I’ve seen a lot of bad analysis over the stimulus bill. One prominent liberal blogger told me that it didn’t matter what the money was spent for, only that it was spent, as if money that reaches the economy quickly isn’t better than money that takes years to enter the economy, and as if money that creates a lot of jobs isn’t better than money that creates a few. For this blogger, all that mattered is that the money was spent and not take the form of tax cuts.
I’ve seen a lot of analysis of the size of the package where it is taken as extremely significant that the package be $900 billion rather than $800 billion. In the grand scheme of things, $100 billion isn’t a significant enough percentage of our economy to make or break the economic recovery effort. If this bill isn’t big enough, it is likely that it needed to be two or three times as large, not $100 billion larger.
There is a lot of analysis that lambastes Harry Reid or President Obama for poor negotiating skills and pointless and meritless efforts at bipartisanship. Yet, we’re looking at having about the bare minimum of Republican support needed to pass the bill. Is it really likely that a more hardline approach would have intimidated more Republicans into falling in line?
A lot of the decent analysis is focused on the specific measures and cuts in the bill and makes an effort to explain what portions of the bill are likely to be efficient at providing stimulus versus what parts are not. It’s worth noting, for example, that corporate tax breaks are inefficient at stimulating the economy while Food Stamps are very efficient at that task. But, again, these matters are marginal. It’s possible that the economy needs two or three trillion dollars of stimulus, but it is unlikely that the fact the bill has corporate tax breaks in it is going to lead to failure.
We all want good policy and sensible expenditures. But we also want to retain our credibility. We also need Barack Obama to retain his credibility. And he cannot do that after campaigning on changing the tone in Washington by going into instant mortal combat mode. There is a process underway here, and it has to play itself out.
Republicans are going to learn many things from this stimulus debate, as is the Obama administration, the Democratic leadership, and the general public. For the Republicans, they are going to lose a fight over the biggest spending bill in history. They will have won a few concessions, but those concessions are more about denying spoils to Democratic interest groups than winning concessions for their own.
Republican members of the House will have nothing to show their constituents and, whatever good that comes out of this bill, they will not plausibly be able to take credit for it. Arlen Specter, on the other hand, can point to $6 billion that he won for the National Institute of Health. Over time, the Republicans will learn that they cannot win concessions and then vote against the legislation because they won’t win concessions the second time around. But the olive branch has to be offered at the start in order for that lesson to be effective.
I have major concerns about the economy and about how the Obama administration is approaching the financial bailout. I worry that this stimulus is far too small and that we are wasting time and resources in a desperate and ill-fated attempt to avoid nationalizing the banks. But I find a huge percentage of the criticism I’m seeing to be wildly off the mark.
