Archive for January 9, 2009

Economic Recovery … 60:40 is NOT a Promising Split

Room for both, but the guy on the left needs A LOT more.

And I am not talking about Harry Reid’s mythical 60-senator bloc; I am talking about Obama’s $775-billion economic recovery plan, 40% of which is comprised of tax cuts. Ugh.

First, about half of the tax cuts is made up of tax credits previously proposed during Obama’s campaign, his “Making Work Pay” plan. Why, if these credits were in the offing anyway are they now being bundled into the separate economic recovery plan? Sure, the credits can contribute towards recovery, but why can’t they stand alone, as they did during the campaign?

Second, the other half of the cuts is going to business interests. With apologies to Strother Martin: “What we’ve got here is failure to remember trickle-down doesn’t work.” I admit I am unclear if part of the calculation is lost tax revenue from not immediately rescinding the Bush cuts in 2009, but apparently, new cuts are part of the recovery plan, including a $3,000 credit for each employee businesses hire during this recovery effort.

Senator John F. Kerry, Democrat of Massachusetts, and others also criticized a proposal to give businesses a $3,000 tax credit for each new employee they hire, saying it was unlikely to influence business decisions.

Know what would influence business decisions? Making huge, substantive changes to the health-care system to expand coverage and lower employer costs to cover employees. Know what changing the health-care system takes? More than just a portion of the remaining $450 billion available for economic recovery.

The piece of pie tax cuts seem to take in Obama’s plan is disproportionate and disappointing, and Republicans are loving it. They are waving their arms from on high, clamoring for fiscal responsibility and lower deficits, laughable considering their leaders, Mitch McConnell and John Boehner have happily either stuffed themselves with pork or voted time and again in line with debauched deficit-spending requests from the Bush Administration.

Supposedly in a meeting with Democratic senators, Lawrence Summers, Obama’s national economic advisor, was amenable to senators’ requests for increased emphasis on spending. We’ll see if Summers’ “Message received, loud and clear” amounts to a substantive rebalancing of investment and tax cuts in the overall plan.

Paul Krugman warns that as it stands, $775 billion is not enough to rebuild the economy enough so that purchasing power is in line with production capacity. Considering almost half of that insufficient $775 is going towards tax cuts, the promise of recovery seems quite bleak.

Even the [Congressional Budget Office] says, however, that “economic output over the next two years will average 6.8 percent below its potential.” This translates into $2.1 trillion of lost production. “Our economy could fall $1 trillion short of its full capacity,” declared Mr. Obama on Thursday. Well, he was actually understating things.

To close a gap of more than $2 trillion — possibly a lot more, if the budget office projections turn out to be too optimistic — Mr. Obama offers a $775 billion plan. And that’s not enough.

Here’s more from Krugman’s recent blog entry on “stimulus arithmetic“:

I see the following scenario: a weak stimulus plan, perhaps even weaker than what we’re talking about now, is crafted to win those extra GOP votes. The plan limits the rise in unemployment, but things are still pretty bad, with the rate peaking at something like 9 percent and coming down only slowly. And then Mitch McConnell says “See, government spending doesn’t work.”

In case this picture isn’t depressing enough, Elizabeth Warren is back with the Congressional Oversight Panel for Economic Stabilization, one of the entities overseeing Treasury’s administration of the bailout. Not surprising, the panel’s latest report faults Treasury as still doing very little to ensure bailout funds are used in the manner intended by law, including providing any sort of relief to homeowners.

“The recent refusal of certain private financial institutions to provide any accounting of how they are using taxpayer money undermines public confidence,” the draft of the report said. “For Treasury to advance funds to these institutions without requiring more transparency further erodes the very confidence Treasury seeks to restore,” it said.

I’ll have more on this next week, after I read the report and have myself a good cry.

Are You Smarter than a Sitting Senator? Jim DeMint Edition

Sen. DeMint (left): "Who among you is brave enough to joust this windmill with me?"

The American Senate takes its name, and an abstract notion of its duties, from the Roman Senate, the primary organ of government in the Roman Republic, which in turn derived its modus operandi from the Etruscan custom of seeking advice from a deliberative body of the oldest, wisest members of the community – the senes, if you will. While the American Senate carries on the tradition of constituting its Senate mostly of old men (the average age of Senators in the 111th Congress is 63), sometimes the “wisest” element is lacking… as, say, in the case of Jim DeMint (R-S.C.).

We’ve previously seen Senator DeMint transmute conservative cowarice into “liberal censorship” – thanks, Jim – so you may be wondering, how he sink any lower? Easy. While the remainder of the Senate & people busy themselves with matters of import, Senator DeMint can choose to spend his time drafting legislation in opposition an imaginary, hitherto-unproposed Democratic agenda.

You see, earlier this week, DeMint and some of his illustrious colleagues submitted Senate Bill 34, the “Broadcaster Freedom Act of 2009,” which would block the FCC from re-instituting the “Fairness Doctrine” without congressional approval, despite a complete lack of evidence, from either President-Elect Obama or the Senate, that a new Fairness Doctrine is in the offing. While the Fairness Doctrine is a persistent element of right-wing mythology – oh no, they’re coming for Rush! – it is just that, a myth trotted out to induce conservatives to rally ’round Rush, not an actual threat. Politics, practicality, and the law all bar a resurgence of the Fairness Doctrine: DeMint might as well rebuke France for its imminent plan to invade Manhattan. This is the ultimate straw man, and a criminal waste of government resources.

But wait, there’s more! DeMint’s “Broadcaster Freedom Act” is worse than useless: it’s unconstitutional, at least according to the legal reasoning and logic employed by members of DeMint’s own party. Because the Act purports to legislatively limit the regulatory discretion the FCC, an executive agency, under the popular conservative understanding of the separation of powers and the “unitary executive,” the BFA would amount to an unconstitutional encroachment on executive authority. ((See U.S. Const, Art. II, § 3 (”[The President] shall take care that the laws be faithfully executed.” Justices like Scalia read this as a positive grant of authority to the President, and therefore construe it as limiting the degree to which legislature can circumscribe the executive’s regulatory powers.))

I don’t expect DeMint to know that. I do, however, expect his legislative aides to know it, and we as citizens should certainly expect our representatives not to waste their time questing against imaginary villains. For those of you expecting Obama’s ascent to inspire a GOP renaissance, politicians like DeMint might make this a long eight years.