Paul Krugman has written a post on his blog about the likely effects of the bipartisan compromise on the stimulus bill that has been reached in the Senate, a compromise driven largely by Senate Democrats, not Republicans.
[T]o 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.
According to the CBO’s estimates, we’re facing an output shortfall of almost 14% of GDP over the next two years, or around $2 trillion. Others, such as Goldman Sachs, are even more pessimistic. So the original $800 billion plan was too small, especially because a substantial share consisted of tax cuts that probably would have added little to demand. The plan should have been at least 50% larger.
Now the centrists have shaved off $86 billion in spending — much of it among the most effective and most needed parts of the plan. In particular, aid to state governments, which are in desperate straits, is both fast — because it prevents spending cuts rather than having to start up new projects — and effective, because it would in fact be spent; plus state and local governments are cutting back on essentials, so the social value of this spending would be high. But in the name of mighty centrism, $40 billion of that aid has been cut out.
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.
My conclusion? Attacks on the stimulus bill had absolutely nothing to do with Filipino veterans, contraception, or any other tiny portion of the plan; if that 1% of stimulus spending were the real issue, those provisions would have been stripped and the plan would have passed in much the form it was originally introduced.
Opposition to the plan had everything to do with preventing the most effective portions of the stimulus from seeing the light of day. Republican elites have always been quite open open about their desire to sabotage government programs in order to prevent the American people from seeing what effective government looks like. Centrist or so-called Blue Dog Democrats have been complicit in this project of sabotage.
Remember: Bush would not nearly have been as successful as he was in achieving his goals if he hadn’t had Congressional support from Democrats. Blue Dog Democrats are completely complicit in everything that was endured over the last eight years. If they had joined the fight against Bush, many of the worst excesses of the previous administration could have been avoided or diluted.
My prediction?: Republicans and centrist Democrats will get the tax cuts they covet. These cuts will be very hard to reverse. The spending in the bill will be insufficient to slow the slump in our economy. Obama and left-of-center Democrats will get all the blame for the “failure” of the stimulus, and they will have expended all their political capital, so that an additional stimulus will be impossible to pass.
And in a sense, they deserve some of the blame. Stimulus supporters claimed over and over again in reasoned and tranquil and almost lethargic bipartisan tones that this bill was absolutely vital to the success/survival of our economy but failed to communicate that urgency to the American people or negotiate intelligently (by for instance, asking initially for much more than they wanted, knowing the final amount would be lower).
Do you hear any urgency in the tone of this video?:
Obama deserves the brunt of the blame for insisting that the initial stimulus plan preemptively incorporate the “bipartisan compromise” that he hoped to forge. Surprise, Mr. Obama!: Republicans and centrist Democrats didn’t reach their hand back in loving admiration of your placid bipartisan/postpartisan tones and simply go ahead to agreeably vote for the bill, no push back, no demand for further compromise. They demanded even more spending cuts, more tax cuts.
And they got ‘em. Given that they’re in the minority, and that they don’t actually have a real interest in helping the economy succeed under a Democratic administration, Republicans couldn’t have hoped for a better outcome, really. There’s a reason they’ve been more successful than Democrats over the last thirty or so years in national elections. They know how to fight for what they believe in. We barely even know what we believe in, apparently, or we’re afraid to say so, preemptively neutering our proposals out of fear that we might make the opposition angry. Perhaps conservatives simply deserve to succeed.
I’m looking forward to watching the inauguration of our first woman president in 2012. I think the Palin-Wurzelbacher administration, and the Republican Congress they will preside over, will be lots of fun for all of us. The new administration will give me lots of opportunities to write political satire. The 600,000 Americans whom the Republicans and centrist Democrats — and in an indirect sense, Obama and left-of-center Congressional Democrats — have ensured will remain out of work? Well, I won’t be one of them — I have a fancy college degree and reasonable prospects in my life — so what do I care about those losers?
P.S., all you awesome bipartisans, here’s Brad DeLong:
Comment by Lee — February 7, 2009 @ 9:06 pm
You criticize Obama’s bipartisan efforts for the same reason that some people criticize a policy of not torturing terror suspects. You say, “those Republicans/terrorists don’t give a damn about playing fair, so why should we treat them fairly.”
But you’re missing the point: The point of treating the terrorists/Republicans fairly is to gain the moral high ground, to improve your standing with the people at large. When America treats detainees fairly, it may not make a damned bit of difference to the detainees themselves, but it WILL make a difference to ordinary Muslims who value our humanity. And it is in America’s national security interest to make a positive impression on these people.
Similarly, when Democrats treat Republican politicians fairly, it may not make a difference to those damned Republican politicians, but it WILL make a difference to millions of American voters who will value the Democrats’ inclusiveness. Republican politicians may be sabotaging government, but most Republican voters want effective government, they want an effective stimulus. It does make a difference to make a positive impression on these people — as Obama obviously did before he was elected president.
