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President Barack Obama will sign the $800-billion economic stimulus bill Tuesday. Given big Democratic majorities in both the U.S. House and Senate, its passage was never in doubt. It will provide stimulus to the economy (though not much in the short term) and will continue to be picked at, after the fact, by critics on both left and right.
A win is a win, and Obama must be credited with victory on the first big issue confronting him. But there were all kinds of sub-texts attached to the exercise which one hopes the new President has duly noted.
First, Obama's hopes for 80 Senate votes for the package were wildly unrealistic. His rhetoric, on the stimulus package as in his campaign, was that of consensus and bipartisanship. But words and friendly bipartisan photo opportunities will never be enough to create consensus where consensus is lacking on substance. On the first go-around, no Republicans voted for the House version of the stimulus bill and 11 Democrats voted against it. The Senate version cleared because three Republican Senators crossed over to support it. (Its opponents included Sen. Judd Gregg of Vermont, who during the same period asked that his name be withdrawn as Obama's Commerce Secretary nominee). No additional Republicans, in either house of Congress, voted for the final bill; 7 Democrats opposed it.
The worrisome thing was that, until late in the day, it appeared that Obama did not realize he lacked a substantive basis for bipartisan support. A bill containing immediate personal and business tax cuts, money to the states to cover unemployment and social-service costs, and targeted short-term jobs spending probably could have gotten the 80 Senate votes Obama had sought. Such a bill would have had greater immediate stimulative effect, would have cost less, but would have omitted a large number of long-term spending programs loaded onto the package. These longer-term spending programs, having little to do with stimulus in 2009 or 2010, were what spooked Republicans in both House and Senate. They also spooked so-called Blue Dog Democrats in the House — who number about 50 — but who stuck with Obama and their party on such a defining issue. Many Democrats held their noses and chose to overlook outright and inexcusable pork spending in the bill as flagrant as any of the "earmarks" Obama had said he would not tolerate.
The party-line stimulus bill victory will not be repeated, and Obama should not be misled into thinking it will. Everything hereafter will be more difficult, beginning with the Financial Rescue Package, Part Two. An illustration of future difficulties came when Congressional Democrats sent an early signal in the stimulus bill that they would not be easily handled. Sen. Chris Dodd introduced a provision, outrightly opposed by the Obama administration, capping salaries of executives whose institutions received federal bailout money. It remains in the bill and Obama will have no option but to sign it.
Another worrisome note came when Treasury Secretary Tim Geithner botched last week his initial presentation of the Part Two package. I had expected that Geithner, flanked by White House economic czar Larry Summers, financial advisory chair Paul Volcker, and key congressional leaders, would unveil a comprehensive, carefully devised proposal which would have immediately jacked up financial-market confidence. Instead, he went alone to the podium, made a deer-in-headlights presentation of an incomplete package, and threw markets into an immediate downer. The package, it was clear, had not yet been thought through and Geithner was nervous about what he had in hand. The whole thing should never have happened.
Consideration of a final Part Two plan will be trench warfare, with both congressional Democrats and Republicans properly demanding satisfactory answers about a program that Geither suggested would cost taxpayers trillions before it ran its course.
Obama also has pledged to bring forward Social Security and Medicare reform proposals, as well as a comprehensive health plan — the latter presumably after he has found a successor to former Sen. Tom Daschle as HHS Secretary.
I am amazed, frankly, that Obama would bring entitlement- and health-reform proposals forward in the current economic environment and before both financial- and economic-rescue measures have been enacted and had time to take effect (likely a year or more). Social Security and Medicare reform, however undertaken, will involve tax increases or benefit cuts which will enrage senior-citizen and other constituencies. Health reform, as presented thus far by Obama, also will involve big new tax increases.
The infamous Clinton health-reform plan, developed in 1993 and abandoned in 1994, failed in large part because Bill and Hillary Clinton failed to develop consensus around its components. Yet Daschle, before withdrawing as HHS nominee, had stated publicly that he thought such reforms were so controversial that they might have to be attached as a rider to other legislation in order to be enacted — an almost certain recipe for disaster.
