Not so fast

[This post ended up being pretty long, so grab a coffee.]

Generally, I’m remiss to question the brilliant writing of Frank Rich, but his column this week erects political grave stones far too early for my tastes.  Concerning Obama’s victory on the stimulus bill, Rich says:

The G.O.P. doesn’t recognize that it emerged from the stimulus battle even worse off than when it started. That obliviousness gives the president the opening to win more ambitious policy victories than last week’s. Having checked the box on attempted bipartisanship, Obama can now move in for the kill.

There’s a couple views on this.

Perhaps I shouldn’t attribute this to Rich because he doesn’t specifically mention other pro-Obama quarters discussing this stimulus bill as a historic victory for the president, but the impression I get from Rich’s column is that he’s no less glowing in the impression of Obama’s supposed brilliance.  Some things need to be balanced here, though.  First off, this stimulus bill is only $800 billion; and I say “only” because Bush’s first major economic act in his presidency was the $1.35 trillion tax cut bill.  So if we’re going to discuss historic Congressional acts for presidents, I have to look at this objectively and say, in this realm, Bush has Obama beat.  Yet none of us on the left side of the fence discuss Bush’s original tax cut bill, which nearly a quarter of Senate Democrats in 2001 voted for, as Bush pushed the larger bill through a Congress with more opposition, as “historic”.  So let’s cut the partisan bullshit of painting Obama’s first achievement in unneeded glowing terms — which isn’t to take away from his accomplishment in general.  Obama has scored an initial victory, but at least a few years must pass before any historic retrospective narrative is attached Obama’s actions concerning this stimulus bill.

Furthermore, concerning Obama’s electoral victory, Rich says:

A useful template for the current political dynamic can be found in one of the McCain campaign’s more memorable pratfalls. Last fall, it was the Beltway mantra that Obama was doomed with all those working-class Rust Belt Democrats who’d flocked to Hillary in the primaries. The beefy, beer-drinking, deer-hunting white guys — incessantly interviewed in bars and diners — would never buy the skinny black intellectual. Nor would the “dead-ender” Hillary women. The McCain camp not only bought into this received wisdom, but bet the bank on it, pouring resources into states like Michigan and Wisconsin before abandoning them and doubling down on Pennsylvania in the stretch. The sucker-punched McCain lost all three states by percentages in the double digits.

OK look, to say that Obama beat McCain in Rural America because he had this super duper, ass-kicking strategy to stick it to the GOP is crap.  During the latter days of the campaign, the economy tanked and McCain, constantly searching for a message, panicked.  If McCain had the wisdom to pick Romney, a successful businessman, to be his running mate then Obama might already be a footnote in history.  Unfortunately for him — and fortunately for the rest of us — McCain stuck his foot in his mouth and picked Sarah Palin, whom most of the country laughed at, and the continued tanking of the economy played to the favor of the non-incumbent party’s candidate.  Now I know that Obama’s campaign had a spectacular grass roots presence which translated into an unheard of get out the vote effort, but to focus solely on Obama’s strategy and not recognize the other facts which made his victory inevitable is just plain being ignorant.  Let’s not rewrite history and apply more to Obama then he’s actually done — we need to keep our feet grounded in reality here.

By picking these two example of Rich placing Obama on a pedestal, I’m forced to revert to the cliche voiced by many…  This man is not the savior.  Everything he does isn’t a miracle.  Outside factors do play a role in how Obama has been able to affect our reality.

As for Obama really sticking it to the GOP any chance he gets, which is the main point that Rich’s column attempts to drive home, let’s look at the facts: In Obama’s push for “bipartisanship,” he allowed Republicans to water down the stimulus bill and then still not vote for it.  Depending on how the economy reacts to this bill, we may be wondering why Obama even played ball with the Republicans a few months from now.

