Senate Dems Compromise Away Best Parts of Recovery Plan

Senate Dems Compromise Away Best Parts of Recovery Plan

By John Nichols, The Nation
Posted on February 7, 2009

Determined to pass something in the way of a stimulus package, Senate Democrats on Friday bartered away key elements of the more robust plan approved by the House.

...

The Senate plan is dramatically more weighted than the House bill toward tax cuts (which account for more than 40 percent of the overall cost of the package). This is despite the fact that there is a growing consensus -- among even conservative economists and policy makers -- that tax cuts will do little or nothing to stimulate job creation in a country that lost almost 600,000 positions in January alone.

...

The Senate's increased emphasis on tax cuts comes at the expense of the aggressive spending in key areas that might actually get a stalled economy moving.

Spending for school construction that would actually have put people to work -- while at the same time investing in the future -- has been slashed. (Almost $20 billion slated for school construction is gone.)

Money for Superfund cleanup, Head Start and Early Start child care, energy efficiency initiatives and historic preservation projects -- all of which create or maintain existing jobs -- has been cut.

...

The bottom line is that, under the Senate plan:

* States will get less aid.
* Schools will get less help.
* Job creation programs will be less well funded.
* Preparations to combat potential public health disasters -- which could put the final nail in the economy's coffin -- will not be made.

In every sense, the Senate plan moves in the wrong direction.

...

- rest at www.alternet.org/module/printversion/125844

 

"A slight majority, 54 percent, favors the bill; 45 percent are opposed."

- www.cnn.com/2009/POLITICS/02/09/poll.obama.stimulus/index.html

 

Thank you, Mr. Krugman. I couldn't have written a better column if I tried. :thumbs:

Hopefully, President Obama has learned his lesson, despite what he said on Saturday, and will stand up for the American people against those(such as most Republicans and a few Democrats) who, so far, are too timid to do what needs to be done to create jobs and shorten the recession.


February 9, 2009
Op-Ed Columnist

The Destructive Center

By PAUL KRUGMAN

What do you call someone who eliminates hundreds of thousands of American jobs, deprives millions of adequate health care and nutrition, undermines schools, but offers a $15,000 bonus to affluent people who flip their houses?

A proud centrist. For that is what the senators who ended up calling the tune on the stimulus bill just accomplished.

Even if the original Obama plan — around $800 billion in stimulus, with a substantial fraction of that total given over to ineffective tax cuts — had been enacted, it wouldn’t have been enough to fill the looming hole in the U.S. economy, which the Congressional Budget Office estimates will amount to $2.9 trillion over the next three years.

Yet the centrists did their best to make the plan weaker and worse.
One of the best features of the original plan was aid to cash-strapped state governments, which would have provided a quick boost to the economy while preserving essential services. But the centrists insisted on a $40 billion cut in that spending.

The original plan also included badly needed spending on school construction; $16 billion of that spending was cut. It included aid to the unemployed, especially help in maintaining health care — cut. Food stamps — cut. All in all, more than $80 billion was cut from the plan, with the great bulk of those cuts falling on precisely the measures that would do the most to reduce the depth and pain of this slump.

On the other hand, the centrists were apparently just fine with one of the worst provisions in the Senate bill, a tax credit for home buyers. Dean Baker of the Center for Economic Policy Research calls this the “flip your house to your brother” provision: it will cost a lot of money while doing nothing to help the economy.

All in all, the centrists’ insistence on comforting the comfortable while afflicting the afflicted will, if reflected in the final bill, lead to substantially lower employment and substantially more suffering.

But how did this happen? I blame President Obama’s belief that he can transcend the partisan divide — a belief that warped his economic strategy.

After all, many people expected Mr. Obama to come out with a really strong stimulus plan, reflecting both the economy’s dire straits and his own electoral mandate.

Instead, however, he offered a plan that was clearly both too small and too heavily reliant on tax cuts. Why? Because he wanted the plan to have broad bipartisan support, and believed that it would. Not long ago administration strategists were talking about getting 80 or more votes in the Senate.

Mr. Obama’s postpartisan yearnings may also explain why he didn’t do something crucially important: speak forcefully about how government spending can help support the economy. Instead, he let conservatives define the debate, waiting until late last week before finally saying what needed to be said — that increasing spending is the whole point of the plan.

