Stimulus Pre-Post-Mortem

It looked touch and go for the stimulus conference deal for a minute today, as House Democrats balked at the lack of school construction money in the bill (or maybe just not being consulted), but that seems to have been squared away. And so maybe it's a good time to look back.

On the bill itself, it's still probably too small to do the lifting it needs to do, and the inclusion of the patch to the alternative minimum tax is the most inexcusable part of it.

But the final bill retained a $70 billion tax cut that would spare millions of middle-class Americans from paying the alternative minimum tax in 2009, which some Democrats decried as wasting a large chunk of the bill on something that would do little to lift the economy and that Congress would have approved regardless of the recession [...]

“I am not happy with it,” said Senator Tom Harkin, Democrat of Iowa. “You are not looking at a happy camper. I mean, they took a lot of stuff out of education. They took it out of health, school construction and they put it more into tax issues.”

Mr. Harkin said he was particularly frustrated by the money being spent on fixing the alternative minimum tax. “It’s about 9 percent of the whole bill,” he said, “which we were going to do later this year in a tax bill. Why is it in there? It has nothing to do with stimulus. It has nothing to do with recovery. This makes no sense whatsoever.”

The answer is that Republicans and quite a few Democrats are too cowardly to rewrite the tax code and offset the AMT patch with new revenue. Nobody thinks that a tax meant to hit high-income tax dodgers should come into play for an individual making $100,000 a year or even less; but if that's the case, Congress should change the law permanently, instead of these silly one-year patches that allow them to evade responsibility.

And yet the Axis of Centrism has the audacity to call their effort to gut the bill of some of its effectiveness "fiscally responsibile." There is no legitimate reason to cancel out state government aid or school construction funding - Nelson, Collins and Specter set an arbitrary number of $800 billion and demanded compliance, and they got it. Of course, Arlen made sure his pet project, funding for the NIH, stayed. There's no reason to it at all.

Which is why I think the sausage-making we saw is mostly due to giving power and agency to the moderates, and most of that is on Harry Reid. Barack Obama is right to say that he should have started the bill with no tax cuts and let those who put them in own them. I'm glad he learned that lesson. I'm not sure it would have made a fundamental difference to the final outcome. A majority of the Senate wanted to lard this up with tax cuts. The dynamic of the filibuster gives a lot of agency to those two or three Republicans on the margins. There are things Obama and the Democrats could have done, certainly. One is to insist that Al Franken be seated to narrow the margins needed for passage - or at least confirm Judd Gregg and use the open seat in New Hampshire as a lever to get Franken in. The passivity there is shocking. And of course, Obama's public offensive on the bill happened about a week late.

Digby writes about the differences when George Bush barely skated into the Oval Office, immediately asked for a huge tax cut, and got most of what he wanted, as opposed to what we saw here. That's because there is no bargaining partner on the Republican side of the aisle, that their nature is not to govern but to oppose, and they'll put party over country every time.

As for whether or not this will be the last chance for Obama to push forward his agenda - I'm not sure. In the short term, Obama's probably stronger for getting this passed, though public opinion hasn't really worked on Republicans yet. And Stan Collender reminds that there's a budget to be passed, which will have the opportunity for stimulus.

The continuing resolution put in place last Fall to cover the nine 2009 appropriations that were not enacted by the start of the fiscal year will expire on March and additional spending almost certainly will be added to the levels currently in place just a week or so after the stimulus is signed.

The Obama 2010 budget will start that year's budget process and the appropriations for that year will provide another opportunity for an additional economic jolt this Fall.

But even more important, the 2010 budget process could include a reconciliation bill that increases spending or reduces revenues or both that, because of the rules, won't be subject to a filibuster in the Senate. In addition, the budget resolution that has to be adopted before a reconciliation bill can happen also can't be filibustered.

Not only will that make another stimulus bill much easier to enact, it's also something that could happen any time after the budget resolution is adopted so the process could be completed relatively early this year and the stimulus provided quickly.

So there may be other bites at the apple. I too am worried about the pervasive talk of "entitlement reform" coming from some corners of Washington, especially in this time of economic hardship. But I really don't get the sense that it's anything more than a recognition that comprehensive health care reform must happen or the budget is toast. This has been Budget Director Peter Orszag's mantra for a while now.

Hopefully, everyone's learned some lessons from this battle and is ready to go to war for the next one. But the Senate is where the dynamic has to change. I'm all ears about how to get that done.