ProPublica’s breakdown of the tax breaks provided by this stimulus package are troubling (h/t matttbastard), since eight years of Bush have proven that tax breaks aren’t stimulating to the economy.  $116 billion is going to a tax credit most of us will us to pay our bills; $69 billion goes to off-set the alternative minimum tax which, while needed, should have been handled by a separate bill because it’s not fucking stimulus.  And that’s just $186 billion — only a good chunk of the bill!  Compare that to the $26 billion being spent on highway infrastructure, otherwise known as spending which creates actual jobs.

I hate to be harsh.  There’s a lot of good and needed spending in this stimulus bill (yes, I will enjoy the $400 tax cut — well, actually, Toyota Financial will enjoy $380 of it while I use the other $20 to get myself a big ass steak dinner), I just don’t think there’s enough spending to create jobs. I’m not the only one, either.

So what’s enough?  Where does our economy stand and what is enough to fix it?

Lately, I’ve been rethinking my assertion that the financial system is sound enough for banks to start lending again, but their holding back because they know a couple trillion could be headed their way in bailout funds.  Many have pointed out that the US banking system is, essentially, insolvent right now. These banks have so much bad debt on their hands that people don’t want to invest in their, since that’s like investing your money in a bottomless pit.  Who knows when or what bank will declare bankruptcy because they carry too much debt from bad loans?  And if a bank one invests in does go belly up, that invested money is gone – kaput.  Bye bye.  Never to be seen again.  No one in their right mind would invest a penny in the banking system right now.

How big is the loan crisis for banks?  As this must see 60 Minutes story details, the sub-prime mortgage crisis may have just been the first wave of the housing bubble popping. What awaits us in 2009 and beyond are foreclosures of, among other things, NINJA loans: mortgages made to people with No Income and No Jobs.  You think that sounds nuts?  Hey, that’s just the way the giant pool of money rolls.

We live in crazy times.  People bought houses for $600,00 in 2007 but now the price of their home is $200,000 — not to mention that bring the price of the rest of homes in their neighborhood.  What will keep them paying down a mortgage worth triple the value of the property?  Before banks start lending money again, they have to answer this question.

And that’s really the crux of the matter because until banks start lending again, the economy will be stalled.

Ultimately, the question one must ask of the stimulus bill, and whatever plan the Obama administration rolls out to bailout the banks (even Rich admits that he doesn’t know what the fuck Geither is thinking — nor do any of us), is if the banks will start lending again.

If they don’t, then we could be addressing Senator McConnell as “Majority Leader” quicker than people like Rich can wonder why they’re not engraving the GOP’s headstone anymore.  This is why I wanted Obama to throw away the bipartisan bullshit, which amounted to dickall, and ram a bill through Congress that had so much spending aimed at job creation that we at least gave people no reason to stop paying their bills.  If they Republicans didn’t like it, then Obama should have had two word reply combined into one contraction: Fuck’em!  (Now that would have been a miracle.)

Instead, Obama let Republicans write parts of the stimulus bill that they didn’t intend to vote for anyway.  Now we’re left to sit idle and wonder if Obama spent his political capital on a bill that doesn’t answer the fundamental issues of getting our economy running again.  With the passing of time, I hope people like Rich can make me eat my words here — I’m just not so confident of that happening.

2 Responses to “Not so fast”

  1. A Giant Slor says:

    Great post. I would take issue with a couple of things, though. First, would the bill have gotten 60 votes if it hadn’t been rewritten? We might have had to deal with a filibuster. I know, “Let ’em filibuster,” people say. OK — then what?

    Second, while I agree that tax cuts will have little stimulative effect, they will still provide political cover. Lots of people like them and think they stimulate the economy, and they can hold that check in their hand and say, “Goody! Maybe Obama and the Democrats aren’t so bad…”

  2. tas says:

    Thanks. On the point of letting them filibuster if the bill didn’t get 60 votes, I think that would have also shown the Republicans to obstructionists too, especially coming off an election cycle where they were roundly smacked down and basically told not to govern for a while. As for the tax cuts, those won’t cover Obama — the only thing Republicans will say is that he didn’t cut enough taxes. And they will say that even if he cut more taxes than Bush did.

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