduced once again in the a few years.

    Parent
    No HOLC? No hope. (5.00 / 2) (#61)
    by oldpro on Mon Feb 02, 2009 at 12:01:32 PM EST
    What's wrong with these people?

    Democrats need a kick in the butt (none / 0) (#80)
    by MyLeftMind on Mon Feb 02, 2009 at 01:42:13 PM EST
    Since our Dem leaders are ignoring this, leading Republicans are pushing to include homeowner support and tax breaks for the poor and middle class in the stimulus bill:

    Senator Mitch McConnell:

    ...the way to build this package is, indeed, to do it on a bipartisan basis, which doesn't mean just talking to us, but including ideas that we think would work.  That would include plans for government-backed, four percent fixed mortgages to qualified homebuyers, and cutting the bottom two income tax bracket rates from 15 percent to 10 percent and from 10 percent to five percent, he said.

    Jeez, where are our progressive leaders and why are they waiting for Republicans to suggest we support the middle class more than the rich bankers?


    Parent

    And I hear Obama said, (none / 0) (#85)
    by oldpro on Mon Feb 02, 2009 at 03:40:35 PM EST
    in his interview before the Super Bowl, that "Republicans have some good ideas!"

    What the Hell?

    Parent

    What conventional wisdom? (5.00 / 3) (#74)
    by joanneleon on Mon Feb 02, 2009 at 01:08:54 PM EST
    Will they lose their nerve, or will they face down a rapidly forming conventional wisdom that would allow them to claim victory only if their economic stimulus package passes with substantial Republican support?

    Where did this conventional wisdom come from?  It seems to me that the media and the Republicans (and Pres. Obama to some extent) are creating their own conventional wisdom.  And the last time I looked, neither the Republicans nor the media haven't approached anything close to the wisdom level.

    I've also heard people on the cable news saying that "the people" clearly want a bi-partisan solution.  Has anyone ever heard the "people" say that?  As far as I know, the people are saying they want something that will work and quickly.

    Truly, I have never heard a person out here in the real world say "Oh, I reall, really y hope they come up with a bipartisan solution."  What they're saying is that they elected these people to get a job done and they want them to step up and do it now.  They're also saying that they want the banks and brokerages to quit stealing our money, and they're saying "Where is my bailout?"

    Hello?  People are hurting out here while you argue about your tax cuts and shovels.

    We need to figure a way to stop the media from creating the conventional wisdom in their discussions with each other, inside the bubble.

    One last thing: Does anyone else think that Andrea Mitchell should be disqualified from reporting and opining on this subject?

    They're too busy trying to figure out how to (none / 0) (#94)
    by suzieg on Tue Feb 03, 2009 at 07:11:36 AM EST
    make honest mistakes on how to not pay their taxes this year....

    Parent
    their is a master plan (5.00 / 1) (#82)
    by JThomas on Mon Feb 02, 2009 at 02:12:40 PM EST
    as hinted by Schumer the other nite on Charlie Rose. This stimulus is just the first of 3 large bills to address the economy. The next will be one directed to address the home mortgage crisis, and then a third for the Banks.

    They just cannot come right out and push all at once...the pricetag will scare the public and it is hard to address all woes with one huge bill.

    Trust me, Obama knows how big the pricetag is going to be and he will drive to that objective...just not all at once.

    He is also forming an oversite organization to implement and monitor financial regulation which is important to establish some confidence in the markets.
    It is his 13th day of his presidency..too early to write the book on his presidency quite yet.

    There's a fourth bill needed in recovery (5.00 / 1) (#83)
    by mmc9431 on Mon Feb 02, 2009 at 02:54:53 PM EST
    He's missing one still. Healthcare. We're never going to be competative with the rest of the world when businesses here have to calculate healthcare costs into their costs. In addition there are now millions more in the uninsured pool. Also medical bills are one of the leading causes of bankruptcy and foreclosure in the country.

    Parent
    I don't buy it. (none / 0) (#86)
    by MyLeftMind on Mon Feb 02, 2009 at 03:44:19 PM EST
    ...a master plan as hinted by Schumer the other nite on Charlie Rose. This stimulus is just the first of 3 large bills to address the economy. The next will be one directed to address the home mortgage crisis, and then a third for the Banks.  They just cannot come right out and push all at once...the pricetag will scare the public and it is hard to address all woes with one huge bill.  Trust me, Obama knows how big the pricetag is going to be and he will drive to that objective...just not all at once.

    Obama has a secret plan but it's not going to be implemented right away?  Bank rescue is third on the list?  The government already gave away the house to the banks, and they're laughing in our faces with multi-million dollar bonuses to the CEOs while they use our tax money to continue to foreclose on the very people our government should be helping!

