An Army Of Krugmans
Paul Krugman delivered some upside the head slaps on Morning Joe today. Pat Buchanan actually tried to argue in favor of the WARREN HARDING TAX CUTS that led to expansion - never mind the Republican Great Depression afterwards. Joe Scarborough tried the fool's game of disowning Bush, saying he was a big spender and not a classic conservative - never mind the fact that Reagan and both Bushes increased the deficit more than every other President combined. Krugman was having none of it. It's worth watching from about the 4:30 mark on. Here's one sample bite.
KRUGMAN: Look at what just happened, we had a proposal I think it was McCain’s proposal for an economic recover package, his version of it which was all tax cuts, a complete, let’s do exactly what Bush did, have another round of Bush-style policies. After eight years which that didn’t work and we got 36 out of 41 Republican senators voting for that which is completely crazy. So how much bipartisan outreach can you have when 36 out of 41 republican senators take their marching orders from Rush Limbaugh?
Unfortunately, there aren't 150 Paul Krugmans to deploy to every news outlet in America. There are, however, 150 liberal Democrats in Congress, maybe even more! I know there's a substantial faction of Democrats who are moles, essentially, and committed more to having Beltway chatterers smile at them in the hallways than anything else. But there really are enough actual Democrats to defend the concept of a stimulus. Here is someone who is decidedly NOT a Democrat, Steven Pearlstein, saying what shouldn't need to be said, but definitely is, because Democrats have been cowtowed by Republican B.S. for so many years.
Let's review some of the more silly arguments about the stimulus bill, starting with the notion that "only" 75 percent of the money can be spent in the next two years, and the rest is therefore "wasted."
As any economist will tell you, the economy tends to be forward-looking and emotional. So if businesses and households can see immediate benefits from a program while knowing that a bit more stimulus is on the way, they are likely to feel more confident that the recovery will be sustained. That confidence, in turn, will make them more likely to take the risk of buying big-ticket items now and investing in stocks or future ventures.
Moreover, much of the money that can't be spent right away is for capital improvements such as building and maintaining schools, roads, bridges and sewer systems, or replacing equipment -- stuff we'd have to do eventually. So another way to think of this kind of spending is that we've simply moved it up to a time, to a point when doing it has important economic benefits and when the price will be less.
Equally specious is the oft-heard complaint that even some of the immediate spending is not stimulative.
"This is not a stimulus plan, it's a spending plan," Nebraska's freshman senator, Mike Johanns (R), said Wednesday in a maiden floor speech full of budget-balancing orthodoxy that would have made Herbert Hoover proud. The stimulus bill, he declared, "won't create the promised jobs. It won't activate our economy."
Johanns was too busy yesterday to explain this radical departure from standard theory and practice. Where does the senator think the $800 billion will go? Down a rabbit hole? Even if the entire sum were to be stolen by federal employees and spent entirely on fast cars, fancy homes, gambling junkets and fancy clothes, it would still be an $800 billion increase in the demand for goods and services -- a pretty good working definition for economic stimulus. The only question is whether spending it on other things would create more long-term value, which it almost certainly would.
All spending is stimulus. It's four words that have been absent from the debate. Democratic lawmakers have been banned from the teevee, I know, but when they do manage to get on, they could do worse than uttering those four words. All spending is stimulus. And if you want to talk about speed, the fastest stimulus is government purchases, either local, state or federal. This is exactly what the axis of centrism and the far right are trying to remove from the bill.
I think Obama's speech to House Democrats last night was intended for a very particular audience. They are being outworked and they need to pull their weight.
(Just to be clear, the bill has too many tax cuts, and if the Axis of Centrism can't swallow the price tag, they can get rid of the $70 billion AMT patch and the $35 billion home-buying credit and the auto-buying credit, cuts which won't help anyone who can't afford a home or a car and will just give away free money to people who would have bought those items anyway. There's your $100 billion in cuts.)