Commentary Magazine


Posts For: February 14, 2009

You Mean We Have To Pay For It?

Like the hangover which inevitably follows the drinking binge, the realization is setting in that now we have to pay for the $787B just spent — which will  really grow to more like $3 trillion with interest and a bank bailout thrown in. (Yes, it sure does add up.)

The Washington Post observes:

The issue then becomes how to pay for it. The nation can’t sustain trillion-dollar deficits without driving up the debt owed to private investors to dangerous levels that could undermine the nation’s global economic dominance. That debt now stands at nearly $6 trillion.

Well, the Democrats can just raise taxes, right?

“You can’t tax your way out of this,” said Brian Riedl, a budget analyst at the conservative Heritage Foundation. “You’d have to raise taxes by $8,500 per household in order to close a trillion-[dollar] deficit through tax increases alone.”

Riedl noted that federal spending will rise to more than 26 percent of the nation’s overall economy this year, driven by the $700 billion rescue of the U.S. financial system and the government’s seizure of mortgage giants Fannie Mae and Freddie Mac, as well as the stimulus package. Tax revenues, meanwhile, are forecast to drop to about 16 percent of the overall economy, in part because the recession is reducing earnings and cutting people’s tax bills.

Hmm. Well, the president is talking about a “fiscal responsibility summit.” The language is exquisitely vague:

Obama has said he wants to tackle the toughest issues in Washington: making a Byzantine tax code simpler and fairer, reducing the skyrocketing rate of growth in Medicare and Medicaid, and assuring that Social Security will survive for future generations.

But the options are clear: radically cut benefits or radically raise taxes. There is no mysterious solution to “assuring” social security’s future or to narrowing the budget gap. The problem was daunting before and we have now made it much worse, because we have widened the chasm between receipts and spending and because the large stimulus bill and increased debt, as CBO predicted, will likely slow economic growth.

The president and his spinners declared this all to be a “long term” problem that had to take a back seat to the short term “solution” for the recession. But little they have done in the short term will improve the economy, which by their own calculations would have begun to bounce back on its own by the end of 2009.

The “long term” problem is now. The first act comes with the next major auction of Treasury debt. Are we going to start printing dollars ourselves to buy up  Treasury paper? Raise the interest rate on bonds to keep Chinese and other investors in the game? The notion that the government, having gorged itself at the Pelosi/Reid trough, must now be put on a diet reveals just how confused and confusing the administration’s economic approach is. Perhaps they should have thought more about the long term before compounding our short term problems.

Like the hangover which inevitably follows the drinking binge, the realization is setting in that now we have to pay for the $787B just spent — which will  really grow to more like $3 trillion with interest and a bank bailout thrown in. (Yes, it sure does add up.)

The Washington Post observes:

The issue then becomes how to pay for it. The nation can’t sustain trillion-dollar deficits without driving up the debt owed to private investors to dangerous levels that could undermine the nation’s global economic dominance. That debt now stands at nearly $6 trillion.

Well, the Democrats can just raise taxes, right?

“You can’t tax your way out of this,” said Brian Riedl, a budget analyst at the conservative Heritage Foundation. “You’d have to raise taxes by $8,500 per household in order to close a trillion-[dollar] deficit through tax increases alone.”

Riedl noted that federal spending will rise to more than 26 percent of the nation’s overall economy this year, driven by the $700 billion rescue of the U.S. financial system and the government’s seizure of mortgage giants Fannie Mae and Freddie Mac, as well as the stimulus package. Tax revenues, meanwhile, are forecast to drop to about 16 percent of the overall economy, in part because the recession is reducing earnings and cutting people’s tax bills.

Hmm. Well, the president is talking about a “fiscal responsibility summit.” The language is exquisitely vague:

Obama has said he wants to tackle the toughest issues in Washington: making a Byzantine tax code simpler and fairer, reducing the skyrocketing rate of growth in Medicare and Medicaid, and assuring that Social Security will survive for future generations.