With the support of the American people a president and a party can acheive great things — but without broad support from the American people, a president and a party have a hard time accomplishing anything. If you’re a Democrat and you want bipartisanship, you need to compel Republicans to support you. How do you do this? By drafting a bill that Republicans can’t possibly oppose — because the bill is so popular with the American people that Republican politicians would lose votes if they opposed it.
You write that Obama ”insisted that the initial stimulus plan preemptively incoporate the bipartisan compromise he hoped to forge.”
I would like to know where you get this idea from. It was Nancy Pelosi and a few top House Democrats who wrote this bill — and after it was written, they put Obama in the position of having to defend it. Now, you are telling a different story — suggesting that House Dems would have written the bill differently if only they’d been free from Obama’s negative influence.
Can you provide a single shred of evidence to support your claim that Obama put pressure on Nancy Pelosi and other House Democrats to write this bill differently than they otherwise would have? Where was this “insistence” you speak of?
This bill wasn’t a pre-emptive compromise. A pre-emptive compromise bill wouldn’t include hundreds of millions in contraceptives. A pre-emptive compromise bill wouldn’t include military aid to Filipino veterans of World War 2. You seem to think Obama fashioned this bill with an idea that Republicans would like it — but the facts are that Nancy Pelosi and a few top House Dems wrote the bill. Period. And the bill they wrote invited Republican criticism. You write Republicans “know how to fight for what they believe in. We barely even know what we believe in, apparently, or we’re afraid to say so, preemptively neutering our proposals out of fear that we might make the opposition angry.”
All right, go ahead: If you believe this bill should include military aid for Filipino veterans, then fight for it. If you want contraceptives in the bill, then fight for it. But House Dems didn’t do that. They put these things in and then sheepishly took them out — and in the meantime, every news analyst, columnist and editorial writer in America wondered aloud how these silly items got in the bill in the first place.
You seem to believe the end result would have been better if the House Dems had started out by porking up the bill even more – that is, stuffing the bill with stuff that wasn’t vital, but would strengthen the Dems negotiating position. But of course, the opposite is true: putting stuff in and then taking stuff out — like the contraceptives, and the military aid for Filipino veterans — only raises troubling questions about how the hell that stuff got in there in the first place, and what other baloney is in there also.
The bill was once $819 billion. Now, it’s what? $750 billion? You’re predicting that a $750 billion bill won’t work. Do you believe an $819 billion bill would work? If so, what makes the $86 billion haircut the difference between success and failure? Or — if you think the $800 billion bill was too small anyway – then what’s the big deal with trimming another $86 billion?
Blaming Obama’s bipartisanship for this fiasco has no basis in fact or analysis. It’s just a way to avoid blaming Congressional Democrats for poor political strategy.
Comment by Ian — February 8, 2009 @ 5:17 am
“Can you provide a single shred of evidence to support your claim that Obama put pressure on Nancy Pelosi and other House Democrats to write this bill differently than they otherwise would have?”
Perhaps “pressure” isn’t the most accurate word, but this is the record of what happened.
From the NYT (1/4/09), we learn:
Surprise, Obama’s aide! This is exactly how the Obama stimulus was not framed.
The WSJ from 1/5/09 tells us:
It did not prove easier to attract Republican support.
Politico wrote this on 1/5/09:
Facing criticism from the left that the stimulus was too small, Obama defended the size of his stimulus bill — his bill, let us remember, not Pelosi’s — in an interview with John Harwood (1/8/09):
He doesn’t come out and say it directly, but Obama implies here that he thought the stimulus was going to get bigger. The plan is everywhere rightly and justly referred to as the Obama stimulus. Obama got Congressional Democrats to propose an amount he was comfortable with.
Guess what? The plan got smaller, not larger, below the lower bound of $800 billion that Obama cited as the “range” economists were offering, the range he used to justify the smallness of the initial proposal. So on Obama’s own terms, this bill is less than what we need.
My thesis is that Obama is largely himself to blame for that failure — Congressional Democrats tried to do it Obama’s way. He needs to learn from his failure for the future. There’s a lot at stake. Lesson 1? If you actually want 800 billion, ask for 1 trillion and let yourself be “negotiated” down.
Comment by Lee — February 8, 2009 @ 2:14 pm
“You criticize Obama’s bipartisan efforts for the same reason that some people criticize a policy of not torturing terror suspects.”
I am a little baffled by this analogy. We do not torture terror suspects because we follow the law–and because we think torture is fundamentally contrary to our values.
Bipartisanship is not a fundamental human value or entrenched in any law. In fact, quite the opposite. In a democracy, I should fight for what I want. You should fight for what you want.
In a legislative process, we come to an agreement. If I don’t ask for what I want, but give away what I want to you before we start that process, you’ll likely ask for even more. We treat Republicans fairly when we respectfully ask for what we really want.
If bipartisan is just a form of public relations outreach in your view, then I can get on board with that. Obama’s meeting with Congressional Republicans is great from a marketing perspective. It makes him look reasonable and wise and open to the other side. Yes, I’m okay with Congressional beer night and Republican Senators invited to the White House Superbowl Party.
