Thoughts on the Stimulus from a Moderate Republican
Now that the Stimulus Package passed by Congress will be signed into law by President Obama tomorrow, I have a few thoughts I wanted to share from my perspective as a Republican and not just a run-of-the-mill Republican, but a moderate Republican, or so-called “RINO.”
My initial thoughts aren’t good. I understand and accept the need for a larger role for the government right now. I also think there needs to be something done to jump start the economy. But I don’t think the bill passed is what is needed. It’s not simply that it’s too large, but it seems to be a catch all of every Democratic plan that has not been enacted during the Bush years and even during the “New Democrat” Clinton years.
Any economic stimulus package should do what Travis Johnson has suggested:
- Bridge the gap for between jobs for unemployed Americans.
- Keep people in their homes.
- Help existing businesses survive and provide a stable environment in which new ones can develop.
But that is not what happened here. What passed, seems overly bloated, and that’s with the three moderate Republican Senators.
Many of the projects that were funded are important and even necessary (such as Amtrak or high speed rail). But it seems like those are the things that should have been part of an appropriations bill, NOT this bill. In someways, this is a repeat of what the GOP led Congress did in the days and weeks after 9/11, use a national crisis to throw in needless stuff. David Frum has said as much:
After 9/11, President Bush (supported by me, among others) argued that the right way to respond to a terrorist attack from Afghanistan was by overthrowing Saddam Hussein. We offered a complicated explanation for this roundabout response, and for a time the public accepted it. But as the war went wrong, and failed to deliver the promised results, our plan’s credibility collapsed.
Now the Democrats have placed themselves in a similar situation. They are offering an indirect answer to an immediate question. The suspicion arises that they had decided the answer long before the crisis ever materialized—that they are using the crisis as an excuse to do what they had long wished to do anyway, for reasons that they are not stating in full.
But the other thought that has been running in what passes for my mind is how the GOP is to respond to the current era we live in and especially how moderates should respond. As a whole, the GOP is still stuck in the 1980s: offering tax cuts as the solution for what ails us. But when taxes are already low, you need to find a different note. (Of course, in light of the current bill, it looks like the Democrats are stuck in the 1930s, but that’s for another post at another time.)
The fact is, with all this debt that the government has run up, as well as the Baby Boomers getting ready to claim their Social Security checks, taxes will go up. Maybe not to what they were in the late 1970s at 70 percent for the top rate, but they will go up. So, the GOP is going to have to find a new plan and a new way to manage the current reality — not live in a time warp. The 1980s were a good time, I was a teen back then, but just like it’s silly to try to live like you’re 15 when you are going on 40, it’s silly to pretend that Reagan is still in office.
Part of that answer should come from moderate or Progressive Republicans. But the recent actions of the three moderate Republican Senators, Susan Collins and Olympia Snowe of Maine, and Arlen Specter of Pennsylvania are laudable for making a bad bill, well, less bad, it also shows what moderates should not do.
What is troubling about their actions is not that they deigned to cooperate with the Democratic majority. I do think it was good to try to reach out across the isle. What was troubling is that there was as Ross Douthat said, more of an emphasis on process than there was on policy. Douthat, who isn’t fond of GOP moderates, I should add, was correct in saying:
So if the GOP wants, say, $500 billion in tax cuts, the country clearly needs $400 billion in tax cuts – but not a penny more! And if the Democrats want $900 billion in stimulus, then the best possible policy outcome must be … $800 billion in stimulus! To read this Arlen Specter op-ed, justifying both the stimulus package and the cuts the “gang of moderates” have attempted to impose, is to encounter a mind incapable of thinking about policy in any terms save these: Take what the party in power wants, subtract as much money as you can without infuriating them, vote yes, and declare victory.
Now, being a moderate or progressive Republican myself, I have a lot of respect for Snowe, Collins and Specter. I share many of their views. But Douthat is correct. This form of bipartisanship, this form of moderate Republicanism, was not one that should be aspired to: it reeked of defeatism, instead of pragmatism. It had no vision of its own; just trying to limit the scope of a Democratic bill.
This is what gives moderates in the GOP a bad name; it makes us look gutless instead of showing vision. Instead of fashioning a conservatism that is forward looking and progressive, moderates look like they are supporting a pale version of Democrats.