But the options are clear: radically cut benefits or radically raise taxes. There is no mysterious solution to “assuring” social security’s future or to narrowing the budget gap. The problem was daunting before and we have now made it much worse, because we have widened the chasm between receipts and spending and because the large stimulus bill and increased debt, as CBO predicted, will likely slow economic growth.

The president and his spinners declared this all to be a “long term” problem that had to take a back seat to the short term “solution” for the recession. But little they have done in the short term will improve the economy, which by their own calculations would have begun to bounce back on its own by the end of 2009.

The “long term” problem is now. The first act comes with the next major auction of Treasury debt. Are we going to start printing dollars ourselves to buy up  Treasury paper? Raise the interest rate on bonds to keep Chinese and other investors in the game? The notion that the government, having gorged itself at the Pelosi/Reid trough, must now be put on a diet reveals just how confused and confusing the administration’s economic approach is. Perhaps they should have thought more about the long term before compounding our short term problems.

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We Still Don’t Know

There is a sense of amazement that President Obama is lesser personage than candidate Obama. The unparalleled campaigner is now a peculiarly passive-aggressive figure who is swiftly squandering his considerable advantages. Bill Kristol writes:

Who would have thought the missing player in the first month of the administration would be Barack Obama? He let his signature economic legislation, the stimulus, be shaped by congressional Democrats. He let internal disputes over the difficult question of how to save the banking system result in a disastrous non-announcement of a non-plan by Treasury Secretary Timothy Geithner last week. Before that, he let Geithner become Treasury secretary after cheating on his income taxes, and waived his own ethics rules to appoint a lobbyist as deputy secretary of defense–undercutting his promises to clean up Washington. He allowed Rahm Emanuel to politicize the Census Bureau, losing as a result his commerce secretary-designee, Judd Gregg, an ornament of his professed hope for bipartisanship.

He returned to the campaign trail for no reason, as Kristol observes, suggesting that the man who spent most of his life running rather than occupying office may be most at ease with adoring fans who do not question his premises nor challenge his utterly conventional liberal policies. He made some limited social overtures to Republicans and then lashed out with hyper-partisan rhetoric when they did not — to everyone’s surprise — embrace a stimulus bill which incorporated none of their policy suggestions.

One recalls the not-so-distant  days of the transition when he could be president-elect, standing in front of all those flags with an impressive array of advisors while the outgoing president sent the markets plunging each time he stepped before the cameras. Now, the markets dive when Obama’s treasury secretary appears. And alas, Obama’s favorite punching bag has returned to Texas.

Throughout the campaign we asked: “Who is he?” Debates raged between those contending he was a far-left liberal and those contending he was a thoughtful moderate.  In the transition we asked again: “Who is he?” He seemed to have a lot of center-right national security gurus but then he threw in plenty of uber-regulators. Well, he was going to settle all the disputes and prevent the clashes between “strong personalities” from becoming logjams. But we still don’t know what he wants.

By default we assume he likes the Pelosi lard-a-thon spending bill. Or is he simply resigned to it? Did he applaud upon finding that the stimulus bill included $5B to encourage states to fill up the welfare rolls, or was this just the price of doing business with the House Democrats? It is no more clear now, in fact less so, whether he has any interest in restraining the most extreme elements in the Democratic party.

During the campaign, everyone cooed about his temperament and watched in awe as he played rope-a-dope with John McCain. But come to think of it he never told us then what he thought of key, urgent matters (e.g. the invasion of Georgia, the AIG rescue) until long after everyone else had put their cards on the table. Zen-like passivity worked when he did not have responsibility for governing.

So we remain baffled about whether he has allowed himself to be run over by events and his own party, or whether this is precisely what he wants — an ultra-liberal, hyper-partisan administration. If the former, we have a serious management issue. If the latter, there are plenty of voters who were deceived.