    You don't fix the root of the problem (mortgage collapse) after funding arts and other easily criticized components (like the $650 million allocated for the Digital-to-Analog Converter Box Program).  We need to manage the mortgage crisis first, not later on.  And if there's a master plan, let's hear it now.  We're not children who have to be told to wait for the details.  What makes liberals assume that elected Democrats are looking out for our interests?  Congressional Dems are (almost) as easily bought as Republicans in Congress, as you can easily see by the breakdown of campaign contributions and the shift that occurred from Repub funding to Dem funding this past year.  

    For most of our lives, the right wing has been stealing from the middle class to give to the rich, while the left wing has been draining the middle class to pay for programs for the poor.  We need a stimulus that protects the middle class, not one that promotes the arts and hopes that will help the economy.  This is exactly why we can't ever maintain progressive policies.  We on the left don't prioritize the basics before the things we'd "like to see get done."  If artists have to look for regular work for a while like the rest of us, so be it.  The priority should be getting people back to work and stabilizing the economy by fixing the original problems that got us in this mess.  Let the banks go bankrupt, then buy them as public entities or let credit unions take them over.  Let the auto makers go bankrupt, then buy them with government money and sell them back to the employees.  Let bankruptcy courts force companies to fire the CEOs that brought their organizations to their knees, then set up systems that allow the public to recoup costs for bailouts.  Otherwise we're getting suckered once again, spending money our grandkids will have to pay back in order to rescue a system that allows the rich to continue to get richer.

    If you've paid taxes your whole life and your house is your major investment but you just lost your job, the best thing the government can do for you right now is buy your mortgage and give you a 45 year payback at 3-5%, then offer you a partially subsidized health plan and assistance getting a new job.  Instead, we're asked to fund billions in bailouts to the super rich with some mechanism to spread a little of it to local communities so they'll be more comfortable (and their elected officials can say "Look what I got us.")  If all works, the bankers and investors will be even richer in the end after using our money to buy other banks and squash the very taxpayers who are funding their activities.  


    Parent

    It get's even better (none / 0) (#89)
    by NYShooter on Tue Feb 03, 2009 at 03:17:52 AM EST
    ".....while they use our tax money to continue to foreclose on the very people our government should be helping!"

    J.P.Morgan/Chase is now using "sweeps" where they contact every bank in a geographical area, searching for customers who have defaulted on a loan and for whom they have obtained a judgement. Once found, they have the local bank "freeze" the account, rendering it unavailable to the client. You might say that's o.k., that's legal, however they make no exception if the funds are Social Security or other exempt monies. "Oh, they can't do that, that's illegal." But, yes they do, and they don't care that's it's illegal. There simply is no one enforcing the law.

    I have a colleague who works for Chase who told me about this policy. After "freezing" the account, it's up to the S.S. recipient to "prove" that it's S.S. money. Chase can go back months and months to find 10 cents that can't be proven to be S.S. funds, and so they call it "co-mingled" money, and the account holder has to go through a long process to "prove" the money is exempt. The point is, as I was told to harrass these older folks into making a "good faith" payment against the old debt of at least $500, to get the account unfrozen.

    It's done all the time, and as I was told, "of course it's illegal....so what?"

    These fixed income people need the meager money to sustain a bare existance, and there is no one to help them.

    Check it out, it's a national scandal, and no one is talking about it.

    Parent

    It get's even better (none / 0) (#90)
    by NYShooter on Tue Feb 03, 2009 at 03:34:21 AM EST
    ".....while they use our tax money to continue to foreclose on the very people our government should be helping!"

    J.P.Morgan/Chase is now using "sweeps" where they contact every bank in a geographical area, searching for customers who have defaulted on a loan and for whom they have obtained a judgement. Once found, they have the local bank "freeze" the account, rendering it unavailable to the client. You might say that's o.k., that's legal, however they make no exception if the funds are Social Security or other exempt monies. "Oh, they can't do that, that's illegal." But, yes they do, and they don't care that's it's illegal. There simply is no one enforcing the law.

    I have a colleague who works for Chase who told me about this policy. After "freezing" the account, it's up to the S.S. recipient to "prove" that it's S.S. money. Chase can go back months and months to find 10 cents that can't be proven to be S.S. funds, and so they call it "co-mingled" money, and the account holder has to go through a long process to "prove" the money is exempt. The point is, as I was told to harrass these older folks into making a "good faith" payment against the old debt of at least $500, to get the account unfrozen.

    It's done all the time, and as I was told, "of course it's illegal....so what?"