Perhaps Obama will rethink his present intention to keep piling new initiatives into his first 100 days while our financial and economic health remains so tenuous. If he persists, however, he will quickly discover that political consensus is impossible without substantive consensus — and that as many Democrats as Republicans will be bridling at his proposals.
A more sensible course would be for Obama to concentrate on Financial Rescue, Part Two, to the exclusion of everything else. Once that has been fully developed, debated, and passed by the Congress, he can take stock of where the rest of his agenda stands. If he tries to push much more, too quickly, he risks a system failure.
Footnote: Capital gossips traditionally focus on who will be the first White House insider to fail. Odds-on favorite just now is Chief of Staff Rahm Emanuel. Emanuel is known as a smart, sometimes devious partisan with sharp elbows, having taken his apprenticeship as an eight-year aide in the hyperpolitical Clinton White House and as a Chicago congressman.
Emanuel is taking heat for the sloppy transition process which has led to the withdrawal of Cabinet nominees. Another mistake was the appointment of such hacks as Illinois Republican Rep. Ray LaHood, a notorious pork spender, as Transportation Secretary. Most recently, the team drove off Commerce nominee Judd Gregg. Commerce controls the U.S. Census Bureau, which is about to undertake the 2010 census. African American and Latino groups, key Democratic constituencies, have been urging for some time that actual head counts not be taken in their communities but that "statistical estimates" be taken which would, as a practical matter, increase their numbers and thus result in a greater flow of federal funds and benefits to their neighborhoods. Emanuel informed Gregg that the White House intended to take control of the 2010 census from Commerce — presumably to get a desired political outcome (as above) from its results. When Gregg objected, Emanuel did not respond. Gregg then bailed out.
If Emanuel persists with his planned White House takeover of the Census, he will come to real grief. This is a dumb move which would break the historic independence of the Census Bureau and cast doubt on its integrity. It would be a foolish move by a White House of either party. If Emanuel persists in it, he will find out how dumb it truly is.
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Comments:
Posted Sun, Feb 15, 12:38 p.m. Inappropriate
It seems that Obama is not the G-d's 2nd child that the Media and many democrats seemed to be deluded into thinking during the election. He is human and he makes mistakes. The editor seems genuinely surprised by this.
Posted Sun, Feb 15, 1:21 p.m. Inappropriate
WHY WAS E-VERIFY KILLED IN STIMULUS PACKAGE? Thought the whole idea of the Stimulus bill was to support, the millions of unemployed AMERICAN WORKERS. Instead Speaker Pelosi and Senator Harry Reid in secret and no discussion killed E-Verify, that would have stopped illegal aliens getting jobs.
HOW MANY BILLIONS OF DOLLARS COULD BE SAVED, IF US TAXPAYERS WERE NOT FORCED TO PAY FOR EDUCATION, HEALTH CARE AND OTHER GOVERNMENT BENEFITS, INCLUDING AN OVERCROWDED PRISON SYSTEM.
ALL THIS TO BENEFIT PREDATORY BUSINESSES WHO HIRE ILLEGAL ALIENS OVER AMERICANS.
Voice your anger at the politicians, by calling the Capital switchboard at (202) 224-3121 MAKE THEM SWEAT!
Posted Sun, Feb 15, 5:57 p.m. Inappropriate
Judd Gregg is a senator from New Hampshire, NOT Vermont.
Posted Mon, Feb 16, 10:09 a.m. Inappropriate
"President Barack Obama will sign the $800-billion economic stimulus bill Tuesday."
And in doing so, he will betray the trust of millions of his fellow citizens who voted for him, and saddle their children with a debt and tax burden that they will not be able to pay off in their lifetimes. And Mr. Van Dyk calls it a "Victory"?
