The Sunday morning shows featured the “stimulus plan” which was just passed by the House with no Republican votes. George Stephanopolis had Fred Smith, the FedEx CEO, on the show plus the Google CEO. The other two guests were Senator Jim DeMint and Congressman Barney Frank. Barney was in fine fettle and, when his mouth was fully engaged, tended to get off message, ranting about the Iraq War. Smith warned about the risks of the Buy American provision in the House bill but Barney was not fazed by this echo of Smoot-Hawley. It is a dialogue of the deaf. George Will pointed out that Obama took a two-week vacation after the election and allowed the Democrat Congress to write the most important bill of his new presidency with no Republican input.
Certainly Obama is willing to cut spending on things like defense in the middle of a war. It’s just a matter of priorities. Peggy Noonan, coming out her Obama swoon, thinks it was a bad deal for him.
But do you know anyone, Democrat or Republican, dancing in the street over this? You don’t. Because most everyone knows it isn’t a good bill, and knows that its failure to receive a single Republican vote, not one, suggests the old battle lines are hardening. Back to the Crips versus the Bloods. Not very inspiring.
The president will enjoy short-term gain. In the great circle of power, to win you have to look like a winner, and to look like a winner you have to win. He did and does. But for the long term, the president made a mistake by not forcing the creation of a bill Republicans could or should have supported.
Consider the moment. House Republicans had conceded that dramatic action was needed and had grown utterly supportive of the idea of federal jobs creation on a large scale. All that was needed was a sober, seriously focused piece of legislation that honestly tried to meet the need, one that everyone could tinker with a little and claim as their own. Instead, as Rep. Mike Pence is reported to have said to the president, “Know that we’re praying for you. . . . But know that there has been no negotiation [with Republicans] on the bill—we had absolutely no say.” The final bill was privately agreed by most and publicly conceded by many to be a big, messy, largely off-point and philosophically chaotic piece of legislation. The Congressional Budget Office says only 25% of the money will even go out in the first year. This newspaper, in its analysis, argues that only 12 cents of every dollar is for something that could plausibly be called stimulus.
This is how he begins his presidency.
Tactically, the White House group seem to be sharp. They have made a move that could decapitate the Senate Republicans by appointing Judd Gregg, a serious and competent man, to the Commerce Department. It would accomplish several purposes. It would reduce the GOP numbers in the Senate by one. It would also remove a leader who is a potential minority leader. It’s a wise move and I hope Gregg turns them down.
The White House seems deficient in strategy.
The left wing of the Democratic party sees nothing wrong with the “stimulus bill” as it currently exists.
All week long, we’ve heard quite a bit about what’s incumbent upon Obama to satisfy Republicans’ demands, despite the GOP’s horrific failures at governing, and despite voters having thrown the minority party out on their asses. Maybe now would be a good time to turn the question around: what are Republicans going to do to play a productive role in the process? When will they move beyond Bush’s failed economic agenda and get serious about the crisis? Obama was prepared to make all kinds of compromises; what concessions are Republicans prepared to make? GOP leaders have acknowledged they can’t just be “the party of ‘no.'” So when might we see them start to say “yes”?
It seems the burden of proof is all out of whack here. It’s not the president’s responsibility to make the rejected (and dejected) minority party happy. It’s not Obama’s job to find out what unhinged, far-right Republicans want to be happy, and then deliver.
Some of this is residual Bush Derangement Syndrome but a lot is just the left wing version of economics. A command economy that takes a maximum amount of the private citizen’s income as taxes, then redistributes it to favored persons, is what they seek. They dismiss, for example, Amity Schlaes’ book, which is being reprinted in Japan, China and South Korea. It is back on the Times list of best sellers, a very unusual circumstance in publishing, but they don’t care.
They misrepresent criticism of Roosevelt’s policies and even the circumstances when he was elected. They do not acknowledge that Hoover followed almost the same policies the present-day Democrats are attempting to follow. He raised taxes, harangued employers to keep salaries high and signed the protectionist Smoot-Hawley tariff. The present day equivalent, although less onerous, is the “Buy American” provision of the House bill. Democrats are dismissive of her concerns but I would listen to her.
I have reviews of her book and Ron Chernow’s The House of Morgan, on Amazon.
The banking crisis was created by Congress with its pressure to lend to non creditworthy borrowers during the housing bubble. Another factor was the Federal Reserve policy of loose money and low interest rates that drove the lending frenzy. Our most important priority now is to recapitalize those banks that have worthwhile assets on their books that they cannot properly value. Mark to market has contributed to the problem. There is no market. We will need this money for another bill, probably establishing a “bad bank” as the Swedes did in the 1990s when they had a similar crisis.
Now is not the time to run up debt on old left wing ideas whose time is not here.