There is a sense of amazement that President Obama is lesser personage than candidate Obama. The unparalleled campaigner is now a peculiarly passive-aggressive figure who is swiftly squandering his considerable advantages. Bill Kristol writes:

Who would have thought the missing player in the first month of the administration would be Barack Obama? He let his signature economic legislation, the stimulus, be shaped by congressional Democrats. He let internal disputes over the difficult question of how to save the banking system result in a disastrous non-announcement of a non-plan by Treasury Secretary Timothy Geithner last week. Before that, he let Geithner become Treasury secretary after cheating on his income taxes, and waived his own ethics rules to appoint a lobbyist as deputy secretary of defense–undercutting his promises to clean up Washington. He allowed Rahm Emanuel to politicize the Census Bureau, losing as a result his commerce secretary-designee, Judd Gregg, an ornament of his professed hope for bipartisanship.

He returned to the campaign trail for no reason, as Kristol observes, suggesting that the man who spent most of his life running rather than occupying office may be most at ease with adoring fans who do not question his premises nor challenge his utterly conventional liberal policies. He made some limited social overtures to Republicans and then lashed out with hyper-partisan rhetoric when they did not — to everyone’s surprise — embrace a stimulus bill which incorporated none of their policy suggestions.

One recalls the not-so-distant  days of the transition when he could be president-elect, standing in front of all those flags with an impressive array of advisors while the outgoing president sent the markets plunging each time he stepped before the cameras. Now, the markets dive when Obama’s treasury secretary appears. And alas, Obama’s favorite punching bag has returned to Texas.

Throughout the campaign we asked: “Who is he?” Debates raged between those contending he was a far-left liberal and those contending he was a thoughtful moderate.  In the transition we asked again: “Who is he?” He seemed to have a lot of center-right national security gurus but then he threw in plenty of uber-regulators. Well, he was going to settle all the disputes and prevent the clashes between “strong personalities” from becoming logjams. But we still don’t know what he wants.

By default we assume he likes the Pelosi lard-a-thon spending bill. Or is he simply resigned to it? Did he applaud upon finding that the stimulus bill included $5B to encourage states to fill up the welfare rolls, or was this just the price of doing business with the House Democrats? It is no more clear now, in fact less so, whether he has any interest in restraining the most extreme elements in the Democratic party.

During the campaign, everyone cooed about his temperament and watched in awe as he played rope-a-dope with John McCain. But come to think of it he never told us then what he thought of key, urgent matters (e.g. the invasion of Georgia, the AIG rescue) until long after everyone else had put their cards on the table. Zen-like passivity worked when he did not have responsibility for governing.

So we remain baffled about whether he has allowed himself to be run over by events and his own party, or whether this is precisely what he wants — an ultra-liberal, hyper-partisan administration. If the former, we have a serious management issue. If the latter, there are plenty of voters who were deceived.

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Where Hillary Should Go

Hillary Clinton starts her trip to Asia tomorrow, her first abroad as secretary of state.  The first stop is Tokyo.  That’s followed by Jakarta and Seoul.  She ends her excellent adventure in the magnificent capital of Beijing.  Long on symbolism and short on substance, Mrs. Clinton’s trip signals the importance of Asia in her calculations.

Everybody’s talking about what she’ll be doing on the trip, but it’s just as important to say what she will not.  She will not, for instance, be going to two places that should have been on the itinerary: Canberra and New Delhi.  To her credit, Mrs. Clinton will be reassuring American allies Japan and South Korea by her visits there.  Yet she is not making the effort to go to the most reliable friend in the region, Australia.  In a time when Washington will need all the support it can get in Asia, the omission is a mistake, especially because Obama’s Washington needs to renew the ties that George W. Bush and John Howard, then prime minister, worked so hard to strengthen.  Skipping Australia is especially sensitive because Mrs. Clinton is going out of her way to visit Indonesia, with which Canberra has often had uneasy relations.