Obama’s putting together a stimulus package that preemptively conceded tons of useless tax cuts and didn’t do enough vital spending is a very bad idea, for reasons I have outlined above.
Blaming Obama’s bipartisanship for this fiasco has plenty of basis in fact — see above — and in no way is meant to let Congressional Democrats off the hook. The Pelosi Democrats have a lot of answer for, too. The first thing they need to answer for?: listening to Obama and agreeing to his lowball stimulus dollar amount.
Comment by Lee — February 8, 2009 @ 2:29 pm
I am willing to accept that Obama pressured House Dems to include tax cuts in the bill in order to try to win support from Republicans.
But your argument falls apart completely from there because you refuse to accept the fact that the problems Dems are having getting the bill passed has nothing to do with the tax cuts Obama put in the bill. The tax cuts in the bill make the bill more popular, not less — and the bill’s popularity is the only leverage Dems have to pressure Republicans to vote for it.
Your argument, as far as I understand it, is that Republicans would have opposed the first version of the bill no matter what was in it — and eventually Democrats would have been forced to make concessions. So Obama and the Dems should have “respectfully asked for what they really want,” which would have been a few hundred billion more than the bill House Dems (with Obama’s input) put forward.
But you’re totally ignoring the political argument that pundits on the left have been making very aggressively for weeks — that Republicans run a very serious political risk when they oppose a stimulus bill that most Americans want to see passed. If Republicans are seen as obstructionist — the left-wing pundits argue – that could be a big problem for them in 2010 when voters go to the polls and punish Republicans for their partisanship.
If only these left-wing pundits were correct! If only House Dems had written a bill they were prepared to defend! Wouldn’t it have been great to watch the Republican minority oppose the first draft of the bill, only to see Republicans in swing districts gradually capitulate under pressure from their constituents who want the stimulus bill to pass? Wouldn’t it have been great if Republicans were paying a political price for their opposition, instead of winning praise for their staunch opposition?
That’s what would have happened – if the bill the House passed was a bill that could endure pot-shots from the right-wing. But ever since the House Dems passed this bill, public support for the bill has eroded because the bill couldn’t endure those pot-shots. And as public support for the bill has eroded, Republicans have felt empowered, emboldened, to fight against it.
The tax cuts in the bill may not be your cup of tea — but they are very popular and totally defensible from a political standpoint. And the pot-shots that have eroded public support for this bill haven’t been attacks on the tax cuts — they’ve been attacks on a long list of spending items — contraceptives, military aid to Filipino veterans — that suggest Congressional Dems saw this bill as an opportunity to enact their entire legislative agenda in a single bill.
The point is: Do you have a single shred of evidence to support your claim that Obama is responsible for the stuff in the original bill that’s making it less popular — that makes it easier for Republicans to oppose it?
The popularity and support Democrats enjoyed immediately following Obama’s election is similar to the popularity and support the United States enjoyed following Sept. 11. Just as the United States frittered away that support by taking positions that were offensive to most other countries, Pelosi and the House Dems frittered away public support for the bill by loading it up with items that were sure to offend ordinary Americans.
Your argument — that the bill should have been full of even more unnecessary items, put there only to improve the Dems’ negotiating position — is exactly the wrong move in this situation. It would have provided Republicans with an even strong argument when they went to the American people and said the bill is full of pork.
You’re “baffled” by my comparison because you refuse to accept the argument that torture actually hurts U.S. national security. You’re opposed to torture on moral grounds — and I respect that — but isn’t it also possible that torture also does damage to our safety? Isn’t it possible that an anti-torture U.S. policy actually makes us safer? You can be opposed to something on moral grounds and still argue against it on practical grounds as well.
Similarly, isn’t it possible that it actually helps the Democratic Party — and therefore the country — when Democrats put forward legislation that’s politically hard to oppose? I’m NOT arguing that bipartisanship is a moral obligation — I’m arguing that it’s a political strategy that works.
You dismiss bipartisanship as “just a form of public relations outreach” because you think power ultimately derives from people in Washington — but you are wrong about that. Power comes from the people — and “public outreach” is the only way to achieve anything in American politics. This “public outreach” isn’t just about football parties and beer nights — it’s also about putting together legislation that the public is likely to support.
You write, “Republican elites have always been quite open open about their desire to sabotage government programs in order to prevent the American people from seeing what effective government looks like.”
This is utter nonsense. Liberals have always been quite open about making the accusation that Republicans want to sabotage government programs — but Republican elites have been saying openly for weeks that they want to pass a stimulus plan that will work, and they don’t believe the Obama plan will work.
The point of bipartisanship is to put the Republicans in a position where they have no choice except to vote for the bill – because opposing it will do more political damage to Republican politicians than supporting it will. Obama put the tax cuts in this bill in order to put pressure on Republicans — and the Congressional Dems totally undermined Obama’s strategy when they included items in the bill that virtually begged for Republican opposition.
Blaming Obama for the current fiasco flies completely in the face of reality.
Comment by Ian — February 8, 2009 @ 5:42 pm