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Posted by on Feb 6, 2009 in Economy, Politics | 43 comments

Stimulus: Rushing Over the Cliff

While we didn’t see a Senate vote Thursday night on the stimulus package, it seems that it will only be a temporary reprieve. On such an important issue it is unfortunate that both the political generals and the talking heads have succeeded in turning it into a political football. One of the most annoying pieces of “analysis” for the week comes to us from Paul Krugman.

It’s time for Mr. Obama to go on the offensive. Above all, he must not shy away from pointing out that those who stand in the way of his plan, in the name of a discredited economic philosophy, are putting the nation’s future at risk. The American economy is on the edge of catastrophe, and much of the Republican Party is trying to push it over that edge.

I’m no cheerleader for the GOP, but the arguments currently being put forth in favor of a slower, more measured analysis, a streamlined bill which targets the truly urgent challenges we face, and the opportunity to openly debate some of the less urgent “stimulus” dollars later on their own merit hardly seems like a rush to the brink. Quite the opposite, questions arising over this bill are coming from all quarters and would seem to indicate that a more considered, thoughtful approach is in order. Krugman himself gives a passing nod to one criticism, though in rather dismissive tones.

The Congressional Budget Office is slightly more sanguine, but its director, nonetheless, recently warned that “absent a change in fiscal policy … the shortfall in the nation’s output relative to potential levels will be the largest — in duration and depth — since the Depression of the 1930s.”

Did you really say that the CBO was, “slightly more sanguine” on this issue? Perhaps “outright dubious” might have been closer to the mark.

CBO, the official scorekeepers for legislation, said the House and Senate bills will help in the short term but result in so much government debt that within a few years they would crowd out private investment, actually leading to a lower Gross Domestic Product over the next 10 years than if the government had done nothing.

CBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net.

I normally don’t find myself agreeing with Charles Krauthammer, as his hyperpartisan liberal bashing can quickly put most moderates off their feed, but he’s got a few good points to make today.

It’s the essential fraud of rushing through a bill in which the normal rules (committee hearings, finding revenue to pay for the programs) are suspended on the grounds that a national emergency requires an immediate job-creating stimulus — and then throwing into it hundreds of billions that have nothing to do with stimulus, that Congress’s own budget office says won’t be spent until 2011 and beyond, and that are little more than the back-scratching, special-interest, lobby-driven parochialism that Obama came to Washington to abolish. He said.

Let’s be clear on one thing. The blame for this did not originate with President Obama, as I see it. He seems to have been clearly and earnestly interested in hearing input from the Republicans and finding a bipartisan path forward on stimulus. Unfortunately, he utterly failed to exercise any control over Nancy Pelosi and, at least thus far, Harry Reid, and now the horse has escaped the barn. He is showing up on television looking angry that his will wasn’t implemented quickly enough and falling back on practiced habits of blaming any failures on the opposition party. If this is how the fairy tale story of the stimulus bill ends, it will be a sad and possibly crippling start to the Obama presidency. The new golden era of post-partisan progress will turn into more of the same old, same old.

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