A bigger omission, in many senses, is India.  The most important foreign policy legacy of the Bush years will undoubtedly turn out to be the beginning of a strategic relationship with New Delhi.  The partnership of the world’s largest democracy and its most powerful one can be the most important force for peace and prosperity in the world.  The Indians do not want to be used by the United States, but they have so many common interests with Americans that the unspoken alliance is a natural one.

Instead of going to New Delhi, Mrs. Clinton is headed to the Chinese capital.  The stopover will produce a lot of nice words but no results, or at least none favorable to us.  Just weeks in office, the Obama administration has had insufficient time to think through its China policy or even name its ambassador to Beijing.  The best the secretary of state can hope for from her China stopover is that she leaves without making any blunders of lasting significance.

If she really wants to accomplish anything with the Chinese during her time in office, Mrs. Clinton should show them that the United States is prepared to work closely with the one nation they truly fear.  So the route to an effective China policy runs through New Delhi.  That’s just one of the many reasons why the new secretary of state should have gone there on her first trip.

Hillary Clinton starts her trip to Asia tomorrow, her first abroad as secretary of state.  The first stop is Tokyo.  That’s followed by Jakarta and Seoul.  She ends her excellent adventure in the magnificent capital of Beijing.  Long on symbolism and short on substance, Mrs. Clinton’s trip signals the importance of Asia in her calculations.

Everybody’s talking about what she’ll be doing on the trip, but it’s just as important to say what she will not.  She will not, for instance, be going to two places that should have been on the itinerary: Canberra and New Delhi.  To her credit, Mrs. Clinton will be reassuring American allies Japan and South Korea by her visits there.  Yet she is not making the effort to go to the most reliable friend in the region, Australia.  In a time when Washington will need all the support it can get in Asia, the omission is a mistake, especially because Obama’s Washington needs to renew the ties that George W. Bush and John Howard, then prime minister, worked so hard to strengthen.  Skipping Australia is especially sensitive because Mrs. Clinton is going out of her way to visit Indonesia, with which Canberra has often had uneasy relations.

A bigger omission, in many senses, is India.  The most important foreign policy legacy of the Bush years will undoubtedly turn out to be the beginning of a strategic relationship with New Delhi.  The partnership of the world’s largest democracy and its most powerful one can be the most important force for peace and prosperity in the world.  The Indians do not want to be used by the United States, but they have so many common interests with Americans that the unspoken alliance is a natural one.

Instead of going to New Delhi, Mrs. Clinton is headed to the Chinese capital.  The stopover will produce a lot of nice words but no results, or at least none favorable to us.  Just weeks in office, the Obama administration has had insufficient time to think through its China policy or even name its ambassador to Beijing.  The best the secretary of state can hope for from her China stopover is that she leaves without making any blunders of lasting significance.

If she really wants to accomplish anything with the Chinese during her time in office, Mrs. Clinton should show them that the United States is prepared to work closely with the one nation they truly fear.  So the route to an effective China policy runs through New Delhi.  That’s just one of the many reasons why the new secretary of state should have gone there on her first trip.

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Flotsam and Jetsam

The White House was partially right about a consensus among economists on the stimulus plan. The catch: most think it’s junk. “The compromise economic stimulus plan agreed to by negotiators from the House of Representatives and the Senate is short on incentives to get consumers spending again and long on social goals that won’t stimulate economic activity, according to a range of respected economists.” You mean the opponents have reasons to oppose the president’s legislative masterpiece?

Larry Lindsay explains how things went off the rails: “The problems began with the inexplicable decision by the administration not to submit its own economic stimulus package, but instead delegate the job to Nancy Pelosi and the barons on the House Appropriations Committee. Appropriations is the reptilian brain of the political process. It is where all the back scratching, logrolling, and pork barreling gets done. Macroeconomic coherence is just not part of the skill set of House Appropriations members. So even rebuilding the nation’s infrastructure got short shrift. Instead, the package was loaded with largesse for fellow politicians and civil service employees back home.”