    These fixed income people need the meager money to sustain a bare existance, and there is no one to help them.

    Check it out, it's a national scandal, and no one is talking about it.

    Parent

    Sorry (none / 0) (#91)
    by NYShooter on Tue Feb 03, 2009 at 03:35:05 AM EST
    three thumbs

    Parent
    The present economic stimulus (none / 0) (#3)
    by bocajeff on Mon Feb 02, 2009 at 09:01:35 AM EST
    will fail because it does nothing to rectify the underlining problem which is the housing industry and the credit markets.

    Also, the great thing about Hillary not being elected is that all comparisons between Obama and her will be between his reality and theory of what she would have done (which will never have to be compared to reality).

    I agree with you in part (none / 0) (#5)
    by Big Tent Democrat on Mon Feb 02, 2009 at 09:04:12 AM EST
    It is also ineffective as fiscal stimulus because it is too small in size.

    Parent
    Except, (none / 0) (#17)
    by bocajeff on Mon Feb 02, 2009 at 09:54:03 AM EST
    You could quadruple the size but if it isn't shot toward the trouble spots then it doesn't really matter. It's like taking 20 aspirin for a brain tumor.

    One of my clients gave me this scenario: Since we're printing money anyway, why not suspend all mortgage interest payments on all owner occupied mortgages. The government assumes the roughly $7 trillion in debt. Tax revenue to the IRS would increase by roughly $100 billion per year due to higher income taxes as the mortgage deduction would become moot. With all homeowners having all that extra money each month they will feel more comfortable spending freely on pretty much everything. Banks would then have tons of extra money to lend as they would have no toxic mortgages on their balance sheets. When the homeowner sells their home they have to pay the government back the principal and any interest that has been deferred up to the sales price.

    In my gut I know this is wrong...but since we're just printing money without any targeted plan I can't come up with a logical explanation for a dreamlike scenario. And that's the world we live in...

    Parent

    Serious economists (none / 0) (#19)
    by andgarden on Mon Feb 02, 2009 at 09:57:33 AM EST
    think that a package of the right size absolutely could help tremendously. The problem is that we're only spending about 1/4 of what we need to on trains, bridges, and highways.

    Parent
    I think it should be bigger and (5.00 / 2) (#62)
    by inclusiveheart on Mon Feb 02, 2009 at 12:10:17 PM EST
    that it should also include more infrastructure, but the thing that is really bugging me about the stimulus more and more is that I can't seem to see any sort of real strategic planning in the proposal.  There are two driving objectives that we keep hearing - bipartansanship and jobs - but I don't see a plan that is strategic - one that builds upon itself over time after creating a floor.  Furthermore, all of the things that I think are most important to actually creating real consumer confidence (besides jobs) like regulation seem to be universally rejected as options by both parties.  

    I've got news for the Obama team - my confidence in the US market isn't going to be reinstilled until government regulation that addresses the root causes of this meltdown are enacted.  While not everyone looking at this collapse is probably conciously aware of how important it is to address the systemic problems, I actually think that intuitively they are.  Confidence is a funny thing.  If there are no obvious changes to how financial entities are allowed to do business, I don't think you can expect consumer confidence to recover in this country.

    Parent

    Thanks (5.00 / 2) (#69)
    by mmc9431 on Mon Feb 02, 2009 at 12:28:06 PM EST
    Great point. I don't know why this wasn't addressed in the bill. You're right that everything depends on confidence. And there's a definite shortage of that around the globe right now.

    I wonder how different the melt down would have been had they paid better attention to the Enron debacle.

    Democrat's have allowed Republican's to redefine regulation and accountability as dirty words.

    Parent

    In a perverse way this attempt (5.00 / 1) (#73)
    by inclusiveheart on Mon Feb 02, 2009 at 12:51:41 PM EST
    at bipartisanship legislating is more politically ideologically driven than it might be if people just looked at the problems we face and tried to create the foundation for a recovery - which would logically include creating a system of rules and regulations that would prevent our problems from continuing.  Congress and the President can saturate this country in cash all they want, but it will still continue to effectively disappear if they don't close the gaps in regulation that got us here in the first place.  It is imo an excercize in futility.

    Parent
    Great comment. (none / 0) (#75)
    by ThatOneVoter on Mon Feb 02, 2009 at 01:09:14 PM EST
    I think the entire economy (none / 0) (#31)
    by Big Tent Democrat on Mon Feb 02, 2009 at 10:26:53 AM EST
    is in need.

    Don't you?

