Thursday, February 12, 2009

The Big Picture and the Strike Have a Constructive Argument on the Stimulus

The Strike: My sense is that the Republicans have adopted a ‘Lipstick on a Pig’” stimulus strategy. They may have gotten some attention and controlled a few news cycles, but they’re coming out of this a lot worse, as their recent Gallup poll numbers indicate.

The Big Picture: I don't think Republicans come out of this looking too good, either, BUT they may have won a huge big-picture victory: they were somehow able to both bring the size of the stimulus bill way down, while at the same time not taking any ownership of it. That really serves their long-term comeback interests of wanting the economy to fail and Obama and the Democrats and liberalism in general to take all the blame. So that's very poor.

The Strike: I’m gonna have to go ahead and disagree with you there, to quote Bill Lumbergh from Office Space. A lot of what got cut were Republican Senate add-ins (like the housing tax credit) and if they had at least shown ANY interest in helping the bill succeed, they would have been in a much better position to bargain for their priorities. Plus, the spending still is at a very high level (even if it’s probably not enough). The Republicans DO have ownership of the economy for a generation because they were the party of big business, George W. Bush and financial deregulation: all extraordinarily unpopular.

The Big Picture: I think it depends on how much confidence each of us have that the stimulus bill is going to work. It seems to me that all the people who actually know what they're talking about say it needs to be a lot bigger, and they have very sound, fact-based arguments - how much the economy is under capacity, and how things need to be radically shifted very quickly because the entire structure of the economy (built on borrowing and leveraging and financial engineering) was completely unsustainable. The only arguments for making it as small as it is are political and ideological, and not rooted in what's necessary to turn the economy around. They may have got the best they could have right now, although I would debate that, but the bigger point is that I'm very concerned that we're not doing nearly enough to deal with this crisis. This applies even more so to the financial recovery than to the stimulus. I really don't care what approach they take, but really if what they do actually works. Nate Silver had a good piece about this, saying that all the carping and whining about Geithner as if media idiots are qualified to critize it is extremely counterproductive. But, I'm worried that he is really bound in by ideological and political constraints in terms of doing what's necessary. And by who he is, and all the former Wall Streeters in the administration. As Silver says, I don't question the motives of their team - they really have every incentive to make the economy work, and not work to protect corporate profits (unlike Paulson and the Republicans). BUT, I'm worried they're not capable of getting past their ideological blinders, and I'm worried that even Obama is ruling out necessary steps because of political concerns about "nationalization". One of the most dangerous things that can happen in a democracy is when absolutely necessary things can't be done because they can be criticized using ideological buzzwords that make them sound un-American. We definitely saw that happen in the stimulus debate. It's going to be a huge test of Obama to get past this obstacle. He's working on it, but it's not easy, and the big problem is that he's the only effective communicator on our side. Although we were able to come out of the Great Depression with our democracy and society intact, and in fact greatly strengthened, that is by no means automatic. The general inadequacy of the response to this crisis from the political structure and the media make me concerned that there won't be a real recovery. That would be a disaster for the country, and for Obama and the long-term prospects of social reform in America.

The Strike: Yeah I would say it applies more to the financial recovery, because the real solution, in my opinion, is to temporarily nationalize the banks, and the only reason that certainly won’t happen are stupid ideological buzzwords, as you mentioned.

But on the stimulus, it depends on how you view it. If you think of it as the one opportunity to solve the economic crisis, it probably won’t be completely successful, but I look at it as an ambitious gateway to enact other liberal policies and to shift the political tectonics leftward, get people more involved in government, start a path to long-term growth of the middle class. As you know far better than I do, a lot of FDR’s policies didn’t go far enough, and people suffered because of it, but it still helped a ton, not only in restoring people’s livelihoods, but in renewing the country’s communal spirit, and redefining the federal government as one that protects the weakest among us.

Also, if the stimulus doesn’t solve the overall macro problems, it still will significantly improve a lot of people’s lives. There are some SERIOUS things in there, like food stamps, unemployment extensions, infrastructure spending, more Medicaid money to states. So it will be a life vest for a lot of people. If Snowe/Collins/Specter need to stick to an arbitrary, ideological number, they’re that's horrible, but if it really is the only way to get this through Congress, it’s worth it.

