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STIMULUS LESSONS
by Ryan Avent
The passage of an economic recovery package was never going to be a particularly clean or easy process. We have a brand new president and Congress, with a Republican minority prepared to sacrifice good policy for partisan victory. We have the worst economic crisis in decades, which appears to be gathering momentum at a frightening pace. And so we have the pressure to act boldly and very swiftly -- pressure that might have been reduced by the passage of a smaller, stop-gap stimulus bill last session, but of course legislators were preoccupied with the automakers at the time.
Under the circumstances, the proposed stimulus package isn't really that bad. It's of a good size, it combines immediate and sustained spending and tax cuts, and it seems quite passable. We could have done much worse.
But as the pre-passage post-mortems begin to roll out, it does seem clear that things might also have gone better. The potential of a transformative stimulus has not been fulfilled, leaving a bad taste in the mouths of many progressives. And I think we ought to learn a few lessons from the process.
Our infrastructure and energy policies need to be drastically overhauled. This is going to require careful forethought -- and time. New initiatives in the stimulus might well complicate or undermine later attempts at reform. The simplest example is the highway versus transit debate; it's difficult to make headway on goals to reduce emissions and vehicle miles traveled while funding lots of new lane miles. Better to set up new guidelines for local, state, and regional planners, along with new funding streams and standards. But that can't be done in a month.
And it isn't necessary to do it in a month, given the other stimulus avenues available. The combination of tax cuts with a massive plan to support state and local spending -- on benefits, but also on infrastructure projects already in progress or operation -- would likely have provided all the immediate stimulus we require. And this could have (and should have) been paired with efforts to expedite follow-up bills addressing infrastructure needs and energy policy. Those bills could then be tailored to function as stimulus as necessary; initial, planned deficit spending could give way to revenue-supported spending. Adding in efficient taxes to kick in after recovery (and there are options aplenty -- carbon tax, congestion tolling, and increased gas taxes are all options) would ease long-term debt concerns.
In short, the administration should have acted boldly and swiftly, but also pointedly. The moment it became apparent that other priorities couldn't easily be squeezed into the bill given its constraints, they should have been set aside, to be handled later.
But as I mentioned last night, I think the Obama team will learn a great deal from this experience. I expect subsequent legislative pushes, on health care and energy and infrastructure, will be much improved by this trial by fire. And hopefully, progressives will also learn from the experience. We all feel pressure to have our pet issues addressed immediately, particularly given the fact that solutions to many challenges are complementary. But we're going to need patience. It was, perhaps, a bit unreasonable to expect a dramatic infrastructure overhaul in this time-sensitive bill. We need to be able to give the leadership the time to get the policy right.
COMMENTS (9)
"but of course legislators were preoccupied with the automakers at the time"
Yeah, ensuring the existence of nearly 3 million jobs amidst a hemorrhaging economy was a bad idea. Ok.
And no, the recovery package is quite poor - weighted down by useless tax cuts and a poor investment in infrastructure.
It is misdirected and not large enough. While I know the market nonsense that proliferates your mind dictates otherwise, we need more public expenditures on programs that will lead to direct employment.
Is it terrible. I guess not. But there is no reason it should not be better.
Posted by: jeff | January 28, 2009 11:40 AM
Let's be honest: there is only one lesson to be learned, and it was clear years ago --
Fuck. The. Republicans.
Posted by: Obama Loves the Steelers | January 28, 2009 1:06 PM
I agree with Jeff.
However, Obama Loves the Steelers,
If one thing is clear, it's that Democrats are to busy screwing over Democrats to to bother boff'n the Republicans.
This bill is more of the same garbage Democrats have tolerated since 20 Jan 1981.
Posted by: S Brennan | January 28, 2009 1:12 PM
"...the Obama administration concedes to reporters that it could pass an economic recovery package right now, without making any policy concessions to Republicans, such as substituting more tax cuts for more infrastructure spending. And yet, Obama and Democrats are doing just that - making concessions to Republicans in hopes that a majority of Republicans will support the final bill. And so again, how many billions of dollars in inefficient tax cuts must taxpayers be forced to finance in order to help Obama attract extra Republican votes that he doesn't actually need?
What's so bad about this question even being on the table is that since I wrote my original post, Republicans themselves have publicly acknowledged that Democrats do not have to make any concessions to them in order to pass the bill."
http://www.ourfuture.org/blog-entry/2009010527/economic-stimulus-bill-sound-policy-vs-dc-bipartisanship
Posted by: S Brennan | January 28, 2009 1:22 PM
S Brennan,
Democrats, indeed, do not need Republican votes to pass it. They WANT Republican votes to share the blame because they know this is a pork-laden bill and a payback to their constituancy groups such as 4.2 billion for ACORN and massive expansion of government.
The money in this bill does not address the core economic issues and they know it. They don't want to take the fall when John Q. Public figures it all out.
Posted by: El Viajero | January 28, 2009 1:36 PM
the passage of a smaller, stop-gap stimulus bill last session, but of course legislators were preoccupied with the automakers at the time.
Oh, bullshit. Your ignorant obsession with wanting the US-based auto industry destroyed ("Detroit would be a creative class paradise, if not for all those nasty jobs for stupid high school graduates") infected your writing so much that I took you off my bookmarks a month ago, and now here you are, spewing the same nonsense.
Bush was going to veto any "stimulus" bill that wasn't predicated on permanent tax cuts, so WTF do you think the Dems could have done if they weren't "preoccupied" with saving 3M American jobs? Eliminate the Estate Tax forever? That would be awesome.
Barack Obama has chosen to push a shitty stimulus bill with too many tax cuts and highways, and not enough transit, and it has not a goddamn thing to do with Detroit. Grow up and put the blame where it belongs.
Posted by: JRoth | January 28, 2009 1:44 PM
with a Republican minority prepared to sacrifice good policy for partisan victory.
Tell me this is a joke. I mean, because Republicans don't have enough votes to pass gas, let alone legislation.
Posted by: asl | January 28, 2009 2:37 PM
asl is right,
The problem isn't big bad Republicans...
...it's the panty waisted Democrats
Just as in 2006, they're gutless wimps.
Only now they're headed by a career sycophant whose amazing rise to power was paved with pleasing platitudes.
Change?
That's off the table!
Posted by: S Brennan | January 28, 2009 2:59 PM
It would also be nice for the President to not have been lying about "we are interested in good ideas wherever they come from." Obviously, they won't come from John Boehner, but there's at least $100B that would be smarter if someone just slightly brighter than Boehner thought about it for a minute. Are there any Republican stones?
Posted by: Doug | January 28, 2009 5:37 PM