This has not always been the case. Moderates in the party tended to have an viewpoint that was all their own and not simply aping the Democrats. Here is what Geoffrey Kabaservice wrote about Thomas Dewey, the Republican governor of New York and GOP Presidential candidate in 1944 and 1948:
Unlike the stalwarts who continued to dominate what little remained of the Republican representation in Congress in the ‘30s and early ‘40s, Dewey believed that the Depression had permanently reshaped the political landscape and that it was insufficient for Republicans simply to denounce the New Deal and hope in vain for the eventual disappearance of the welfare state. As Dewey said in his first gubernatorial address, “There has never been a responsible government which did not have the welfare of its people at heart… anybody who thinks that an attack on the fundamental idea of security and welfare is appealing to people generally is living in the Middle Ages.” As governor, he put forward social programs that included unemployment insurance, sickness and disability benefits, old age pensions, slum clearance, state aid to education (including the creation of the State University of New York), infrastructure projects (particularly highway construction), and pathbreaking anti-discrimination legislation.
Dewey attempted to distinguish his programs from similar Democratic programs by running a government that was acknowledged to be clean, honest, and efficient. His was pay-as-you-go liberalism, as he managed to implement his social programs while cutting taxes, reducing the state debt by over $100 million, and still achieving budget surpluses. He also argued that while Republicans and Democrats might agree on social ends, the parties would differ in their means, with moderate Republicans emphasizing individual freedom and economic incentive over collectivization. However, this relatively sophisticated position inevitably opened Dewey to conservative gripes of “me-tooism” and Democratic claims that he was offering a lesser version of the genuine article.
While some might claim there is a “me-too ism” in Dewey’s ideas, they seemed both pragmatic and bold. He was able to provide forward and progressive thinking programs that were within budget and even cut taxes. There is something in Dewey’s accomplishments that seem more fearless and ready to move the GOP forward. That is not what you hear in Specter’s response.
Moderates have a long and proud history in the GOP and they will rise again. But it has to be with their own ideas and approaches and not simply going along with the Democrats.
16 Responses to “Thoughts on the Stimulus from a Moderate Republican”
As a moderate Democrat, I'm happy to agree with a moderate Republican (and hey, there was nothing wrong with “me tooism” in te GOP, just because Barry Goldwater didnt like it).
I think the Republicans in Congress could have done much better at rallying voters — and perhaps even some moderate Democrtaic colleagues — if they had scoped out a simply, easy to communicate and understand stimulus alternative that had the three virtues dubbed crucial by Larry Summers — to be timely, targeted and temporary.
Such an altrenative might have looked like this:
– Much or all of the Democrats' proposals for relief from recessionary impact — extended unemployment comp, added food stamps, etc.
– A payroll tax holiday — putting money into people's paychecks literally next week).
– A modest spending sum targeted to the truly “shovel ready” projects.
– A much more modest pile of dough for the states (maybe half the Obama plan) aimed at helping to bridge current year budget deficits , with an understanding that Congress would take another, closer look (with hearings) at needs for next fiscal year within the next few months.
Period.
I'm doing what I can to encourage sensible dialogue at:
http://thepurplecenter.blogspot.com/
So, the GOP is going to have to find a new plan and a new way to manage the current reality- not live in a time warp.
We as a nation have an option. We can go back to 6 percent unemployment and raise taxes that will shrink economic expansion but will balance the budget and pay down the debt.
Or
We can continue cutting taxes and continue growing the economy, keeping unemployment at or below 4 percent and continue RUNNING UP DEFICITS. The GOP really are lost. Until they find a new message they are going to remain in the wilderness.
Cutting spending to enable cutting taxes is good on paper but as our democratic friends point out its not so good in real life.
Good post, Dennis. I think you are right about the tactical error of moderate Republicans.
I disagree that the stimulus was too large, mostly because I think the longer-term spending plans are helpful now too. But I also recognize that that goes beyond the traditional view of immediate stimulus.
A lot of this problem was caused by Obama yielding to Obey and Pelosi in the bill's drafting.
I am taking the Goldilocks view, namely that if the left is unhappy the bill isn't large enough, and the right is unhappy that it's too large, then there is a chance this bill is about right or at least as good as we could expect. As one who values fiscal responsibility (and realizes the GOP ignored it for the past several years) I don't like the extraneous and long term elements of the bill. I am hoping this turns out to be the “least bad” bill that was possible given the situation.
I've posted this before, and why not again here. Here is what Zandi, a Democrat, at Moody's, provided as a list of items with their associated likely “yield” for the money spent on each of them. Assuming his list is good and the yield figures make sense, why wasn't a “stimulus” bill created from this list, and limited to what is on this list, to be reasonable and “on topic” (which the Dems refused to limit as well as apply themselves to, obviously) as well as to form a basis for apportionment of the total money to be spent, and a basis of negotiating between the two major parties (which the Dems rejected)?