    Parent

    I think the problem is that (5.00 / 1) (#64)
    by inclusiveheart on Mon Feb 02, 2009 at 12:14:15 PM EST
    they aren't trying to cover every aspect of the economy that they would like to see advancing in the next recovery.  In other words, I think there should not be a list of some things first, others second etc.  Instead they should be trying to jump start everything all at once - especially given the fact that this is such a small package.  Right now 40% won't even be released into the economy until 2011 - which makes the package even smaller than it should be.

    I don't think that the members of Congress or the Obama people get it.  They're probably going to have to see unemployment rise into double digits before they are going to start to realize how dire this situation is.

    Parent

    What size do you know that (none / 0) (#56)
    by zyx on Mon Feb 02, 2009 at 11:51:03 AM EST
    is just about right for the stimulus package?

    Parent
    The number I see tossed (none / 0) (#81)
    by Radix on Mon Feb 02, 2009 at 02:03:23 PM EST
    about, is 100B per 1% reduction in unemployment.

    Parent
    NPR (none / 0) (#84)
    by zyx on Mon Feb 02, 2009 at 03:28:54 PM EST
    had a piece about Keysian economics and how it went out of vogue, and...chatted up Alan Blinder of Princeton. He did some Keynsian math and his figure is $650 billion for a stimulus package.  (It's at about 8:50)

    That may be low, and I know Krugman thinks we need to spend more, but I don't know what BTD and some of the other critics here think is the right number and how it is to be passed and spent.

    Also, is the $700 billion bank rescue "stimulus"? Surely it is, to some extent.

    Parent

    We're (none / 0) (#4)
    by SOS on Mon Feb 02, 2009 at 09:02:17 AM EST
    trying to maintain overvalued equity markets for as long as possible to prevent the IRAs and 401Ks of the working class from "vanishing".

    Bonuses (5.00 / 1) (#77)
    by joanneleon on Mon Feb 02, 2009 at 01:24:27 PM EST
    I look at the bonus money in terms of how many people they would not have to lay off if they forego the bonuses.  

    $100,000/employee x 1000 employees = $10 million in bonuses

    Every ten million in bonuses eliminates a good job at about $75K plus benefits.  For lower paying jobs, the number of employees goes up.

    I think it's a travesty that execs can hand out millions in bonuses while at the same time laying off employees.

    Parent

    Sort of. (none / 0) (#78)
    by Radix on Mon Feb 02, 2009 at 01:30:28 PM EST
    Money, higher profits, only has meaning when you do something meaningful with it, expansion, pay dividends, increase worker compensation and the like.

    Parent
    Huge News (none / 0) (#6)
    by SOS on Mon Feb 02, 2009 at 09:05:33 AM EST
    President Barack Obama is the cover of the March issue of Vanity Fair.

    oh man . . . . .

    Maybe we spoke too soon (none / 0) (#8)
    by Saul on Mon Feb 02, 2009 at 09:16:26 AM EST
    (I think that he has already done the most important thing he could substantively, end torture as sanctioned US policy.)

    The L.A. Times shows that the executive order Obama signed to end torture and close Quitmo preserved for the CIA the rendition program which allows the transfer of terrorist suspects to certain foreign countries who in turn tortue.

    not all renditions (5.00 / 1) (#11)
    by lilburro on Mon Feb 02, 2009 at 09:37:48 AM EST
    take detainees to countries that torture.  You can send someone to a country where they won't be tortured, but simply in order to try them under another legal system.  Renditions are useful also for breaking up terrorist groups.  You displace people you don't have the evidence on to try yourself.  (Possibly you take the person to a country that has a lot of dirt on them and will be more likely to get a conviction).  I don't know how this is going to work out for the new Administration.  I wrote up a post on the LA Times piece yesterday.

    Parent
    That article (none / 0) (#9)
    by Big Tent Democrat on Mon Feb 02, 2009 at 09:25:43 AM EST
    seems incorrect to me.

    Read the executive order. It simply does not allow for extraordinary rendition.

    Parent

    I am amazed to  see how many people are more concerned about talking about partisan politics then those who are asking what will this do for us.  It is well documented that spending has never been successful in getting us out of a recession.  What will we have, a few new roads, some renovated buildings?  None of this is sustainable, it does nothing to address our long term competitiveness in the world.  As long as we run to Walmart and ship hundreds of billions of dollars off to China every year this spending will change nothing. If we take our tax savings and give it right back to the country that we are borrowing the money from what will we have except debt for our children and their children.  This is no panacea this spending is insanity.

    Amity Shlaes joins us today (5.00 / 2) (#15)
    by Big Tent Democrat on Mon Feb 02, 2009 at 09:49:40 AM EST
    Thanks for stopping by.

