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Congress Pushes Obama to the Left on Stimulus

Posted by ELROD in Economy, Politics.
Jan 8th, 2009 | Comments

Joe references lots of Democratic concern over the Obama economic stimulus plan.

What’s striking about it is that the pressure is coming from the left much more than the right. Sure, there are Blue Dog Democrats concerned about deficits. But Obama has assuaged the fears of them by speaking openly and frankly about the perils of long-term debt and by consulting with them on a regular basis. As for Republicans, there are plenty of dead-enders who don’t care about a workable solution. But of the conservatives who believe that tax cuts will genuinely stimulate the economy, most are happy that Obama is providing $300 billion in tax cuts – even if they’re unsure exactly how those cuts will be applied.

The biggest opposition, however, is coming from what we might call the Paul Krugman left. These folks have argued from the beginning that the biggest risk in a stimulus package is not debt or too much government, but not going far enough. We need to encourage ordinary Americans to spend money and we need to give them jobs right away.

I actually think Obama planned it this way. Typically, the President starts big and bargains down to a workable compromise spending amount. But this time the opposite is happening. Obama is letting the groundswell of public opinion and Congressional pressure push him toward a more robust stimulus package.

It’s noteworthy that this is exactly what happened during the New Deal. FDR offered relatively conservative policies in the 1932 campaign, and focused almost entirely on solidifying the banks in 1933. But then came more pressure for interventionist government and job creation and, consequently, the WPA, PWA, CCC and the rest. He was pushed to the left after he took office.

I suspect that will be true of Obama too. Like FDR – or even Lincoln, who pushed a very moderate anti-abolitionist course in the first year of the Civil War – Obama is willing to be pushed by events to the left.

This is the exact opposite of what Bill Clinton did. Clinton tried to push through liberal policies that many conservative Democrats opposed. The Republicans were perfectly positioned to hold firm and push back against Clinton.

2009 is not 1993. It is more like 1935.

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mikkel

I read this interesting piece about the environment that suggested the same dynamic, with Al Gore playing the foil. As for the economic situation, I am very disappointed in Krugman for not addressing our large debt in more detail. Many otherwise center-left (well by current definitions) commentators that aren't opposed to large stimulus in general are pointing to this with alarm.

DLS

It is not the Great Depression. It is not 1935. It is much more like 1993, but in Japan rather than in the USA.

It's laughable that the leftier Dems can't stand the idea of Obama's tax cuts, and that they don't see enough spending on public works (things that people can see and touch in their Congressional representatives' territories, i.e., flirting with vote-buying pork, predictably), much less on the stupidly overhyped notion of magical alternative energy development with the "promise" [sic] of vast numbers of new jobs.

Elrod is somewhat late to the party. All-too-typical Democratic Party parrot (arguably worse than Krugman has notoriously been in the New York Times before, and lithping and thmacking and thaying "um" on NPR) Jennifer Granholm has been idiotic in hawking the magic elixir of the nation-and-society-saving Electric Car and Green Jobs, Jobs, Jobs in Michigan (naturally).

Now we see Barney Frank wanting to buy loser votes with cram-down mortgage contract revision-enabling new legislation and such. The fun has only begun. Congress is going to outbid Obama in the spending department, and will replace tax cuts with tax increases as well as new taxes, "fees," "surcharges," and so on.

And that's even without seating Democrats "representing" Minnesota or New York yet, seating Burris, or being able to replace Kit Bond yet.

DLS

"As for the economic situation, I am very disappointed in Krugman for not addressing our large debt in more detail."

The Democrats have normally defended deficits, and they don't care about the debt, unless they can blame Republicans for it (which has been frequently the case since 1981). At this time what seems to matter the most (eagerly supported by so many on the Left) has been the need (supportable or otherwise, wants mislabeled "needs," a common form of mischief everywhere) for federal spending while going easy on taxes, in order to be stimulative. The spending should be stimulative, while taxes have the opposite effect.

Don't be surprised to see Congress bid up Obama's spending plans to spend more on infrastructure (at least some of which is justified and practical, given many of our bridges are deficient, for example, and there are roads that need rebuilding and new roads that should be built) while eliminating the tax cuts as "fiscally irresponsible" as well as being trivial to worthless as a stimulatory measure given their amounts per capita. I'm not sure what will end up being done with energy projects, though likely it will be more than what Obama wants (whatever he actually wants).

I don't know to what extent some Dems may be looking ahead to monetizing the growing, huge debt to come with the printing press insofar as to them inflation (the ultimate narcotic and opiate of the exploitable masses) in the future is probably foreseeable, likely, and welcomed by them.

DLS

"But this time the opposite is happening. Obama is letting the groundswell of public opinion and Congressional pressure push him toward a more robust stimulus package."

Actually, he can leave it to Congress, which will be making the laws, so Congress, not he, gets the blame for any excess, or any failures, while he can bask telegenically in any successes that result and claim credit for "saving" the nation.

DLS

I don't know how large the eventual stimulus is going to be, but I've heard one lefty say already that one trillion dollars "is nothing" and I am surprised that nobody spent much time remarking about China's stimulus measure. One who did has the correct proportion in mind insofar as to what constitutes a stastically significant (to the point of being substantial) fraction of GDP or anything else: 10-20 per cent.

"The important lesson for American policymakers is that, given the scale and potential damage from the coming recession, it needs to see its stimulus program, even if only behind closed doors, in terms of a 10-to-20-percent share of GDP, not in $100 billion denominations. 10 percent of U.S. GDP is $1.4 trillion. "

http://www.carnegieendowment.org/publications/i...

* * *

Before leaving this thread to others, I'll point out that the Dems have a good case for their favored stimulus measures, as well as related measures that would be dear to people like Michigan's governor Jennifer Granholm. To me the favored methods won't and shouldn't be a surprise, but there is some good rationale for it, at least according to Moody's (hardly a bunch of flaming lefties, by definition) and this is true not only for infrastructure but for other things (which should appeal specifically to Granholm and others where unemployment already is high enough to constitute a problem and even something of a slowly-developing crisis eventually). Rather than repeat the numbers that I posted from this on another thread, I'll just direct readers to the report and they can read it there. (Bonus for lefties: Bush's tax cuts do poorly in the Moody's evaluation.)

http://www.economy.com/mark-zandi/documents/ass...

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