Phil Levy: “The crafting and selling of the stimulus package have been neither transparent, innovative, calm, nor bipartisan. Much of the package was crafted behind closed doors. The rush to push money out quickly left no time to develop creative new approaches. The president’s dire warnings of doom did little to soothe fears, particularly in those who had doubts about the stimulus package’s efficacy. And hopes for bipartisanship may have been the biggest victim of the endeavor. While President Obama was willing to exchange pleasantries with Republicans, those Republicans were largely excluded from the crafting of the bill and voted overwhelmingly against it.”

Via Mickey Kaus, comes this spot on welfare reform. The immediate victim is Harry Reid, but doesn’t it work for (rather, against) every Democrat?

Chuck Todd seems miserable in his new job (and that was before he read the comments to his post complaining about access in the White House.) Maybe he and David Gregory should swap jobs.

Once again, remarkably, I essentially agree with Glenn Greewald: “Republican groups demand from politicians support for their beliefs.  By contrast, as Judis describes, Democratic groups — including (perhaps especially) liberal activist groups — now (with some exceptions) lend their allegiance to the party and its leader regardless of how faithful the party leadership is to their beliefs.” Translation: much of the left blogosphere long ago sacrificed intellectual honesty (he calls it “independence”) in favor of political boosterism.

Is it true that “few expected” a repeat of zero Republican votes in the House for the stimulus? Politico needs to talk to more Republicans. The House GOP hasn’t been this united since they arrived as the majority in 1995.

An absurd headline: “Obama to Shift Focus to Budget Deficit.” Huh?? So they’re going to cut expenditures (or raise taxes) because a huge deficit is a mortal danger to our economic health. If you are confused, think how dumbfounded the financial markets and the rest of the world are. But if they are looking for some cost savings, I’ve got a great idea to eliminate $787B plus interest.

Wonderful news about Justice Ginsburg’s health situation.

One of the worst aspects of the stimulus bill: billions to the states with a heavy subsidy to add to the welfare rolls. Michael Tanner of CATO writes: “By some estimates, the stimulus bill contains roughly $250 billion in welfare spending, another $6,700 for every poor man woman and child in this country, along with the erosion of the 1996 reforms. It can be counted on to “stimulate” the loss of another generation to welfare dependency.” Well, if Hillary runs in 2016, she can promise to pass welfare reform again.

An Obama and Geithner bear market? Well the combination of the monstrous fiscal stimulus and the non-existent bank bailout has not cheered the markets. Maybe the Obama economic gurus should have tried something to spur investment and private sector job growth.

Bradley Schiller agrees it is time to stop the fear-mongering: “Mr. Obama’s analogies to the Great Depression are not only historically inaccurate, they’re also dangerous. Repeated warnings from the White House about a coming economic apocalypse aren’t likely to raise consumer and investor expectations for the future. In fact, they have contributed to the continuing decline in consumer confidence that is restraining a spending pickup. Beyond that, fearmongering can trigger a political stampede to embrace a “recovery” package that delivers a lot less than it promises. A more cool-headed assessment of the economy’s woes might produce better policies.”

Jeb Bush calls for a shadow cabinet. Judd Gregg for Commerce Secretary?

What is wrong with California? More importantly, why does Meg Whitman want to be governor? Maybe managing a successful business that sells junk is good preparation. It won’t be a piece of cake, that’s for sure.

The White House was partially right about a consensus among economists on the stimulus plan. The catch: most think it’s junk. “The compromise economic stimulus plan agreed to by negotiators from the House of Representatives and the Senate is short on incentives to get consumers spending again and long on social goals that won’t stimulate economic activity, according to a range of respected economists.” You mean the opponents have reasons to oppose the president’s legislative masterpiece?