Posted Mon, Feb 16, 10:16 a.m. Inappropriate
Mr.Van Dyk,
Why more of the same superficial analysis? Most objective observers have concluded that the Republicans weren’t interested in a bi-partisan stimulus. See the Los Angeles Times report on page A3 of today’s Seattle Times. An excerpt:
“In effect, the Republicans took a precarious gambit: By unflinchingly opposing a popular president on the issue Americans care most about, they hope to place responsibility for reviving the economy squarely on President Obama's back.
If his prescriptions fail, or succeed but carry unwelcome side effects such as inflation or higher taxes, the GOP could say “We told you so” and bid for a return to power.”
And they papered over their true motive with flimflam. A revealing example is found right here at home on U.S. Representative Dave Reichert’s web site. In a statement issued Jan. 28 (Reichert Rejects Massive Spending Bill) he says:
“Just last week, the nonpartisan Joint Committee on Taxation could not say whether any jobs would be created by this massive spending package.”
Well guess what, the Joint committee didn’t say that. What the spokesman for the Committee did say is that they didn’t make an estimate. Here’s the exchange from the transcript:
Rep. Dave Camp (R-Mich.), the Republican ranking committee member, questioned Thomas Barthold, the deputy chief of staff of the non-partisan Joint Committee on Taxation, about jobs creation in the Democrat bill.
“Can you tell me Mr. Barthold, how many jobs will be created as a result of this legislation?” Camp asked. Barthold replied, “In short, Mr. Camp, I can’t.” Camp then pressed Barthold to clarify his position, “So we don’t have an estimate of the number of jobs this would create either private sector or public? We don’t have any estimate of the economic effect that this legislation would have on our economy, whether it would create any growth in our economy at all? We don’t have that data before the committee today?” Barthold then nodded his head and shrugged.
So based on this testimony Reichert implies in a message to his constituents that there will no job creation. He ignores the fact that the mission of the Joint Committee on Taxation is to estimate the fiscal (revenue) impact and not the economic impact. A big difference that needed to be explained. But that would not have suited the Republican strategy of obfuscation.
Posted Mon, Feb 16, 10:55 a.m. Inappropriate
dn: Urge you to get past partisanship and partisan interpretations. Fact was, both Dems and Republicans on January 20 wanted in the worst way to
collaborate in an economic-stimulus package which would bring the economy out of the trough and help the country. Republicans were not thinking: Let us oppose a package and hurt the economy because we might benefit in 2010. The package as it evolved, however, was one where Republicans could not find sufficient common ground. It evolved that way, in part, because a new President miscalculated and let it be loaded with much expensive stuff which was irrelevant to recovery in 2009/2010.
Both parties would like to make a fresh start and find common ground on the Financial Rescue, Part Two. But, as I related above, that is easier to say than to do. The financial rescue involves much more money than the stimulus package and is even more vital to recovery. The President, first, must be sure he has a solid proposal---not a partial outline, as
presented the other day by Geithner. Then, behind the scenes, he and
his key aides must work with both Democratic and Republican congressional leaders to try to find a formula which can gain broad support. If the financial rescue were to pass, with true bipartisan backing, it would do wonders for public and financial-market confidence.
We are in big financial/economic trouble and it is a waste of time to
see everything in who wins/who loses partisan terms.
Posted Mon, Feb 16, 1:11 p.m. Inappropriate
Good piece, as usual, Mr. Van Dyk. However, I think that the republican party is currently tying the noose that they will use to hang themselves. They're not looking at working with Demos; they're looking, in my opinion, to pass blame, much like dn said. However, once again, I have to ask the Republicans: You're against big spending? Since when? Get real, I say, and look at the almost $600 BILLION debt that the Bush Administration sunk us into with the war in Iraq--and that's just for starters. I can't believe the Repubs are against big spending. It's all smoke. Surely in their districts there are people who are not dependent only on tax cuts.
I look forward to the Republicans loosing more seats in Congress as the American people see through their game. The children of future generations are already saddled with debt thanks to Bush-baby and may be saddled with more if the economy doesn't improve. So much whining. Too many Republicans nay-sayers.