The Big Picture: Those are very good points. I hope that happens, and it has a decent chance. It seems as if we're at a great pivot point, and either a general shift to the left politically and toward a more equal, sustainable economy and society, or we'll be consumed by divisions, by media, by short attention spans and buzzwords, by demogogues with easy answers and with scapegoats. The second is what happened in most other countries during the Great Depression, because they lacked an FDR, and such a strong democratic tradition. Can Obama exhibit the extraordinary political skill, the astuteness to understand everyone's motivations, and is our democracy strong enough to deal with long-term thinking and shared sacrifice for a better tomorrow?

I definitely agree with your point about the stimulus providing immediate assistance to people's lives. Hopefully the third leg of the stool, housing policy, will be done very effectively. My dad's basic idea is now Obama's idea, as he said in the Fort Myers Town Hall meeting! My dad doesn't know if it actually came from him or was also developed by them independently, but it's pretty exciting. It's a very smart, forward-looking, non-ideological plan: the government through the housing agencies will renegotiate mortgages so that people can afford to pay them, and then when markets stabilize banks will share in some of the homeowner's equity. So government facilitates each side giving something to avoid disaster, and each will therefore benefit, and so will everyone else in the neighborhood, and the banks' balance sheets will improve. It seems very reasonable.

The Strike: That Housing plan seems incredibly promising! I think your pivot point argument is absolutely true. If Obama can rise above the echo chamber, the 24 hour news-cycle, the smug elite columnists and a relentless, focused effort to ensure his failure, I think we could see that sort of generation shift.

One more point I would make is that the subject of my thesis, Reagan’s 1981 Budget and Tax bill, in pure policy terms didn’t exactly meet all of his objectives. A lot of the funding he wanted to cut was restored, and the top marginal tax rate was lowered only to 50 percent (it's now 35 percent), but it shifted the terms of the debate permanently, and allowed him to administer further cuts in spending, and a far more ambitious tax cut (that the Democrats ridiculously went along with) that lowered the top rate to 28 percent.

His policy may have been flat-out wrong, but he WAS able to overcome cynics (even the old guard in his own party) to the point that the next Democratic President basically just slightly altered the framework of his agenda.

The Big Picture: That's a very good point about Reagan. Hopefully like FDR and Reagan, Obama has now permanently shifted the grounds of what's possible, entrenching his vision. One big point I would make, though, is that the big question is whether the GOP will be as feckless in opposition as the GOP in the 30s and the Dems in the 80s, or as successful as the GOP in the mid-60s and the GOP in '93-'94. I think there are important reasons the GOP is in better shape than the opposition was during FDR and Reagan's time. In comparison with the GOP of FDR's first term, the GOP today is in much better shape. The biggest reason is that things aren't nearly as bad as they were in the absolute depths of the Great Depression - a Depression that had already lasted for years before FDR took over. Things are bad now, and people do blame Bush, but not as much as they blamed Hoover and big business, and they weren't as desperate. In contrast with the Democrats of the 80s, the current GOP is proving to be far more unified and self-assured. So even though Democrats then had majorities, they were so split between conservatives and liberals, so much division in the Democratic Party. So FAR more Dems then willing and even eager to along with Reagan's agenda, whereas there are at most 3 and arguably ZERO Republicans willing to along with Obama's less-ideological agenda. And conservatives are so much more effective in messaging than liberal Dems were then, I think in large part because conservative Republicans are rich white guys who have always run the country, expect to run the country, and the media and everyone gives them way more deference than they're due because of that. In contrast to liberal Dems who were heavily black or relentlessly mocked as bleeding hearts, and consequently were less self-assured of their mainstream appeal themselves, and the mainstream was much more dismissive of them.

I think it is extremely important for Obama to become like a Roosevelt or a Nixon and be extremely astute and realistic about the motivations and capabilities of everyone else involved in Washington. 99% of the Republican Party will do everything they can for him to fail. They are very effective message-pushers in opposition who know how to use the media, they will try to: 1) make all his proposals less popular and more mock-able, 2) water down the proposals so they'll be less effective, and 3) not vote for it anyway and then blame anything that goes wrong on it. Obama has to realize that the media will fall prey to the mocking and the demogoguery unless he puts a human face on his programs, and unless he exposes his opponents effectively, and he defines himself as the Man of Action and his opponents as the Party of No. Obama has to realize that most Congressional Democrats are extremely poor message-pushers when in leadership, have huge egos, and generally can only be trusted to bring down support for his programs. Obama can only depend on the Three Big Facts (people's desperation for change, their dislike of the GOP and business, and their huge support for him personally) and also his incredible communication skills and his own political astuteness.

No comments:

Post a Comment