Larry Lindsay explains how things went off the rails: “The problems began with the inexplicable decision by the administration not to submit its own economic stimulus package, but instead delegate the job to Nancy Pelosi and the barons on the House Appropriations Committee. Appropriations is the reptilian brain of the political process. It is where all the back scratching, logrolling, and pork barreling gets done. Macroeconomic coherence is just not part of the skill set of House Appropriations members. So even rebuilding the nation’s infrastructure got short shrift. Instead, the package was loaded with largesse for fellow politicians and civil service employees back home.”

Phil Levy: “The crafting and selling of the stimulus package have been neither transparent, innovative, calm, nor bipartisan. Much of the package was crafted behind closed doors. The rush to push money out quickly left no time to develop creative new approaches. The president’s dire warnings of doom did little to soothe fears, particularly in those who had doubts about the stimulus package’s efficacy. And hopes for bipartisanship may have been the biggest victim of the endeavor. While President Obama was willing to exchange pleasantries with Republicans, those Republicans were largely excluded from the crafting of the bill and voted overwhelmingly against it.”

Via Mickey Kaus, comes this spot on welfare reform. The immediate victim is Harry Reid, but doesn’t it work for (rather, against) every Democrat?

Chuck Todd seems miserable in his new job (and that was before he read the comments to his post complaining about access in the White House.) Maybe he and David Gregory should swap jobs.

Once again, remarkably, I essentially agree with Glenn Greewald: “Republican groups demand from politicians support for their beliefs.  By contrast, as Judis describes, Democratic groups — including (perhaps especially) liberal activist groups — now (with some exceptions) lend their allegiance to the party and its leader regardless of how faithful the party leadership is to their beliefs.” Translation: much of the left blogosphere long ago sacrificed intellectual honesty (he calls it “independence”) in favor of political boosterism.

Is it true that “few expected” a repeat of zero Republican votes in the House for the stimulus? Politico needs to talk to more Republicans. The House GOP hasn’t been this united since they arrived as the majority in 1995.

An absurd headline: “Obama to Shift Focus to Budget Deficit.” Huh?? So they’re going to cut expenditures (or raise taxes) because a huge deficit is a mortal danger to our economic health. If you are confused, think how dumbfounded the financial markets and the rest of the world are. But if they are looking for some cost savings, I’ve got a great idea to eliminate $787B plus interest.

Wonderful news about Justice Ginsburg’s health situation.

One of the worst aspects of the stimulus bill: billions to the states with a heavy subsidy to add to the welfare rolls. Michael Tanner of CATO writes: “By some estimates, the stimulus bill contains roughly $250 billion in welfare spending, another $6,700 for every poor man woman and child in this country, along with the erosion of the 1996 reforms. It can be counted on to “stimulate” the loss of another generation to welfare dependency.” Well, if Hillary runs in 2016, she can promise to pass welfare reform again.

An Obama and Geithner bear market? Well the combination of the monstrous fiscal stimulus and the non-existent bank bailout has not cheered the markets. Maybe the Obama economic gurus should have tried something to spur investment and private sector job growth.

Bradley Schiller agrees it is time to stop the fear-mongering: “Mr. Obama’s analogies to the Great Depression are not only historically inaccurate, they’re also dangerous. Repeated warnings from the White House about a coming economic apocalypse aren’t likely to raise consumer and investor expectations for the future. In fact, they have contributed to the continuing decline in consumer confidence that is restraining a spending pickup. Beyond that, fearmongering can trigger a political stampede to embrace a “recovery” package that delivers a lot less than it promises. A more cool-headed assessment of the economy’s woes might produce better policies.”

Jeb Bush calls for a shadow cabinet. Judd Gregg for Commerce Secretary?

What is wrong with California? More importantly, why does Meg Whitman want to be governor? Maybe managing a successful business that sells junk is good preparation. It won’t be a piece of cake, that’s for sure.