    Parent
    Made me google. (none / 0) (#47)
    by oculus on Mon Feb 02, 2009 at 11:04:55 AM EST
    Hmmph. i would have taken you (none / 0) (#49)
    by ThatOneVoter on Mon Feb 02, 2009 at 11:25:40 AM EST
    for an FT reader.

    Parent
    Just Martin Bernheimer on line. (none / 0) (#50)
    by oculus on Mon Feb 02, 2009 at 11:26:54 AM EST
    Well, shoot, I'm not going to read it (5.00 / 1) (#59)
    by ThatOneVoter on Mon Feb 02, 2009 at 11:52:47 AM EST
    myself! I come here to read comments from the well-read cognoscenti, don't you know.

    Parent
    Pulitzer Prize winning music critc, (5.00 / 1) (#95)
    by oculus on Tue Feb 03, 2009 at 12:15:55 PM EST
    formerly of the LA Times.

    Parent
    Sorry BTD, but this poster (none / 0) (#79)
    by Radix on Mon Feb 02, 2009 at 01:39:20 PM EST
    wasn't entirely wrong here. We can't keeping shipping billions of dollars to other countries, we need to keep some of that here.

    Parent
    What's wrong with what he/she said? (none / 0) (#97)
    by Samuel on Wed Feb 04, 2009 at 09:14:16 AM EST
    The stimulus package won't counter the structural inefficiencies that free money caused throughout the economy.  It will prop up demand and maintain artificially high prices where deflation and liquidation must occur in order to regain longterm structural efficiency.  The money will run out eventually but have caused ill-advised capital inflows based on false profit projections.  This means that we will be met with an even larger recession than we would face now (or have faced at the end of the tech bubble).

    Parent
    size of stimulus (none / 0) (#16)
    by Jlvngstn on Mon Feb 02, 2009 at 09:50:30 AM EST
    Where were you in September when many of us were screaming about a jobs stimulus package?  One of the major reasons the stimulus is too small is because our elected officials waited too long to put one in the works.  As I stated last June, the free cash stimulus held the economy over for a few months but was a band-aid for gangrene.  

    The substantial increase in downsizing could have been averted had our representatives been busy creating legislation to address the situation.  Instead, you had a party on the left waiting to win the election so they could take credit for a job creation program and a party on the right filled with confusion and failed policies.

    Had a jobs program been passed in September, some of the money would be hitting the street and companies and people would feel cautiously optimistic as opposed to downright scared to spend.  Layoffs and reduced spending are partners and a very costly partnership.

    We have what we have now not only because of CDS, Derivatives, greed etc. Addressing problems before they become crises is leadership.  We saw leadership from no one.

    The longer we go without a stimulus the worse the problem gets and the longer it takes to recover.  An economy our size breaking down takes months to kick-start and get moving again.

    In September of 2008 I stated that any bail out bill without a jobs program should not be passed as it did nothing to address the mounting labor issues which would be a direct contributor to a weaker economy and a weaker financial system.  

    Working Americans keep the economy moving. With more than 10 million unemployed, state gov'ts going broke because the tax revenue losses and more layoffs forthcoming because people are afraid of losing their jobs as well, what did your representative do about it?

    In September I stated that the bailout needed to be at least 1.4 trillion to include jobs and money for states.  Since we waited and allowed the problem to spiral to its current state, the new cost stands at 2.5 trillion.

    So for President Obama and the democratic party, the funding needed has tripled because they wanted to be the heroes.  What they are going to get is a prolonged recession to the middle of 2010 and employment deficits until 2011.  Which could turn out very nicely for Jindal and Romney.


    BTD has hardly been silent about the need (none / 0) (#18)
    by tigercourse on Mon Feb 02, 2009 at 09:55:39 AM EST
    for jobs stimulus.

    Parent
    I don't recall seeing it (none / 0) (#22)
    by Jlvngstn on Mon Feb 02, 2009 at 10:06:12 AM EST
    June through December of last year but perhaps i am mistaken

    Parent
    Very much mistaken (none / 0) (#30)
    by Big Tent Democrat on Mon Feb 02, 2009 at 10:26:05 AM EST
    well then please accept my (none / 0) (#33)
    by Jlvngstn on Mon Feb 02, 2009 at 10:29:16 AM EST
    apologies

    Parent
    I agree that jobs are key to getting this going but I disagree that government spending is the answer.  We can point fingers at the derivatives market and greed, as well as pointing fingers at the millions of people who set this ablaze by defaulting on mortgages.  Frankly real estate has been the economic engine this country has run on for years because no one has addressed our lack of competitiveness in the manufacturing base of this country.  But I certainly don't think that government spending will change this long term.

