Monday, February 09, 2009
Why Republicans Won't Support the Stimulus
Why are Senate Republicans (all, that is, except the lonely moderates Collins, Snowe, and Specter) nixing the stimulus package, as House Republicans did? Not because Obama failed to compromise -- he gave them the tax breaks they wanted, included a whopper for business. Not because Senate Democrats failed to bend -- they agreed to trim more than $100 billion out of a previous version of the bill. Not because Senate Republicans are doctrinally opposed to deficit spending -- many of them happily voted for Bush spending and tax cuts that doubled the federal debt.
The reason has to do with the timing of the economic recovery. If everything goes as well as possible and the stimulus and next round of bank bailouts work perfectly, a turnaround could begin as early as mid-2010. But even under this rosy scenario, employers wouldn't start rehiring until late 2010 because they'll want to be sure the upturn is for real (employment typically lags in a recovery). This means that under the best of circumstances -- assuming the stimulus is big enough to jump-start the economy and the next bank bailout big enough to get credit moving -- most Americans won't feel much better than they do now by November, 2010. Unemployment could easily be hovering close to 8 percent; underemployment, close to 14 percent; and many other indicators, still in the doldrums.
That's if all goes extremely well. But what if the stimulus isn't big enough? (I fear it won't be, given the large and growing gap between what the economy can produce at near full-employment and the meager demand coming from consumers and businesses.) And what if the bailout doesn't quite work? (It may not, given that the banking system is collapsing and many banks are actually insolvent.) The economy in November of 2010 may be worse than it is now, with no turnaround in sight.
Which brings us to the midterm elections of 2010.
Yesterday, while sitting across from Newt Gingrich on George Stephanopoulos's Sunday morning television show, 1994 came roaring back into my head. Gingrich, you remember, turned that midterm election into a national referendum about Bill Clinton's leadership. (No one today remembers what was in Gingrich's "Contract with America," but almost no one did then, either.) Because Clinton's presidency had had a rough start and because House and Senate Republicans had kept remarkable unity in opposing him at almost every turn, Gingrich in the election of 1994 could claim that and the Republican Party offered a clear alternative, and had earned the chance to control Congress.
Fast forward to today and listen to Senate Republicans referring to the stimulus: "This is neither bipartisan nor is it a compromise," said Sen. John McCain this morning. "It is ... generational theft" that will increase the role of government and provide no mechanism for paying back the money. Sen. Mike Enzi said the package "spends everything we've got on nothing we're sure about. I'm supposed to be giddy that we're only spending $827 billion. Frankly, I've had enough of this bailout baloney." Sen. Tom Coburn's office released a list of projects that he calls earmarks and pork, totalling more than $55 billion. And so it went today.
Last week, House Republicans were equally vitriolic.
....more.........
http://robertreich.blogspot.com/2009/02/why-republicans-wont-support-stimulus.html
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