And Mr. Obama got nothing in return for his bipartisan outreach. Not one Republican voted for the House version of the stimulus plan, which was, by the way, better focused than the original administration proposal.

In the Senate, Republicans inveighed against “pork” — although the wasteful spending they claimed to have identified (much of it was fully justified) was a trivial share of the bill’s total. And they decried the bill’s cost — even as 36 out of 41 Republican senators voted to replace the Obama plan with $3 trillion, that’s right, $3 trillion in tax cuts over 10 years.

So Mr. Obama was reduced to bargaining for the votes of those centrists. And the centrists, predictably, extracted a pound of flesh — not, as far as anyone can tell, based on any coherent economic argument, but simply to demonstrate their centrist mojo. They probably would have demanded that $100 billion or so be cut from anything Mr. Obama proposed; by coming in with such a low initial bid, the president guaranteed that the final deal would be much too small.

Such are the perils of negotiating with yourself.

Now, House and Senate negotiators have to reconcile their versions of the stimulus, and it’s possible that the final bill will undo the centrists’ worst. And Mr. Obama may be able to come back for a second round. But this was his best chance to get decisive action, and it fell short.

So has Mr. Obama learned from this experience? Early indications aren’t good.

For rather than acknowledge the failure of his political strategy and the damage to his economic strategy, the president tried to put a postpartisan happy face on the whole thing. “Democrats and Republicans came together in the Senate and responded appropriately to the urgency this moment demands,” he declared on Saturday, and “the scale and scope of this plan is right.”

No, they didn’t, and no, it isn’t.

- www.nytimes.com/2009/02/09/opinion/09krugman.html?_r=1&ref=opinion

 

Paul Krugman:

MY CONNECTION WITH ENRON, ONE MORE TIME

I really didn't want to say any more about the Enron advisory board issue - I've already posted quite a lot of information here . I don't have anything to hide, but my job at the New York Times is to write about real issues, not myself. Still, the story keeps popping up.

Let me give the people bringing this up the benefit of the doubt, and suppose that they really are concerned about journalistic ethics. That's certainly a valid subject. It's important that a national publication like the New York Times insist that its journalists be free from conflicts of interest; kudos to my employers for their strict rules, which insist that writers be free from anything that might raise questions - rules that I have followed from the moment I joined the Times. It's also important for a journalist to disclose previous connections where they are relevant - which I have.

But somehow this keeps shifting from a real discussion of journalistic ethics, the guidelines that publications should adopt and that writers should follow, to a prurient fascination with other peoples' paychecks. If that's all that it's about, then it's tabloid journalism, not a real attempt to grapple with the issue.

Lately I find myself presumed guilty of an ethics violation simply because I was paid for my time. All that anyone wants to talk about is $50,000 (which turns out to be wrong - see below). There is such a thing as earning money honestly; if you want to challenge a journalist's ethics, you have to ask not how much he was paid but when, for what, and whether it distorted his writing. It's particularly important to get the context right when the person in question had a successful non-journalistic career before he went into journalism - which I did.

Too much of what I read about myself doesn't get even the most basic facts right. Critics imply, falsely, that I received money from Enron as a New York Times columnist - that I was receiving a bribe because of a prominent journalistic position that I did not in fact have at the time (unlike the other journalists who have served on that board, who held the same jobs then that they do today). They don't acknowledge that I disclosed my connection almost three years ago, and again a year ago.

And they don't acknowledge that I have been criticizing Enron since January 2001, long before everyone else started bashing the company.

By all means let's have a discussion about journalistic ethics; Enron has made us all a lot more conscious of ethical issues involving business. But a game of gotcha, in which anyone who received money from Enron is lumped in with the genuine malefactors in this story, does nothing to improve journalistic integrity - on the contrary, it's counterproductive.

To make it easier for anyone who is still interested in this story to get the facts right, here are some frequently asked questions about my role on the Enron advisory board, with answers.

1. What did I do? In early 1999 I was asked to serve on a panel that offered Enron executives briefings on economic and political issues. As far as I knew at the time, they genuinely wanted to learn something. I resigned from that board in the fall of 1999, when I accepted an offer to write for the New York Times.