    This is like the wizard of oz where we are following dorothy down the yellow brick road because some guy behind the current has all the answers.  The government is behind the current and they have proven time and again that they don't know what they are doing.  The American people have the answer, they are the answer.  Do we need someone to take our money and they 'buy American' or can we just make better decisions.  Supporting US manufacturers would result in jobs, capital spending and increased tax revenue for the governement.  All of this without a trillion dollar plus debt at the end.

    Parent

    I was right here (none / 0) (#29)
    by Big Tent Democrat on Mon Feb 02, 2009 at 10:25:42 AM EST
    And Bush was still in the Oval Office.

    I wanted HOLC too. Where were you?

    Parent

    bush was still in the oval office (1.00 / 1) (#35)
    by Jlvngstn on Mon Feb 02, 2009 at 10:33:37 AM EST
    is a gross copout.  Tell me who the leaders were in the democratic party trying to STOP the hemorraghing of job losses through stimulus 9 months ago when we needed it?  We all know it takes at least 6 months for any money to hit the street and 18-24 months for all the money to hit.  

    Democrats could have and should have started the legislative process relative to job creation last summer.  Defending it by blaming Bush is horsepucky.

    Parent

    Copout? (5.00 / 1) (#36)
    by Big Tent Democrat on Mon Feb 02, 2009 at 10:36:09 AM EST
    I supported a huge stimulus but knew the President would not sign one.

    I was arguing IN SEPTEMBER about what Obama needed to do in January.

    As for being against HOLC, well shame on you then. Where were you?

    Parent

    Then leave the president sitting high and dry (none / 0) (#38)
    by Jlvngstn on Mon Feb 02, 2009 at 10:38:52 AM EST
    Still a major copout.

    As for being against HOLC, I believe you might have seen my alternatives for the bailout which was buying out the mortgages of those at risk and having a gov't bank own them with substantially lowered payments to be recouped on the back end.  Perhaps you missed it the 25 times I posted it.

    Parent

    You just proposed HOLC (5.00 / 1) (#39)
    by Big Tent Democrat on Mon Feb 02, 2009 at 10:41:08 AM EST
    clearly you do not know what HOLC was and would have been.

    Parent
    HOLC (none / 0) (#42)
    by Jlvngstn on Mon Feb 02, 2009 at 10:49:26 AM EST
    as i understood it was to refinance at a lower APR and a fixed APR for those who purchased on an ARM.  It was also highly restrictive offering to those who were currently in the process of default and did not address foreclosures that were going to come in 2009 as a result of the job losses created by the lack of legislation addressing that issue.  

    So if you create legislation that helps homeowners that are behind on monthly payments now,  you will be missing more than a million homeowners who will face the same situation later this year who are not currently in trouble but will be.

    Perhaps I missed that portion of the bill.  If I did than I am an idiot.  If I didn't, it is not a good solution.

    Parent

    That is HOLC. (none / 0) (#68)
    by masslib on Mon Feb 02, 2009 at 12:26:51 PM EST
    I don't like the HOLC (none / 0) (#34)
    by Jlvngstn on Mon Feb 02, 2009 at 10:30:52 AM EST
    because it does not provide relief or stimulus and only helps a small portion of those in trouble.  There are dozens of other HOLC type programs that are far more stimulative and actionable. I was there but I don't author the blog so I would expect you to miss some of that.  Being that you author here I should pay more attention.

    Parent
    Every foreclosure costs the American public (5.00 / 2) (#67)
    by masslib on Mon Feb 02, 2009 at 12:26:02 PM EST
    an average of 200k.  

    Parent
    sure and HOLC (none / 0) (#88)
    by Jlvngstn on Mon Feb 02, 2009 at 08:42:35 PM EST
    upon creation helped mostly those who could afford help.  More than 800k people were denied because they were deemed high risk.  And most of the loans if not all were secured with high down payments, nearly 50% was the norm.  Virtually no one puts down that amount now and my guess is that most of the loans in jeopardy do not have the same equity.  Apples and oranges, both fruit but vastly different.

    Parent
    So the stock market is dropping today (none / 0) (#20)
    by tigercourse on Mon Feb 02, 2009 at 09:58:36 AM EST
    on GOOD news. That's bad. This market is still deteriorating and has a ways to go. If this stimulus is indeed not big enough as alot of people are now saying, we might as well be burning the money on the White House lawn.

    Yeah (none / 0) (#70)
    by Spamlet on Mon Feb 02, 2009 at 12:30:51 PM EST
    So the stock market is dropping today

    Just wait till Friday.