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These are my similar thoughts, but coming out of Wm Bonner’s keyboard:
“…Porter Stansberry adds this assessment:
“Congress wants you to believe we can dig ourselves out of the financial crisis by spending $400 million to research global warming, $650 million to convert analog TVs to digital, $7 billion to ‘modernize’ federal buildings, and $20 billion on food stamps, etc. According to the Wall Street Journal , ‘only $90 billion out of $825 billion, or about 12 cents of every $1, is for something that can plausibly be considered a growth stimulus.’”
We don’t doubt that all this corruption is well-meant. Heck, who doesn’t want to blow up this Depression Asteroid before it hits us? But boondogglization won’t work. Because it doesn’t solve the real problem – the debt. It merely moves debt from the private sector to the public sector; overall, debt actually increases.
There is about $6 trillion worth of debt that needs to be eliminated before the economy can begin to grow again. Liquidation would do it – quickly and painfully. People would get what they had coming. The U.S. dollar-based system would collapse. Everyone would learn a lesson and be better off for it.
But that could happen only over the dead bodies of Ben Bernanke and other key policy makers. Which is our preferred approach. But we are in a tiny minority. Everyone else believes that somehow some hocus-pocus will get us out of this mess without pain or suffering.
Let’s “get all the right people into the room and close the door and put a solution up on the wall,” said Jamie Dimon of JPMorgan Chase.
Eventually, the solution these simpletons are going to look at is the only one that will really work: inflation. Overt. Shameless. Explicit inflation…”
There are basically 3 responses. Lose. Survive. Thrive. Losing means moping and hoping. Surviving means understanding the dangers, then hunkering down and protecting your ass-ets accordingly. Then there’s thriving which requires moving away from the crowd and hunting down the opportunities when they don’t appear to be opportunities. The hardest part seems to be combining a quick trigger woth a patient hand.
Hey Allen. Hey Mike K.
I just wish for once the Congress would stop being such….well, never mind. The stumu-won’t is a horrid piece of legislative crap.
You wrote “The banking crisis was created by Congress with its pressure to lend to non creditworthy borrowers during the housing bubble.”
That’s bull. Congress never legislated that banks engage in flagrantly speculative credit default swaps on mortgages they didn’t even issue. Congress didn’t demand they leverage themselves 30:1… just like LTCM did, disastrously, just ten short years ago.
Of course, Congress DID capitulate and hand them the loaded Glass-Steagall repeal gun back in 1999. That Congress is in a deeply co-dependent relationship with the monied interests, and who pulls whose strings, is hardly worth discussing.
The economic crisis, which is more accurately a crisis of faith, has been brewing ever since a generation of Americans adopted the mythology that taxing the rich more than the poor was morally opprobrious. As the CIA World Factbook puts it, “Since 1975, practically all the gains in household income have gone to the top 20% of households.”
snoofy, why do I think you stumbled over here from Patterico ? If you knew what you were talking about, you would realize that the credit default swaps are doing fine. They were not the problem, although they may have given a false sense of safety to the people who were writing those CRA mortgages and bundling the crap into CDOs. Those are “Collateralized Debt Obligations”, which is probably what you meant by swaps. They are different.
Congress is in a deeply co-dependent relationship with the monied interests is true and can be seen by Dodd and Frank’s relationships with the worst banks. Also, Obama’s mentor in Chicago was a slum lord. Most of those executives of failing financial houses voted D and gave their money to Obama.
By the way, the only people in America who still pay taxes are the “rich” by some people’s standards. Take a look at a breakdown of the income tax collections by income quintile.
Hello Michael Kennedy, nice to meet you.
By the way, the only people in America who still pay taxes are the “rich”
Ahem. Did you just say that only the “rich” pay the fuel sax, sales tax, FICA tax, Medicare tax, telephone tax, cable TV tax, hotel tax, alcohol tax, cigarette tax, gambling winnings tax…?
Oh, you said income tax. Don’t weasel out like that, man. You gotta look at the whole picture. We’re all getting nickeled and dimed, and when all you have is nickels and dimes, that adds up to a regressive tax structure.
Regardless, let’s take your assertion at face value; only the rich pay taxes. So what? When did taxing the rich become a bad thing? Robin Hood is a folk hero for a reason; stealing from the rich and giving to the poor is an act of social justice. When did we lose sight of that?
Listen, I’m not making this stuff up. “Render unto Caesar the things which are Caesar’s.”
The purse-strings that pull Congress know no party affiliation. It’s one of the great efficiencies of our system — with only two parties, you go long on one and hedge your bet on the other. 🙂
Be well,
snoofy
I did mean income tax and I favor a flat tax or sales tax without income tax. Nice to welcome you to the supporters.
I actually agree that middle class people have been hurt by the pressure of FICA plus health insurance deductions, etc. I am in favor of a government sponsored health plan and have a lengthy discussion here.
Congress is the absolute worst place to write major policy changes like health care. They are mostly crooks and weasels. The few honest members are outnumbered by the others, and that is bipartisan, by the way. If Obama were truly interested in bipartisan government, he could accomplish a lot but I am afraid he is not up to it. He has no history of such cooperation.
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