Yield of $1.00 in federal stimulus appropriation and spending, according to Zandi:
Tax Cuts
Non-refundable lump-sum tax rebate, $1.02
Refundable lump-sum tax rebate, $1.26
Temporary tax cuts
Payroll tax holiday, $1.29
Across-the-board tax cut, $1.03
Accelerated depreciation, $0.27
Permanent tax cuts
Extend alternative minimum tax patch, $0.48
Make Bush income tax cuts permanent, $0.29
Make dividend and capital gains tax cuts permanent, $0.37
Cut in corporate tax rate, $0.30
Spending Increases
Extending UI benefits, $1.64
Temporary increase in food stamps, $1.73
General aid to state governments, $1.36
Increased infrastructure spending, $1.59
Why didn't this stimulus simply consist of items like the foregoing? (It's too much to expect the Dems to have negotiated with the GOP.)
“there is a chance this bill is about right or at least as good as we could expect … the 'least bad' bill that was possible given the situation”
I disagree strongly, as I have done numerous times before. To be more productive here, it may be best to try to analyze (or more precisely, to psychoanalyze) why this ugly bill got through. The House Dems were obviously undisciplined and lunged at this first opportunity for a bill like children or untrained pets; the Republicans were once more dysfunctional, but also may well have been listening to their constituents, as so many people of all political views had concerns or criticism of this bill. This was the first chance the Dems had to exercise more power than they may still realize they have, and they were clumsy at it, and at the same time, they're not confident or even knowledgeable just what they want or what they believe the federal government should do for a stimulus measure (or what else they should try to do). This is as much or more about gettting a first bill through Congress, asserting the Dems' power, and beginning the test of Congress (the Dems in particular) versus Obama for power in Washington, than it is actually about a stimulus or other measures that are sought to revive or improve the economy. (The wiser left-Dems and other Dems know that the economy must be set right to free the federal government and to provide it with more funds to engage in the projects the “progressives” and other activists have long dreamed of.)
[Begin lecture from sidelines]
I wish this bill had been limited to stimulus, even limited to short-term measures (I'd accept longer-term items as well, namely various infrastructure elements, to get started on these if we want them). The list above by Zandi is reasonable as well as a guide (much better than no information at all, obviously) to priorities or to allocation (and to negotiation with the Republicans, ideally). This would ideally have been considered an ideal first attempt at a stimulus, to be followed later (as I anticipate more will come) with more of the same or additional items (more spending, more government active intervention, but hopefully not including deliberately inflationary measures) later, to be known already (now) but held effectively in reserve (or for follow-up where things are doing particularly better than expected).
[End lecture from sidelines]
What Im concerned about is why Harry Reid would waste time on this bill. Im surpirsed he didnt cut off debate so he could get back to “passing more resolutions on Iraq.”
“Cutting spending to enable cutting taxes is good on paper but as our democratic friends point out its not so good in real life.”
Short answer: Here we can illustrate the obvious by reduction (actually, augmentation, of “cutting”) to absurdity: We can reduce spending on anything to enable reducing taxes as well, as much as we want (assuming the law is changed for “mandatory” federal spending, that Congress will never likely do) — we can reduce our Social Security or Medicare future and even present costs as much as we want by reducing benefit payments, ideally to zero. But that denies reality in the form of issues such programs (and other government functions) are meant to address. In other words, we can't be excessively simplistic, even rarely on the non-liberal side.
Ideally with this economy, though, we'd simply stand back and let things work themselves out. Short of that, the next best thing is to stand back at least for the major events and trends to happen or to emerge and then react accordingly. We can't predict much, and moreover, the history as well as the obvious fact about interventionism by government is that there are all kinds of unexpected or intended consequences, many of them negative, both foreseen and (again here) unforeseen, even the opposite results of what we seek with such interventionism. The “precautionary principle” that environmentalists and other leftists insist on with technology (other than their toys or pet PC objects of love) and with development is more in need than ever with government interventionism and exercise of its power.
“What Im concerned about is why Harry Reid would waste time on this bill.”
He doesn't want to be forgotten, neglected, or prove so weak or irrelevent he risks being challenged and replaced as leader! [chuckle]
Besides, Senate Dems won't avoid flexing their muscles, even in a more restrained way than the inmates running the House asylum.
While the House Dems have already, surprisingly misbehaved, the Senate still makes me wonder if they are still unsure at how to handle the power that they have, more than they may still realize they have. As long as they don't continue like the House, they should still gain in two years.