    Parent

    Obama from his Today Show interview (none / 0) (#23)
    by andgarden on Mon Feb 02, 2009 at 10:07:37 AM EST
    "If I don't have this done in three years, then there's going to be a one-term proposition."

    So he understands the stakes, I think. But his strategy seems lacking.

    that's helpful (5.00 / 1) (#25)
    by BobTinKY on Mon Feb 02, 2009 at 10:12:58 AM EST
    if there is one thing that gets a politician to straighten up & fly right it is a threat to his re-election.  The House stimulus vote debacle shoudl wake up Obama to the futility of his initial approach to bipartisanship.

    All the moderates and compromisors, the handful of them, that once popeulated the GOP have long since abandoned that party.  It is top to bottom right wing nut jobs now, the hardest of the hard core.  These folks, with considerable assistance from Democratic appeasors, brought us this mess.  And now we seek their input to the solutions?

    They have nothing to offer in the way of solutions for anyone except their ultra-rich benefactors.  Never have.

    Parent

    This seems to be (5.00 / 2) (#43)
    by KeysDan on Mon Feb 02, 2009 at 10:51:32 AM EST
    an odd comment.  If it was meant to be a confidence-builder for his plan, it only introduced his doubt.  Although, it does give stimulus to the Republicans, as if they needed any more, to follow their obstructionist blueprint.   Maybe, too, the strategy is for one term.

    Parent
    I frankly hope (5.00 / 2) (#44)
    by andgarden on Mon Feb 02, 2009 at 10:55:32 AM EST
    that the Republicans are so obstructionist that Obama has to force through a partisan plan. The question is, does he have the backbone to deal with fainthearted types like Ben Nelson?

    Parent
    It's not about him. (5.00 / 2) (#45)
    by ThatOneVoter on Mon Feb 02, 2009 at 11:01:17 AM EST
    I don't like the comment. He should be saying that he doesn't care about a 2nd term, if he can get the right things done.

    Parent
    If he doesn't have this done in three (5.00 / 2) (#54)
    by Anne on Mon Feb 02, 2009 at 11:49:24 AM EST
    years, not only will he be looking at lame-duck status heading into the 2012 presidential election, but those 2010 mid-terms will have ushered in a bigger crop of Republicans who are not going to feel the slightest need to be bipartisan.

    It shocks me that he has so little comprehension of the rising level of desperation out here in Real America that he could be talking about "three years;" people will have taken to the streets by then, I'm pretty sure.  As it is, I have seen a growing number of people panhandling, and sleeping on steam grates with all of their belongings.  

    Are we supposed to be cheered by his overweaning self-interest as a motivator for fixing the economy?

    Parent

    It shocks me, too (5.00 / 1) (#63)
    by sj on Mon Feb 02, 2009 at 12:12:45 PM EST
    I'm seeing a lot of comments like this:

    No doubt our supremely calm president is certain that, in the end, all will be well.

    I have also repeatedly seen him described as "preternaturally calm" (aside:  a word that always makes me think of vampires).  One person's "preternaturally calm" is another person's "detached".

    Don't get me wrong.  I'm glad he's not running around like a chicken with its head cut off.  That intelligence should be put to good use.  But I think a little urgency would make me feel alot better.  

    Oh and just for the record,  I don't believe that "thoughtful" and "urgent" are mutually exclusive.

    Parent

    Remind you of a recent occoupant (none / 0) (#72)
    by ThatOneVoter on Mon Feb 02, 2009 at 12:40:42 PM EST
    of the White House?

    Parent
    Thankfully (5.00 / 1) (#76)
    by sj on Mon Feb 02, 2009 at 01:09:18 PM EST
    Not really.  I always thought the previous owner was always thinking about his next workout or nap (or cocktail).  

    I think this one is actually thinking about the state of the nation.  It's his context I'm trying to figure out, and how he sees his role.  

    Having said that, here is a previously unexpressed (I think) fear of mine.  I remember reading that BO found that he was bored by the work of a Senator.  Pushing through legislation as a President may not be what he had in mind.

    Parent

    Perhaps people will be preoccupied (none / 0) (#58)
    by ThatOneVoter on Mon Feb 02, 2009 at 11:51:37 AM EST
    counting body bags from Afghanistan and Pakistan.

