Sen. Arlen Specter is the King of on-the-one-hand-on-the-other-hand bullshitting, but his decision to endorse the stimulus package in today’s Washington Post is duly noted and appreciated. As a justification, it’s better than I’ve come to expect from Arlen, although his perception of what is ‘necessary’ is patently self-serving. Be that as it may, Specter makes a couple of points worth remembering. First, he points out that we’re experiencing a global crisis of confidence and we must pass a stimulus bill (regardless of what is in it) and second, he quotes John F. Kennedy:
“In politics,” John Kennedy used to say, “nobody gets everything, nobody gets nothing and everybody gets something.” My colleagues and I have tried to balance the concerns of both left and right with the need to act quickly for the sake of our country. The moderates’ compromise, which faces a cloture vote today, is the only bill with a reasonable chance of passage in the Senate.
However, Arlen neglects the elephant in the room, which is the concern that the stimulus package is too small. Mind you, the experts are not arguing that the stimulus package is too small by the relatively small amount represented in the Senate cuts that Arlen describes, but by hundreds of billions of dollars.
With the United States government close to roughly $12 trillion in debt and contemplating tacking on another $800 or so billion, the two bodies will wrestle all week over some $40 billion. By congressional standards, that’s the change in the couch cushions.
Remember that when you hear people huff and puff about the size of the moderates’ bill. The moderates’ bill is roughly the same size as the House bill, and the difference is the equivalent of couch change. However, the stimulus package isn’t the end of spending.
Still looming out there (and relevant to the stimulus bill with the still-enormous price tag) is another omnibus appropriations bill to continue government funding when last year’s continuing resolution expires on March 6th. Oh, and possibly another trillion dollars for yet another TARP round.
I wish I was kidding about that.
David Waldman reminds us that we never passed most of last year’s appropriations (and so have been operating the government at 2007 levels all during this fiscal year) and that we have more TARP money coming (to be announced by Treasury Secretary Tim Geithner tommorrow). How many ‘economic experts’ have been honestly accounting for the next two huge spending bills when they estimate total stimulus? Answer: not one that I have seen.
You can safely add another trillion and a half in spending to whatever comes out of the final stimulus package. Many of my fellow liberals are quick to argue that all spending is stimulus when it serves their purpose, but quickly drop that rhetoric if any of the money goes to shore up the financial sector. And how many have you seen mention that government spending will go up across the board once last year’s appropriations are passed?
Unfortunately, the size of our economic hole is so large that it is still reasonable to wonder if all this spending will be adequate to the task. But, again, don’t get in a lather over couch change.
“Many of my fellow liberals are quick to argue that all spending is stimulus when it serves their purpose, but quickly drop that rhetoric if any of the money goes to shore up the financial sector.”
They drop that rhetoric because with TARP 2, stimulus as a generic concept takes a back seat to issues of moral hazard, unjust enrichment, rape of public finances for personal gain, privatized profits and socialized losses, etc., etc. Surely you are not ramping up an effort to have liberals swallow whatever “bad bank” voodoo bullshit is likely coming down the pike tomorrow, are you?
To some degree I am reserving judgment until I see what they’ve come up with. My personal opinion is that we will wind up nationalizing the banks for some period of time, and I know we are not announcing that intention tomorrow. So, I am very skeptical that their plan will work as envisioned but fairly confident that it is just a step in the road towards nationalization.
In any case, I don’t nationalization for nationalization’s sake, but only because I see it as the only way to get fair value for the taxpayer’s dollar.
However, if all spending is stimulus and therefore roughly the same, as my liberal brethren keep insisting, then TARP II money is stimulus, too.
I happen to agree that bailing out Citicorp without nationalizing it is wrong both morally and as policy, but it is stimulus.
Well, sure. Giving George Bush a $1 billion going away present would be stimulus also, but stimulus for its own sake would take a back seat to moral concerns in terms of whether such a proposal should be supported. “All spending is stimulus” is merely an aswer to the Republican and Blue Dog claim that certain elements of spending in the bill are “not stimulus.” It’s not an anwer to every possible criticism of a given spending proposal. My concern with TARP 2 being a “step to nationalization” is that it will be a wasteful step. We have already handed Citibank and BOA direct infusions and guarantees that exceed their current market cap by tens upon tens of billions of dollars, for a paltry stake in their firms. Why spend hundreds of billions more tap-dancing around the reality that they and others are failed institutions that need to be put in receivership?
And speaking of receivership, why are we not using a term like that to describe the more sane process of managed dissolution, the very same process we used with the RTC back when the S&L’s failed??? Suddenly everyone is throwing around the term “nationalization,” which makes people think of third world dictators taking over American assets on a whim.
