Bipartisanship and Its Discontents

Krugman, “What the centrists have wrought“:

The short answer: to appease the centrists, a plan that was already too small and too focused on ineffective tax cuts has been made significantly smaller, and even more focused on tax cuts.

Ian Welsh, Firedoglake:

The Senate Bill is apparently $780 billion, 42% is tax cut, 58% spending.  That means tax cuts are: $327.6 billion.  Spending is $452.4

The House Bill was $819 billion.  Of that $275 billion were tax cuts.  Spending was $544 billion.

So the Senate bill is almost half Republican tax cuts, which is quite an appeasement for the sake of bipartisanship.  Yet Republicans are still yammering about how bad this bill is.  Despite what President Obama might think, this isn’t helping anybody.

Let’s focus on how bad the tax cuts for bipartisanship are.  Krugman again:

My first cut says that the changes to the Senate bill will ensure that we have at least 600,000 fewer Americans employed over the next two years.

Ian Welsh, again:

The tax cut increases will increase job creation. Total tax cut increase is $52.6 billion.  $52.6 billion/140,000×0.5 jobs = 187,857 jobs created.

The spending cuts will decrease job creation.  Total spending cuts are $91.6 billion.  $91.6 billion/140,000×1.4 = 916,000 job losses.

Add job gains to job losses and you get a net loss of 728,143 jobs.

That’s Welsh’s low estimate, actually.  But either way…

I’m sure Senator McCaskill’s [and other moderate’s] pride will be a great confort to those hundreds of thousands of additional unemployed people and to their children, spouses, friends, parents and other loved ones.

Is President Obama blowing his political capital to get bipartisanship for a stimulus bill that won’t do enough to stimulate the economy?  The President might only have one shot to get this right, and the situation is desperate enough to  make me agree with Big Tent Democrat:

When President Obama comes back for more, he will be told that “spending” did not work and that he has had his chance at stimulus. I do not believe there will be second bite of the stimulus apple. This is why the 11 dimension political chess defense does not even make sense on its own terms.

President Obama has committed a grievous mistake imo. I do not think it can be corrected.

Furthermore, why the hell are we haggling with the Republicans over this when we won?  Why are Obama and the Democrats empowering them?  How come I hear from Mitch McConnell more then Harry Reid?  Last time I checked, McConnell is the minority leader.

Bottom line: To the detriment of the stimulus package, half the bill is now tax cuts — yet the hardline Republicans still won’t vote for it.  There’s your “bipartisanship”.  The only thing this sordid affair proves is that for President Obama to do the right thing, he needs to ram it through Congress without regard of what the Republicans think.  That’s what Obama has the political capital and votes to do right now — a confluence of power he might not have in the future.  So get it done, now.

(edited by DrGail)

3 Responses to “Bipartisanship and Its Discontents”

  1. utm says:

    here’s a short, independent political advert against bipartisanship:

    http://www.youtube.com/watch?v=1IXCf-y2mWg

  2. Jeff says:

    I’m not sure if it makes sense. Economies go through cycles and recession is part of the cycle. I read the history of cycles at http://www.recessioninfocenter.com

  3. tas says:

    I got that covered with one of the links, Jeff, though it’s something I glossed over quickly. But there’s economic cycles of bubbles and depressions, but then there’s us today.

    This is not a normal recession. This has the potential to turn real ugly. To put this in another perspective, I’m not sure what the unemployment rate was in 1929, but by the time FDR took office in 1933, it was at 25%. But that’s straight unemployment — there was no unemployment insurance back then. Today we have unemployment insurance, and the unemployment rate is calculated by seeing what percent of the population is on unemployment. But the insurance runs out. In other words, that 7.6% unemployment rate we see right now doesn’t take into account all the people who have been unemployed for a while, ran out of insurance, and still can’t find a job. So in terms of FDR’s era, where does that put our employment rate.. 10 percent? 12 percent? 12.5% would bring us halfway to what FDR faced going into office; but that 25% FDR saw was allowed to go during the Hoover administration since, in 1929, our economic problems (which, in an ironic parallel to today, were partly caused by a credit bubble due consumption beyond our means) were underestimated.

    I’d rather err on the side of caution and overestimate our economic problems today. If we overspend and the economy gets back on track, then we’ll at least have the money to pay back the debt.

    Regardless, because the outgoing Bush administration took on the mortgage backed security debts of Fannie Mae and Freddie Mac, the government will pay out trillions anyway — the Fed now owns all those shady flex-rate mortgages. So the government pays for each foreclosure, and the total debt Fannie and Freddie accrued is $5 trillion. If a $1 trillion, or even $2 trillion, stimulus plan is needed to create enough jobs to stop foreclosures, great — do it. Otherwise, the government will just pay $5 trillion in the future. Why nobody is discussing this facet of the story is beyond me because this makes any stimulus plan look like a bargain.

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