2. What was I paid? It turns out that I was actually paid $37,500 - the last quarterly payment did not take place, because of my early resignation from the board.

3. Was this exorbitant? It didn't seem so at the time. In 1998-1999 my normal fee for a one-hour business speech in Boston or New York was $20,000 - more if the speech involved long-distance travel. The Enron board required that I spend 4 days in Houston. So the sum they offered didn't seem out of line - if anything it seemed rather low compared with my usual rates.

4. Was I being paid off because I was a journalist? That Enron board, when I was on it, did not strike me as a board of pundits. It included Larry Lindsey and Bob Zoellick - future Bush administration officials, though I had no way of knowing that, but certainly not journalists. It also included Pankaj Ghemawat, a strategy professor at Harvard, and Irwin Stelzer, an economist at the American Enterprise Institute. (Stelzer had a column in the London Times, but I didn't know that) The only person there I thought of as a journalist was William Kristol - I thought he was there to regale us with Washington gossip. And I regarded myself as being in the same category as Ghemawat - an academic expert, who was there because of his expertise.

An amazing number of people seem to think that I was paid by Enron while working for the Times. I wasn't - when Enron approached me there was no hint that a Times connection lay in my future. As soon as I shook hands with the Times, I resigned from that board.

I did write monthly columns for two magazines in 1999, but I would not have described myself as a journalist - no more so than, say, Laura Tyson, Robert Barro, or or Gary Becker, respected economists who write monthly columns for Business Week. I wrote a monthly column for Fortune; that column was neither a major commitment of time nor a major source of income. I also wrote a monthly column, for very little money, for Slate. My main sources of income were teaching, consulting, and business speaking.

5. Did I disclose my connection? Yes. I reported it the one time I mentioned Enron in Fortune, almost three years ago. I reported it again the first time I mentioned Enron in the New York Times, in a highly critical article more than a year ago. I didn't say that I was paid to serve on the board, but I thought that was obvious: who volunteers his services to for-profit corporations?

One point that seems to have been missed in all the mud-slinging: I was the only member of the board to declare my connection voluntarily. Lindsey and Zoellick, as government officials, were required to disclose their consulting; none of the other members uttered a peep before the January 2002 New York Times article about the board.

6. Should I have disclosed the sum of money I received? I have always understood that when writing about someone you disclose the fact of a potential conflict of interest, not the financial details. If I had disclosed the sum back in January 2001, when I first wrote about Enron for the New York Times, it would have sounded strange - I'm sure people would have accused me of bragging.

7. Did the payment from Enron cause me to write anything I would not have written otherwise? No. Some people seem to think that because I had nice things to say about Enron's energy trading in a Fortune article - in which I disclosed my connection - I was being out of character. But I have always been a free-market Keynesian: I like free markets, but I want some government supervision to correct market failures and ensure stability. Some of my pro-market Slate pieces enraged people on the left - check out The accidental theorist , or In praise of cheap labor . My Fortune piece about the rise of markets, illustrated by Enron's energy trading, was an attempt to take a sunshine break from the dark pieces I had been writing about the Asian crisis; it was also a favor to my editors, who devoted that issue to e-business. It wasn't at all out of character. In fact, the next column I wrote for Fortune was also a pro-market piece, with kind words for Milton Friedman and Margaret Thatcher.

8. Was Enron trying to buy my soul? That's for them to answer. But I wasn't selling.

- www.princeton.edu/~pkrugman/enronfaq.html

 

Bottom Line

President Obama would appear to have the upper hand in the current focus on Congress' efforts to pass a major economic stimulus bill. Not only does Obama get much higher approval ratings for the way in which he is handling the stimulus issue than do either the Democrats or, in particular, the Republicans in Congress, but a majority of Americans agree with him that passing such a bill is critically important for improving the nation's economy.

- www.gallup.com/poll/114202/Obama-Upper-Hand-Stimulus-Fight.aspx

 

A whole lot of the tax cuts will be spent on buying products produced in foreign countries thereby negating a great deal of the ability of the bill to produce jobs in the United States.

This idea that we can simply tax cut our way out this recession is wrongheaded. This is not the economic world of the 1960s nor the 1980s.

 

You're dreaming. But that's okay. Everyone needs to have a dream.