Friday, January 9, 2009


One vote short of a super-majority in the Senate, with punishing majorities in the House and control of the White House, the last thing we should be hearing is talk about "bipartisanship". We hold elections for a reason, and the consequence of the last two is that the GOP has been thoroughly hammered and rejected as the ruling party. The Dems need one vote (if we include Lieberman in the Dem caucus) to push through any proposal they like and overrule a filibuster.

Yet despite these electoral mandates, despite the huge momentum of political capital buoying up the new President-elect, we are given tepid, half-way proposals for action.

Paul Krugman writes in his most recent column:
Is the plan being limited by a lack of spending opportunities? There are only a limited number of “shovel-ready” public investment projects — that is, projects that can be started quickly enough to help the economy in the near term. But there are other forms of public spending, especially on health care, that could do good while aiding the economy in its hour of need.

Or is the plan being limited by political caution? Press reports last month indicated that Obama aides were anxious to keep the final price tag on the plan below the politically sensitive trillion-dollar mark. There also have been suggestions that the plan’s inclusion of large business tax cuts, which add to its cost but will do little for the economy, is an attempt to win Republican votes in Congress.

Whatever the explanation, the Obama plan just doesn’t look adequate to the economy’s need. To be sure, a third of a loaf is better than none. But right now we seem to be facing two major economic gaps: the gap between the economy’s potential and its likely performance, and the gap between Mr. Obama’s stern economic rhetoric and his somewhat disappointing economic plan.

"Political caution"? "An attempt to win over Republicans"? A friend has suggested to me that the rhetoric of bipartisanship could be being implemented in an attempt to forestall the inevitable obstruction from the Republican congressional minority. But we aren't talking about rhetoric here. Obama's stimulus plan is a concrete policy proposal, and I cannot see any reason to blame Republican opposition for its tepid and 'cautious' (which is to say, unduly conservative) character.

When this 'cautious' spending regimen doesn't work wonders, what will Democrats say to idiotic morons like Mitch McConnell when they inevitably start bantering that "gummint spending doesn't work"?

We would be mistaken in a characteristically liberal fashion, however, if we simply assumed that "political caution" meant only throwing a bone to the Democrat's electoral opponents. Obama and company took power with the blessing (and financial backing) of powerful business interests, and the Administration already has representatives of Capital sitting in cabinet posts. In short, there is a general sense in which Obama's crew aims to keep Capital supportive of the new Administration. But we should not confuse this with prudence, expediency or economic wisdom: this is an expression of the new Administration's ideological trajectory and economic alliances.

FDR's administration made the nearly-fatal mistake of trying to balance the budget after an initial round of massive government spending and quasi-Keynesian initiatives, a similar example of political 'caution' which derailed and obstructed the ability of the spending initiatives to generate recovery by stimulating demand. This example is different in many important ways, but the strategy was mistaken for the same reasons as Obama's apparent flip-flopping, hodge-podge approach.

1 comment:

Arvilla said...

There was a similar conversation on NPR a couple days ago. I can't remember who it was on Diane Rehm but the guest was saying, basically, why are you people saying he did the business tax cut thing to get Republican support? What on earth would indicate to you that Obama himself isn't ideologically content with building the economy around corporate well being first and foremost? Workers get a measly $500 in this "massive" stimulus deal? Ugh, how progressive indeed.