    Parent
    if necessary (none / 0) (#32)
    by lilburro on Mon Feb 02, 2009 at 10:27:58 AM EST
    he can try to redefine what bipartisanship means and what to measure the success of the stimulus by (hint: not the # of Republicans who voted for it).  But he is painting himself into a corner right now ... ex from the interview:

    LAUER: And when it comes to the stimulus plan, the -- the House passed its version last week but without one Republican vote. That disappointed a lot of people. The Senate takes up their version of the measure starting tomorrow. How -- how important is gaining some more Republican support for that, how big a test of your leadership at this early stage of your presidency?

    OBAMA: Well, look, the -- the important thing is getting the thing passed. And -- I've done extraordinary outreach I think to Republicans because they had some good ideas. And I wanna make sure that those ideas are incorporated. I am confident that by the time we actually have the final package on the floor that we are gonna see substantial support. And people are gonna say this is a serious effort. It has no earmarks. We're gonna be trimming up -- things that are not relevant to putting people back to work right now.

    LAUER: Can you predict a number of Republican votes?

    OBAMA: No. Of course not.

    LAUER: You wouldn't do that, no?

    OBAMA: No, I wouldn't. But -- but I'm confident that -- well, look, I -- I -- I think that -- the House Democrats -- actually adopted a number of the ideas that the House Republicans had offered. Obviously the House Republicans wanted to make a statement. Now it moves to the Senate. We've got 535 people who feel it's their responsibility to represent their constituents and make their voices heard.

    So if this is -- democracy is always a somewhat messy process. But the thing I want all of them to remember and the thing I'm thinking about every single day is the thousands of people who are being laid off of their jobs right now. They can't afford politics as usual. And old habits are hard to break. But now is the time to break them 'cause we've got an urgent situation.

    Lauer's pretty dense but Obama's left himself open to that kind of question.

    Parent

    He still doesn't speak well without a (5.00 / 1) (#37)
    by tigercourse on Mon Feb 02, 2009 at 10:38:31 AM EST
    tele prompter.

    Parent
    Bizarro world. (none / 0) (#55)
    by ThatOneVoter on Mon Feb 02, 2009 at 11:50:41 AM EST
    Maybe he thinks that Bush and other Republicans got Democratic votes from time to time because of "outreach", and that he can emulate the strategy.
    Hardly.

    Parent
    And I would love to know what (5.00 / 2) (#60)
    by Anne on Mon Feb 02, 2009 at 11:57:53 AM EST
    Obama thinks the GOP's "good ideas" were or are; he says that's the reason he reached out to them, but, never says what, specifically, they are.

    If these are such good ideas, why didn't he just suggest to the Democratic leadership that they be included in the bill?

    What troubles me is that the things the GOP thinks are good ideas are the kinds of things that got us in trouble to begin with, and I don't know why Obama would think they were worth considering.

    I shudder to think what happens when he takes on entitlement reform; I'm sure the GOP will have lots of good ideas for him on that front.


    Parent

    This is exactly (5.00 / 1) (#66)
    by Spamlet on Mon Feb 02, 2009 at 12:26:00 PM EST
    why I did not support Obama in the primaries:

    I shudder to think what happens when he takes on entitlement reform

    If and when the topic is social security, we'll really have to "hope," now more than ever, that the Democratic Congress will "change" from being a rubber stamp for the executive branch.

    Parent

    The longer this drags on (none / 0) (#65)
    by jbindc on Mon Feb 02, 2009 at 12:20:54 PM EST
    The more I think this is about getting a "bi-partisan" major bill passed than actually coming up with useful solutions.

    Parent
    Stimulus package will need more (none / 0) (#57)
    by mmc9431 on Mon Feb 02, 2009 at 11:51:26 AM EST
    Bush was able to constantly go back to Congress and get another 1/2 trillion or so each time for the wars with no major problems.

    I guess we'll see if Obama has the same success.  

    Yeah, why didn't the military (5.00 / 1) (#71)
    by Fabian on Mon Feb 02, 2009 at 12:40:22 PM EST
    get asked "Hey!  Where'd that last billion go?  Why should we throw good money after bad?".

    We just need to frame everything as a National Defense/Security Issue.  It seemed to work for Bush.

    Oh, and toss in some Executive Privilege too.

    Parent

    The Senate version of (none / 0) (#87)
    by JThomas on Mon Feb 02, 2009 at 04:28:37 PM EST
    the stimlus is now out and the CBO is now saying that 78% of the 884 billion will be put into circulation in the next 18 months...which was a criticism of the House plan.

    As I have said, this is going to be shaped and molded over the next couple of weeks and it is growing...and the tax cuts went down in the Senate version with infrastructure up to the same 247 billion in tax cuts.

    Look,all these bills are being formulated and will be rolled out as soon as possible, I suspect we will be hearing of the housing rescue plan by next week..but doing everything this week is just not feasible.