The partisan stimulus bill that does not actually stimulate – that started as an $800B partisan grab bag of Democratic pet projects and pork in the heavily Democratic House of Representatives – that ballooned to $900B in the heavily Democratic Senate – has been apparently been “pared back” to $827B and will pass with the help of 2 or 3 Republican senators, knocking a fully interest loaded $1.1 trillion hole in the deficit. I guess that makes it bipartisan now.
This bill represents about half of the cost of the Iraq war to date, but committed in the first month of the new administration. Impressive. What we saw with this bill is a template for what we can expect from the “post-partisan” Obama administration over the next four years. Very public bi-partisan media photo-op eyewash, but hard-core ideological partisan bills steamrolled over the opposition in Congress. Sounds familiar. And why not? As Obama says “We won”. With his 52% mandate, there is no real reason to worry unduly about the valid concerns of the other 48%.
As this bill represents the new President’s first big partisan victory, it is instructive to review how Obama’s rhetoric on the bill has evolved.
Shortly after the election, while basking in the afterglow of the historic outcome, I – like many proud Americans – watched Steve Kroft interview the new first family on 60 Minutes. I was struck by one particular statement made by the president-elect, and even highlighted it in a post at the time:
Kroft: “Where is all the money going to come from to do all of these things? And is there a point where just going to the Treasury Department and printing more of it ceases to be an option?”
Mr. Obama: “Well, look, I think whatâ€™s interesting about the time that weâ€™re in right now is that you actually have a consensus among conservative Republican-leaning economists and liberal left-leaning economists. And the consensus is this: that we have to do whatever it takes to get this economy moving again, that weâ€™re gonna have to spend money now to stimulate the economy. And that we shouldnâ€™t worry about the deficit next year or even the year after. That short term, the most important thing is that we avoid a deepening recession.”
What made the statement remarkable, is that it was patently, demonstrably, unequivocally false. No such consensus existed among economists – not then – not now.
If we were still in the heat of the presidential campaign, partisans might have seen fit to call it a blatant bald-faced lie. If Bush had uttered those words, it would have been cited as yet another example of his pathological inability to tell the truth, his isolation from dissenting views, and his disdain for the “reality based community”. But a new President deserves the benefit of the doubt, so let us just call it an exaggeration for effect.
At the time I considered consulting the intertubes and dragging up quotes from a few dozen economists to contradict the assertion – But – I was feeling lazy, and as he had only been elected a few days before, had not been sworn in, and we had not even really started the honeymoon yet, I couldn’t be bothered. My only editorial comment in that post was a reminder that someone (our children and grandchildren), someday would have to pay the price for this additional debt, in either taxes, inflation, devalued currency or all of the above.
Since then, as the massive
stimulus pork laden spending bill took shape, the same statement was repeated in various forms by Obama, by surrogates and by the Democratic leadership. Over the weeks and months, the statement morphed, becoming even more assertive, more arrogant, more imperious and by extension more untrue:
“Economists from across the political spectrum agree that if we don’t act swiftly and boldly, we could see a much deeper economic downturn that could lead to double-digit unemployment and the American dream slipping further and further out of reach.” – Barack Obama 3-Jan-09
“Every economist from right to left, Republican, Democrat, advises that (a government stimulus) has to be a very substantial package” Rep. Steny Hoyer (D) 4-Jan-09
“Everybody, I think, from economists on the left to economists on the right realize that we must make critical investments at this time,” – White House chief of staff Rahm Emanuel 18-Jan-09
“There is no disagreement that we need action by our government, a recovery plan that will help to jumpstart the economy.” â€” Barack Obama 09-Jan-09
It became an ideological canon of Democratic dogma, chanted at every opportunity. The odd thing, is that Obama appeared to actually believe it, as if by repeating it often enough it would become true.