I welcome your embrace of nuance. I wish I saw more of it. My preliminary feeling is that you’re right that a two-step to nationalization will be wasteful. But I await the plan.
a couple of posts back you said framing was for suckers.
what do you mean by that?
dont you think if the stimulus package was framed as the jobs package and every program showed how many jobs it would create that this thing would be an easier sell….and maybe even more interesting is if the whole thing were framed as a jobs bill then the people would push to see more of the info on jobs and want more spending on jobs which right now seems a far away result of spending.
no, I don’t. The bill is going to pass. The GOP is not going to vote for it as a matter of strategy and they could care less how we frame the argument.
I just wish the DOD would take a large hit. The enormous expenditure for defense-related activity is gross, even for a military gadget junkie like me.
Busy Monday For Obama…
The President speaks at 12:30 this afternoon in Indiana and has a live Press Conference on TV tonite (at least C-Span… I haven’t seen the network schedules.)
Even given the seriously weakened Stimulus Bill as created in the Senate (they vote on it today, I believe) with only 3 Republicans on board (does that make it Bipartisan? I don’t think so…). Obama has to insist that it go through so we get a star here.
It will be in bill after bill coming right on the heels of this one that even more changes and high-debt expenditures will HAVE to be made, Republicans kicking and screaming or not, that the things which were cut out will have to be replaced. As soon as we see what has and has not been effective there will be even less time left for repair.
If we don’t want to be part of the Great Depression II, we had better do some radical spending. And this does not mean TAX DEDUCTIONS!
Under The LobsterScope
the fact that arlen speculum supports this at all is an indicator of how difficult his re-election will be.
In 2004, he nearly lost to Pat Toomey, a hard-right dingdong. Bush himself showed up to save specter’s ass, and he depends on the support of conservative democrats to hold onto power.
But what a change! Penn Democrats no longer have to hold the line against Rick Santorum, as we did in 2004. we have a conservative Democrat in Casey, and several other conservative democrats with appeal (to some anyway, not me). Pat Murphy and Allyson Schwartz are two warmongering, wiretapping bank-lovers who both have their eyes on Specter’s senate seat.
I really hope specter gets a challenge from the right as well this year, forcing old cancerhead to flip flop like the stinking old trout he is.
Patrick Murphy is a warmonger with a link to Sestak is a warmonger?
You can do better than that.
the warmonger link was more about allyson schwartz.
If you’d like i can go over the blank checks that Pat Murphy voted for.
actions speak a lot louder than words. pat’s got good rhetoric, but his votes on those three subjects suck balls. i’m not about to pretend that he’s some kind of good guy for smiling in my face when he votes against my interest. I realize you’re his friend, and friends tend to downplay each other’s glaring flaws, so i don ‘t expect you to point out his record like i do.
go ahead and point me to his blank check votes.
did my research, and you are half-right.
he voted for one blank check, or rather the procedural vote that allowed the house to vote for blank-check funding without any consequences:
So no one actually knows if he did or didn’t: but that was the purpose of the vote to begin with, kind of the way people like Lieberman vote “yes” on cloture, and then no on confirmation for people like Alito.
boo, you’ll have to pardon my mistrust of democrats. they’ve done so much to earn my trust over the past few years, that my suspicion is probably unwarranted. i mean, when was the past time a politician said one thing and did the other? that only happens in the Republican party.
I’m half-right?
Murphy voted against blank checks everytime. Unlike Sestak and Schwartz.
But you posted a link to Sestak and Schwartz’s votes and called Murphy a warmonger.
Despite compiling a conservative voting record in his first term, Murphy gave me every vote I felt was important except one (retroactive immunity). Considering how important I felt that vote was, I weight it very, very heavily, but I also know that Obama pulled the rug out for anyone one in a tough district that wanted to vote against immunity. Murphy played it safe and I remain disappointed in him for letting the American people down on that vote. But you should not distort his record out of animosity over one vote.
i don’t think I’m distorting his record, but i won’t call him a warmonger anymore.
Given the procedural vote that preceded the war funding vote in the linked article, you have no idea how PM voted, unless he told you personally. Given the willingness of politicians to lie their heads off, i wouldn’t put too much stock in anything someone in that line of work says.
You can call me cynical for that if you’d like, but given recent events on FISA, and Changey’s state secrets trick, i think my distrust is more than justifed.
Sigh.
At some point you are going to realize that David Sirota has a credibility problem.
The procedural vote he refers to passed 218-201 with only two Republican votes. The only Democrats to vote against the rules were Democrats like Stark, Waters, and Kucinich, who generally vote against all defense appropriations.
What was in the bill?
Shoving SCHIP, Katrina funding, an increased minimum wage and ‘other matters’ into the bill was what the Rule was all about, and why the Republicans almost universally opposed it. The Democrats didn’t have the votes to stop funding so they made the Republicans eat a lot of shit as revenge.
But Sirota portrayed it as a way to hide who was voting for the war. Both votes are in the record, and it’s a total misunderstanding of how Congress works to interpret a vote for that rule as a vote for the war.
Since it is likely that no stimulus is large enough, who’s got the plan for total economic collapse and it’s aftermath? I’m sure we are expecting the best and preparing for the worst.
