January 25, 2009 [LINK / comment]
Clearly aware that he has a limited "window of opportunity" to enact his sweeping agenda, President Obama is ramping up the pressure on Congress to pass his economic "stimulus" package, warning of dire consequences otherwise. The "American Recovery and Reinvestment Plan" would cost $820 billion, or perhaps more. No one knows for sure. Obama reached out to Republicans in hopes of crafting a "bipartisan" stimulus package, but the way he proposes to spend money to create four million new jobs seems extremely inefficient. His plan is filled with a grab-bag of liberal programs that have little or nothing to do with stimulating the economy. See the Washington Post, which quoted Rep. Chris Van Hollen (D-MD) regarding Obama's desire for bipartisan support -- notwithstanding the fact that Van Hollen is one of the most partisan Democrats on Capitol Hill. Bad choice.
Even though the unemployment rate is not yet as bad as it was in the recessionary years of 1974 or 1982, I would agree with a stimulus package that was based on putting Americans to work by a New Deal-style public works program, especially if it were coupled with a broader reform of the labor market. For example, the Federal government could eliminate a large portion of the unemployment insurance program by simply requiring recipients to perform community services in exchange for the money. Neighborhood cleanup, street repair, etc. are badly needed. Another huge opportunity for employment generation would be to enforce laws prohibiting companies from hiring illegal aliens, and filling those jobs with Americans who have been without work. Can we do it? Yes, we can!!! (But will we do it? Probably not.)
As for the Republican response, I am glad that House Minority Leader John Boehner was highly critical of Obama's plan, but I was disappointed to hear that tax cuts are at the top of the Republican agenda. Everyone knows that there is not a snowball's chance in hell of that happening, so such a proposal sounds rather insincere, "pandering" to the GOP base. Tax cuts are unlikely to have much stimulative effect in the middle of a recession, in any case. If that's all the Republicans can come up with, I'm not encouraged.
In discussions with Rep. Eric Cantor (R-VA) Obama declared, "I won," suggesting that the November elections were a mandate for him to do whatever he pleased. See New York Post. Talk about "audacity"! Obama also made a slighting reference to Rush Limbaugh, which won't mend partisan fences either; hat tips to Byron York and Mason Conservative. It didn't strike me as showing disrespect for "dittoheads," as those pundits inferred, but it wasn't very wise, either. The leader of the House Democrats, Nancy Pelosi, said it didn't matter what the Republicans thought, because the Democrats won the election, thereby entitling them (she believes) to dictate policy terms. That's the sort of hegemonic triumphalism once expressed by the likes of Karl Rove and Hugh Hewitt that proved to be the undoing of the Bush presidency.
Conclusion: Any stimulus package that gets passed by Congress will almost certainly be highly partisan in nature, and lacking a broad public support, it will be doomed to fall well short of its goals.
I've been reading the Obama campaign's book Change We Can Believe In, which lays out the rationale for Obama's myriad proposals. One thing I noticed is the grossly excessive use of the word investment, which sounds more worthy than spending. A given appropriation of money (by an enterprise or by a government) can be considered an investment as long as it leads directly to a real increase in future revenue streams. Spending money on education can plausibly be called "investment," and perhaps even spending on immunizations to prevent costly disease outbreaks. But Obama applies that term to Federal programs that have no such purpose. One example is spending money on veterans' medical treatment. That is indeed be a worthy cause, but providing care and comfort to retired military personnel has nothing to do with making the U.S. economy more efficient or productive.