I hope this is not too far afield for this thread
This discussion is a variation of many others on the net that attempt to analyze the “Stimulus” bill in terms of a garden variety recession. Political strategizing and debating divergent economic philosophies both work the problem assuming we have something that is in fact missing, credit. Tax breaks or work projects will accomplish nothing long term as long as credit is unavailable to the private sector.
It seems that priming the pump only works when there's water in the well, and the pool of credit that eventually got us out of past downturns is presently missing from the present equation. So, even though we call this a stimulus bill, I believe Obama et al really see this a stop gap measure while the world figures out what to do about the lack of global credit.
Folks the entire world is slipping into recession.
Where we going to borrow the money??
Whose going to lend it to us??
That's why my nickname for this Bill is “The Buckshot Bill”…
All it's going to do is piss off the charging grizzly bear and place us in greater peril than doing nothing at all but falling on the ground and playing dead. Of course I suggested a couple of aimed high-caliber bullets but you know…..that would make sense…
Good post. Agree w/ House Dem discipline issues. The stim and TARP are small patches on a gaping wound. DLS must still be employed, otherwise there would be little talk of “let things work themselves out.” Hang on for Round II. WHen banks create their own “giant sucking sound,” temporarily nationalizing them will begin to be a plausible yet radical solution. The forecasts of a Japan-like “lost decade” are starting to look about right unless more purposeful action is taken to sequester bad debt and inject liquidity. THe idea of transferring bad mortgages to local and regional banks for restructuring (getting them off Citi, BofA, JPMChase, etc books) might have some merit.
“DLS must still be employed, otherwise there would be little talk of 'let things work themselves out.'”
I'm not the only one saying it would be better to have things work themselves out, given the damage and futility the record of intervention shows. There's nothing to decry there, much as you may be moved to decry it (or disparage it, or worse).
And more to the point now, I've provided a plan B, which is at least to let the major events and trends emerge or evolve, because we can't predict the future and we so often risk making things worse (unexpected or even the opposite of what we seek). I've also said before that obviously I have been outvoted — the majority of the public obviously would like to see something done to help people now and hopefully to forestall more problems later — though I believe a deflationary spiral is possible (I refer to Japan in the 1990s as our most relevent contemporary model) and that we'll see a deflationary-anticipatory behavioral development in the public if it really gets going (beyond learning to wait for lower prices at more sales, which we already see). That a stimulus is sought, is the public's decision — I have been delving into what is recommended or preferred in such instances and even looked at what has been offered as a guide, the Zandi “bang for the buck” claims, which would be the better basis for a stimulus (with more, broad measures and similar, additional stimulus means kept in reserve for the next phase of our economic adventure) than the “stimulus” bill the Dems managed to cobble together.
(Side note about the banks — not a word, much less many, about learning any lessons and applying anything learned from the savings and loan industry episode from several years ago. But then again, with what they managed to craft for a “stimulus” measure, and with the extent to which the House Dems were truly crazy in what they originally sought, why expect any useful learning and application right now?)
This was clumsy. The only substantial achievements that are a source of “pride” for Obama and the Dems are that something that says “stimulus” has passed (there's a low end of the bell curve who will take everything, question little or nothing), but more importantly (and of higher value this time, given the low quality of the bill and how it was passed) that the Dems have shown that they (and Obama) have Dem political primacy established in Washington and will assume leadership for now. They promised (threatened) to do it, and they have now demonstrated it. It's a shame they have over-spent, mis-spent, and been clumsy and sloppy in their first big achievement, though.
“The forecasts of a Japan-like “lost decade” are starting to look about right unless more purposeful action is taken …”
And we can say in hindsight that Japan should have done this, done that, done this or that earlier, done more of this or that, but nobody knew at the time and people tried new things then, and to the extent that it didn't change the mindset of people, not to mention creating new undesired effects, it didn't work. Laying aside this sloppy “stimulus,” even if we tried serious, straightforward measures to revive our economy and rescue the public (such as the list of items Zandi evaluated for their effect or “yield” that I have posted more than once), there is no guarantee that it will work, or produce undesireable effects (be they surprising or not surprising). But at least shouldn't we go with what we reasonably believe is appropriate as well as suitable, rather than just tossing together a bunch of spending to buy votes, pay off special interests, and frankly just play with money?
Imported deflation: Japan imports Chinese and other countries' inexpensive consumable goods, raw materials (due to lower wages and fast growth in those countries). Thus, prices of imported products are decreasing. Domestic producers must match these prices in order to remain competitive. This decreases prices for many things in the economy, and thus is deflationary.
One big problem we are going to face is that these countries are all going to be lowering their prices and forcing the US to deflate their prices to compete.
Deflation is a big possibility but if it can be controlled it might actually prove beneficial.