“With all due respect Mr. President, that is not true. Notwithstanding reports that all economists are now Keynesians and that we all support a big increase in the burden of government, we do not believe that more government spending is a way to improve economic performance. More government spending by Hoover and Roosevelt did not pull the United States economy out of the Great Depression in the 1930s. More government spending did not solve Japan’s “lost decade” in the 1990s. As such, it is a triumph of hope over experience to believe that more government spending will help the U.S. today. To improve the economy, policy makers should focus on reforms that remove impediments to work, saving, investment and production. Lower tax rates and a reduction in the burden of government are the best ways of using fiscal policy to boost growth.”
Cato also offered a very nifty little widget to promote the ad, which I’d encourage Justin to give a home in the sidebar. It’ll serve to remind him that there are plenty of “smart economists” who do not subscribe to failed Keynesian ideological dogma. Towards the end of his life, even Keynes became skeptical of this kind of Keynesian stimulus.
I was encouraged when public support for the bill fell below 37%. Rational arguments by smart people (even economists) were raised in opposition to this bill. Examples include: Megan McArdle (also here), with Sully chiming in (but still apparently unable to resolve his claimed conservative principles with his continuing P.D.S. affliction), Steve Verdon, Greg Mankiw and others.
Nick Gillespie hit the nail on the head:
“McConnell’s change in attitude seems suspiciously unprincipled and mostly partisan. I’m all for divided government (here’s hoping it delivers gridlock), but one of the problems with unprincipled pols is that, well, they don’t have principles. Which means they will flip the moment they get enough goodies promised them to go one way or the other. And if the experience with the financial sector bailout is any indication, expect the second (and third, and fourth, and so on) bills to be even worse than the awful first draft. And expect McConnell sometime soon to be on the other side of the vote, the one with all those shiny, happy Democrats yapping about how they just guaranteed a car in every pot and two chickens in every garage by funding BS infrastructure programs in every ZIP code in the country.”
One thing has changed. President Obama stopped asserting that there is no credible opposition since Cato published that ad. He has a different message now.
In Wednesday’s briefing with Treasury Secretary Tim Geithner, Obama’s tough sounding but ultimately meaningless eyewash on limiting Wall Street executive compensation got most of the press. The real message was this quote:
“Now, in the past few days I’ve heard criticisms of this plan that echo the very same failed theories that helped lead us into this crisis — the notion that tax cuts alone will solve all our problems,” the president said at the White House. “I reject that theory, and so did the American people when they went to the polls in November and voted resoundingly for change.”
A video of the entire 10 minute event from the White House can be found here. The quote above occurs at 4:42.
The portion of Obama’s comments not related to executive pay was repackaged and regurgitated into a Washington Post op-ed on Thursday – “The Action America Needs”. Compare this quote from the op-ed to his White House comments Wednesday:
“In recent days, there have been misguided criticisms of this plan that echo the failed theories that helped lead us into this crisis — the notion that tax cuts alone will solve all our problems; that we can meet our enormous tests with half-steps and piecemeal measures; that we can ignore fundamental challenges such as energy independence and the high cost of health care and still expect our economy and our country to thrive. I reject these theories, and so did the American people when they went to the polls in November and voted resoundingly for change.”
Same old stuff. Pay no attention to the content (massive pork) in the bill. Pay no attention to the fact that it will not solve the root problem and will at best delay a day of reckoning. Pay no attention that it will add a trillion dollars of debt that we do not have and will have to borrow from the Chinese or tax from Americans or devalue the currency to repay. Just pass it, because an economic fear-mongering President says it should be pass.
The point: Since there is no more pretense that credible informed opposition to this insane spending plan does not exist, we have a new message – Something like this…
My overwhelming 52% electoral mandate means that Americans want to flush another trillion dollars that we don’t have down the toilet. Because I say so.
Welcome to the post-partisan Obama era.
Did we learn nothing from the hastily passed $700 Billion Wall Street bailout last year? You remember – when we witnessed the rampant stupidity of a craven congress rolling over to an executive demand for fast action on the basis of economic fear mongering – and as a result – were treated to the spectacle of our representatives wasting massive amounts of taxpayer resources without really understanding what they were passing or having any idea where the money will go or how it will be used.
No need to answer the question. We learned nothing. The exact same thing just happened on the floor of the Senate.
x-posted from “Divided We Stand United We Fall“