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Quick, But Not That Quick

After the House passed the “stimulus” bill by a vote of 246-183 without a single Republican vote yesterday, Speaker Nancy Pelosi told the chamber that no president in history had ever acted so boldly or so quickly to help the American economy.

Well, boldness, I suppose, is in the eye of the beholder. But quickness can be objectively measured. The bill passed on the 25th day of the Obama presidency. Is that a record for major economic legislation? No, it’s not even close.

On March 9th, 1933, only the sixth day of Franklin Roosevelt’s presidency, he signed the Emergency Banking Act–which revolutionized American banking–into law. It had been submitted at one o’clock that afternoon, passed the House by unanimous voice vote 38 minutes later, passed the Senate a few hours after that with only seven dissenting votes, and FDR signed it into law at 8:36 that evening.   Now that’s quick, not to mention bipartisan, which no one can  accuse the stimulus bill of being.

Indeed, by the 25th day of his presidency Roosevelt had also signed into law the bill creating the Civilian Conservation Corps to employ 250,000 young people, the Economy Act, which reorganized the government to reduce government expenses by $500 million, and the Beer-Wine Revenue Act legalizing low-alcohol drinks and taxing them heavily, which proved to be the death knell of Prohibition.

By June 16th, when Congress adjourned, Roosevelt had signed 14 major acts of legislation into law.

After the House passed the “stimulus” bill by a vote of 246-183 without a single Republican vote yesterday, Speaker Nancy Pelosi told the chamber that no president in history had ever acted so boldly or so quickly to help the American economy.

Well, boldness, I suppose, is in the eye of the beholder. But quickness can be objectively measured. The bill passed on the 25th day of the Obama presidency. Is that a record for major economic legislation? No, it’s not even close.

On March 9th, 1933, only the sixth day of Franklin Roosevelt’s presidency, he signed the Emergency Banking Act–which revolutionized American banking–into law. It had been submitted at one o’clock that afternoon, passed the House by unanimous voice vote 38 minutes later, passed the Senate a few hours after that with only seven dissenting votes, and FDR signed it into law at 8:36 that evening.   Now that’s quick, not to mention bipartisan, which no one can  accuse the stimulus bill of being.

Indeed, by the 25th day of his presidency Roosevelt had also signed into law the bill creating the Civilian Conservation Corps to employ 250,000 young people, the Economy Act, which reorganized the government to reduce government expenses by $500 million, and the Beer-Wine Revenue Act legalizing low-alcohol drinks and taxing them heavily, which proved to be the death knell of Prohibition.

By June 16th, when Congress adjourned, Roosevelt had signed 14 major acts of legislation into law.

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Stimulus Passes

It is not surprising that a hugely popular Democratic president with large Democratic majorities pushed through a gigantic spending bill. But certain things are surprising in the extreme.

It was a surprise after all the soothing bipartisan rhetoric that the president chose not to include Republicans in the legislative process — or to include their ideas in the substance of the bill — in any meaningful way. It was a surprise that only three Republicans in the entire Congress voted for it, a political discipline and unity unheard of in modern times. (By contrast the barely elected George W. Bush got 28 Democratic House members and 12 Senators for his 2001 tax cut plan.) It was a surprise that the president deferred entirely to the House Democrats who showed so little inclination to actually focus their largess on short term, job enhancing activities.

The Washington Post, gets it a bit wrong, but belies the nervousness of the elite opinion makers:

White House officials predict the measure will create 3.5 million jobs over the next year and a half, easing the effects of the worst economic downturn in a generation.

Some private analysts said the slimmed-down measure is likely to fall well short of that goal, creating fewer than 2.5 million jobs and leaving the unemployment rate over 9 percent through 2010. They also caution that even if the package boosts economic activity, conditions are likely to continue to deteriorate unless the administration finds a way to thaw frozen credit markets and revive the paralyzed banking system.

(Actually the 3.5 million are saved or created, an entirely meaningless and unprovable calculation.)