Posted Mon, Feb 16, 4:16 p.m. Inappropriate
Seattle Observer,
GW Bush and the Republican congress have already saddled us with debt that will last generations. They ran massive deficits - fiscal stimulus if you will - throughout Bush's two terms. They created a magical bubble economy based on financial hocus pocus and wishful thinking even more ludicrous than the dot com bubble. Deregulation and the private sector plunged our economy into depression without any help from Mr. Obama.
I find it odd how most Republican criticism of Obama actually applies to the consequences of Republican policies.
Posted Mon, Feb 16, 6:30 p.m. Inappropriate
I agree with Mr. Van Dyk here. I believe that Pres Obama and many Republicans wanted to reach a bipartisan compromise, but that Sen Reid and Speaker Pelosi had no interest in bipartisanship. No Republican input was allowed into the initial House bill or in the Senate/House conference.
Yet some people above blame the Republicans for opposing a bill into which they had no input? Better yet, "political" and "sdstarr" still can't get over their irrational Bush hatred? I suggest that they follow Pres Obama's advice and get over it.
Posted Tue, Feb 17, 12:20 p.m. Inappropriate
PJS
What did I say that seemed like Irrational Bush Hatred? George Bush ran up large deficits. He was an advocate for reducing government regulation - or red tape as he called it. I admit that "magical bubble economy" is a bit over the top, but otherwise I think what I wrote was hardly Irrational Bush Hatred.
Besides, I think my feeling can be more accurately described as Rational Bush Contempt. I hope to get over it soon. However, you have to understand that it grates on my sense of fairness when Republicans say they stand for something - like fiscal restraint - when they have in fact done the exact opposite when they had control of the government.
As far as the question of bipartisanship, I think that the stimulus bill was never going to find much bipartisan support. Many Republicans are simply philosophically opposed to government solutions to economic problems. Supporting the bill would betray their core beliefs, and there was nothing that Nancy Pelosi could do that would change that. Hopefully there will be other issues in the future that will be more amenable to bipartisan solutions.
Posted Tue, Feb 17, 3:21 p.m. Inappropriate
Sdstarr -
"Financial hocus pocus?" "Deregulation and the private sector plunged our economy into depression?" Please explain how either statement is rational.
The three industries that precipitated the current situation --- banking, insurance and broker/dealers --- are the three most highly regulated industries in the United States. I would suggest that overregulation or faulty regulation is more to blame than deregulation. The private sector? Do you mean that everybody who does not work for the government is to blame?
I agree with Mr. Van Dyk and, I suppose, Pres Obama. I do not believe it does any good to look back and blame anybody --- Pres Bush, Pres Clinton (remember, he chose to lightly regulate derivatives and to push Fannie and Freddie to extend loans to lower income people, yet I don't see many hysterical liberals blaming him for this "depression"), whoever.
I credit the President for attempting to get a bipartisan consensus. I believe that many (not all) Republicans were prepared to work with him. Unfortunately, Sen Reid and Speaker Pelosi ignored the President and the Republicans.
Posted Tue, Feb 17, 5:24 p.m. Inappropriate
PJS
I will concede that everything in the following sentence was a bit hyperbolic: "They created a magical bubble economy based on financial hocus pocus and wishful thinking even more ludicrous than the dot com bubble." My only defense is that it's fun to use the words Hocus Pocus. It makes me feel all pundit-y.
I would point out that your own arguments imply that a lack of regulation led to our current economic woes - lightly regulating derivatives is how you put it. I would further argue that the parts of the private sector you list in your post - banks, mortgage brokers and insurance companies - are much more responsible for this recession than the government.
Didn't mean to imply that everyone who doesn't work for the government is at fault. To be frank I have a feeling when historians look back at this recession they will primarily blame the lack of foresight, free spending and heard mentality of both those in positions of power and average Americans. We have seen the enemy and he is us.