I’d like that plan to be made public sooner than later.
People should know what will come if there is mass disruption of order.
I guess that would be a DHS activity – who’s on the Freedom of Information request?
Am I the only to find the irony in Specter quoting JFK? Don’t any of you know about physics and history?
Couch change:
Krugman’s a smart guy, but he has zero political sense. I’d trust Axelrod to get the politics right before I’d trust Krugman.
Here is my point.
Krugman isn’t saying that the stimulus is too small by $40 billion but he’s acting like the cut of $40 billion is a travesty and a disaster.
You can’t make that argument.
By Krugman’s logic, the House plan was way, way too small and therefore a travesty and a disaster. The fact that the Senate version is marginally worse is almost immaterial.
He’s not making an honest critique even if his economic judgment is sound.
If the goal of the stimulus is to reach a magic number of, say, 5 million jobs, then yes, you could say that the House stimulus fails because it only saves/creates 3 or 4 million. Therefore, it doesn’t matter if the Senate version creates 600K less than that.
But there is no magic number. It is not Vegas or Bust.
As parvenu said in a comment yesterday, the word “stimulus” is sexy but what we are looking at it more like a job loss suppression plan. Many of the jobs being created aren’t permanent. This is about softening the landing for American workers and families and cutting off a larger deflationary spiral. Each and every job that gets created works toward that end.
3 million can be too low overall but still preferable to 2.4 million. It is not dishonest of Krugman to say so.
Plus, we’re talking about up to 600K people–that’s a lot of families that will still be able to pay their mortgages or rents and feed their kids. I would never call that couch change.
First of all, about the half the tax cuts are for payroll taxes and should be very effective. Other tax cuts will be anywhere from inefficient to comparatively inefficient. Still other tax cuts will help spur car and home manufacture but may work at counterpurposes when it comes to the credit bubbles.
We can argue for a 10 trillion dollar plan that would, on paper, lead to full employment, but that isn’t workable.
Let’s posit that the House version will create 600,000 more jobs, just for the sake of argument. In that sense, it is a more efficient expenditure of money. Yet, we will also be creating jobs when we pass last year’s appropriations (something Krugman doesn’t mention, let alone calculate) and when we pass the TARP II money (which will also include a lot of money to deal with the foreclosure crisis). Krugman doesn’t calculate that, either.
My question, then, is how much will this trillion dollars of new spending (much of which is earmarked for this fiscal year) going to ameliorate the shortfall Krugman discusses when he argues for a $1.2 trillion package. By my calculations, the stimulus, plus TARP, plus TARP II, plus the last year’s appropriations package, plus this years appropriation’s package, should add up to over three trillion in increased spending. Does Krugman take that into account?
Not that I’ve noticed.
If we’re going to look at spending through a wide lens, let’s look at unemployment that way too.
Let’s say the additional spending you cite accounts for 4 million jobs on top of the hypothetical reduced stimulus figure of 2.4 million. That makes 6.4 million.
We have lost 3.5 million jobs since the beginning of last year. 600K jobs in each of the last 3 months. If the private sector loses in the aggregate, say, 10 or 12 million jobs, from last year to the end of next year, then 6.4 million is still not enough, but 7 million is still better.
Small lens or wide lens, 600K additional jobs is still preferable. That’s all Krugman is saying.
From the get-go, Krugman has argued for a $1.2 trillion stimulus plan. So, he criticized the House bill for being too small and having far too many tax breaks in it.
The Senate bill adds another $100 billion in ineffective tax breaks, and cuts out $100 billion of some of the best spending items (state aid, school construction, food stamps, science research). The $40 billion in state aid is a big deal, but it’s only a part of the cuts Krugman and others are upset about.
So overall, the bill is about 20% less effective (2.4 million jobs instead of 3 million jobs). Yet it is a dishonest critique for Krugman to point out that this is a travesty?
I’d rather fight for those 600,000 potential jobs than to simply dismiss the centrist cuts as pocket change or “marginal” changes.
But that criticism is part and parcel of a flawed political understanding. Krugman does not see this as an opening shot in a long campaign – he is trying to evaluate this bill in isolation as if Obama was going to fold the tent after it passes.
I don’t really think it’s nitpicking to be upset about the gutting of aids to states. The $40 billion in state aid wasn’t enough, but at least it was something substantial. I know folks who work at public schools here in California, and they will be laid off if those cuts remain.
The TARP I and TARP II money won’t save these state jobs. The appropriations bills won’t save these jobs, unless Obama slips in state aid and more education funding. So, it’s not really “couch change” when we are talking about hundreds of thousands of jobs.
There is a real difference between spending $70 billion on the AMT fix for people making over $100,000 per year, and $70 billion for schools, health care and supertrains.
TARP money is not stimulus. Covering that bad paper will only save the jobs of bank execs. It does nothing for the country. It is just welfare for the rich.