And then it also was surprising that, to obtain what was in many ways a foregone conclusion, the president lost patience so soon with principled opposition and lost his “No blue states, no Red states,” inclusive rhetoric. And, finally, it was surprising he did not come close to his cap ($200,000? $250,000?) for tax relief promised in the campaign. (The final phase out number for the so-called Making Work Pay credit was $75,000 for individuals and $150,000 for couples.)

Although not entirely surprising, it was at least remarkable that the process was as nontransparent as it was.

What matters in the end, however, will be the course of the economic recovery. So far the stimulus and the non-plan for a bank bailout have left the markets depressed.  If you want to see economically literate people explain why the stimulus is an expensive and dangerous sideshow turn off the political news and watch a business channel (Geithner is the “Dan Quayle of economic policy . .  . This is a clown show.”) There is a reason why the Dow is now below 7900, down from  9600  (almost 18%).

Ultimately all the spin in the world won’t change basic, observable facts. Does economic growth and employment bounce back in some reasonable time frame that can be attributed to the stimulus plan? Is the enormous deficit sustainable or will the consequences (slower growth as the CBO predicts and/or inflation) be worse than the cure? We are embarking on uncharted seas. It is understandable the president would have preferred to have political cover, but this is his economy now and he correctly observes that his presidency will in large part hinge on the results obtained.

It is not surprising that a hugely popular Democratic president with large Democratic majorities pushed through a gigantic spending bill. But certain things are surprising in the extreme.

It was a surprise after all the soothing bipartisan rhetoric that the president chose not to include Republicans in the legislative process — or to include their ideas in the substance of the bill — in any meaningful way. It was a surprise that only three Republicans in the entire Congress voted for it, a political discipline and unity unheard of in modern times. (By contrast the barely elected George W. Bush got 28 Democratic House members and 12 Senators for his 2001 tax cut plan.) It was a surprise that the president deferred entirely to the House Democrats who showed so little inclination to actually focus their largess on short term, job enhancing activities.

The Washington Post, gets it a bit wrong, but belies the nervousness of the elite opinion makers:

White House officials predict the measure will create 3.5 million jobs over the next year and a half, easing the effects of the worst economic downturn in a generation.

Some private analysts said the slimmed-down measure is likely to fall well short of that goal, creating fewer than 2.5 million jobs and leaving the unemployment rate over 9 percent through 2010. They also caution that even if the package boosts economic activity, conditions are likely to continue to deteriorate unless the administration finds a way to thaw frozen credit markets and revive the paralyzed banking system.

(Actually the 3.5 million are saved or created, an entirely meaningless and unprovable calculation.)

And then it also was surprising that, to obtain what was in many ways a foregone conclusion, the president lost patience so soon with principled opposition and lost his “No blue states, no Red states,” inclusive rhetoric. And, finally, it was surprising he did not come close to his cap ($200,000? $250,000?) for tax relief promised in the campaign. (The final phase out number for the so-called Making Work Pay credit was $75,000 for individuals and $150,000 for couples.)

Although not entirely surprising, it was at least remarkable that the process was as nontransparent as it was.

What matters in the end, however, will be the course of the economic recovery. So far the stimulus and the non-plan for a bank bailout have left the markets depressed.  If you want to see economically literate people explain why the stimulus is an expensive and dangerous sideshow turn off the political news and watch a business channel (Geithner is the “Dan Quayle of economic policy . .  . This is a clown show.”) There is a reason why the Dow is now below 7900, down from  9600  (almost 18%).

Ultimately all the spin in the world won’t change basic, observable facts. Does economic growth and employment bounce back in some reasonable time frame that can be attributed to the stimulus plan? Is the enormous deficit sustainable or will the consequences (slower growth as the CBO predicts and/or inflation) be worse than the cure? We are embarking on uncharted seas. It is understandable the president would have preferred to have political cover, but this is his economy now and he correctly observes that his presidency will in large part hinge on the results obtained.

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