A Confluence of Outrages

There are two current themes in the news (and the blogosphere) that, I would argue, are more alike than different.  That this is not immediately apparent to us does not bode well for the future of the Economic Recovery and Reinvestment Act of 2009.

On the one hand, the Republicans are bloviating about the “excesses” incorporated into the economic stimulus bill wending its way through Congress.  After complaining that spending for contraceptives and resodding the National Mall would do nothing to stimulate the economy, they are now deriding the part of the bill aimed at the National Endowment for the Arts.

In response the President and his staffers, backed by progressives and issue-oriented organizations, seem to be losing the PR battle to convince people that spending of this sort is actually stimulative:  it creates or saves jobs and injects money into the economy.  The tax cuts and spending reductions which figure prominently in the Republican counter-proposal, on the other hand, represent a continuation of the Bush Administration’s approach and we all know where that left us.

The other theme is the incredible outrage — being fanned by the media to the point where the President and members of Congress are offering harsh criticisms — about the indulgences shown by the very companies that were bailed out at taxpayer expense.  From the Big Three CEOs arriving in their private jets to beg for money from Congress, to John Thain’s $1.2 million redecorated office, to Bank of America sponsoring a big blow-out party at the Super Bowl, the public is aghast at the excesses and the apparent sense of entitlement that spawned them.  The common reaction to the relentless revelations appears to be anger that these fat cats are so divorced from the reality in which the rest of us reside that they don’t see anything wrong in what they are doing.

And yet, as ill-advised and tone-deaf as these instances of excess are, they at least help stimulate the economy.  Goods are consumed, workers are employed, and taxes are paid.  At an elemental level, the multipe millions spent by BofA on its “NFL Experience” is not appreciably different in its stimulative effect than those same dollars being spent on, say, a museum.  We can argue back and forth about which creates the greater social good or represents a better investment in America’s future, but they are essentially the same in terms of economic stimulus.

That we see them as somehow different suggests to me that the Republicans have once again prevailed in the framing contest.  Rather than judging spending on the basis of how well it stimulates the economy, we have been drawn into debating the merits of specific expenditures on the basis of their intrinsic worthiness rather than their ability to create/save jobs, make an investment in the future of our country, and save money down the road.

3 Responses to “A Confluence of Outrages”

  1. gcotharn says:

    I can’t tell for sure, but: are you suggesting conservatives approve of bailed out companies flying private jets and spending $1.2 million to redecorate offices? B/c we don’t.

    When corporations take public bailouts, those corporations are instantly in partnership with taxpayers, and therefore such expenditures are obscene and unvirtuous (not that they were ever virtuous in the first place). When corporations go into bailout partnership with taxpayers, Congress should get themselves into the middle of those corporations’ business. Before dispensing funds, Congress should throw weight around and demand austerity, accountability, and methods of ensuring same. It’s shameful Congress hasn’t demanded such power in return for handing over taxpayer monies. An investment banker would demand such power before making a major investment in a company. Congress is effectively making taxpayers into investment bankers who are forced to lend to failing companies without receiving corresponding and customary stake in how those failing companies are run. It’s shameful Barack is in the position of criticizing CEO pay bonuses, then immediately seeing the government hand over $Billions to those very CEOs.

    Separately, re “what stimulates the economy”

    Every expenditure ripples through the economy. The debate is always about which expenditures stimulate and grow the economy most efficiently. The Right believes private expenditures are the most efficient; that economic growth vastly comes from the private sector instead of the public sector. The Left absolutely, diametrically disagrees.

    But, we can agree a partial taxpayer funding of a $1.2M office is obscene. We are the World! Sweet! Let us walk hand in hand…

    • DrGail says:

      I think the expressed outrage regarding the $1.2 million office redecoration (as just one of the offered examples) was actually strongest among the media and the voting public, although among lawmakers it was certainly louder on the D than the R side of the aisle. Offhand, I can’t recall any R lawmaker making a public statement of outcry about some of these excesses, while there have been numerous D lawmakers (including the President) doing so.

      You and I could not agree more about the degree of oversight Congress should be exercising on companies that took bailout money. Let’s not forget who structured and drove through those bailouts that have been so woefully misapplied and mismanaged — Do the names George W. Bush and Hank Paulson ring a bell?

      The Right believes private expenditures are the most efficient; that economic growth vastly comes from the private sector instead of the public sector. The Left absolutely, diametrically disagrees.

      This is the most simplistic of statements and, as such, pretty much wrong. Private sector spending would be lovely, and I (as would other progressives) heartily approve of it. In fact, that’s much of what’s in the stimulus bill. Money put into the hands of people who are “on the edge” — unemployed, uninsured, barely getting by — would be spent almost immediately and have stimulative effects for core industries. It would also be a mitzvah and a quite christian thing to do.

      Money put into the hands of people who are relatively better off — which is what the R-proposed income tax rate cuts would do — has very little stimulative effect. It is largely used to either pay off bills or is put into savings. Nobody is buying anything (when’s the last time you made a major purchase?), credit is tight or nonexistent, and the outlook is so poor that people (and companies) aren’t making long-term or capital investments.

      I can’t say it any more plainly: Trickle down doesn’t work. I know this tidbit of wisdom emanated from St. Ronnie and therefore is held sacrosanct by those of the conservative persuasion, but facts are facts.

      Corporate tax cuts sound good as well, on the surface. But many corporations don’t pay any taxes at all, having located their headquarters offshore (see Halliburton, e.g.). Smaller companies, which don’t have the wherewithal to set up shop in Aruba or wherever, are the much-vaunted engine of job growth. But you don’t pay taxes no matter what the tax rate is if you have no profits. Further, there is absolutely no reason to think that companies who get to pay lower taxes will create jobs. The last time I went to business school, it seemed a truism that companies create jobs when they have need for the labor (which is usually because sales justify increasing production capacity), not when they have the money to do so. Companies that find themselves with an unexpected surplus of money usually direct it toward their investors (in the form of dividends), their executives (in the form of bonuses), or use it to buy up other companies.

  2. gcotharn says:

    GWB’s support of the bailouts – especially his Executive support of bailouts for automakers – was misguided and was damaging to our nation. Thumbs WAY down.

    Bernanke reminds of an auto salesman, ie. You’ve got to do this deal now. RIGHT NOW. In the next 10 minutes! No time to waste! Hurry. Hurry. You have to do this deal NOW. No more thinking. No more consideration. NOW. GWB and Congress fell for it. The nation is paying for it.

    We hugely disagree on top down vs. bottom up recovery. No sense in my beating that horse.

    I do mention this: Corporate headquarters fleeing is not a reason to keep corporate taxes high. Corp headquarters flee partially BECAUSE OF high corporate taxes. The same dynamic occurs with individual high performers in all fields: let income taxes get too high – at the state level or the national level – and some will consider fleeing and taking their talent with them: a slow bleeding of talent and production away from a state or a nation.

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