Did the stimulus bill just fail?

Sort of, or so says The Washington Post.  Apparently some of the moderate Democrats are not on board and there is talk of cutting it by as much as $200 billion.  David Leonhardt has an insightful column, which examines the dual claims that the bill was too small and not well-enough targeted.  I wonder if this is a case where some people (though not I) might have double-peaked preferences, namely that the bill should either be much larger, or if not simply smaller to hold down the deficit.

Overall I am surprised that the bill didn't sail through.  I expected one round of opposition and then a collapse as extra goodies were put on the Xmas tree for recalcitrant legislators.  The political equilibrium now seems trickier than that and I believe that, for better or worse, Obama's "honeymoon" period is now over.

Comments

I was shocked to get an email from McCain the other day, saying he was AGAINST the stimulus package. I think Obama's mistake was to go after Rush Limbaugh the way he did. It gave Rush a lot of credibility and he's obviously been using it effectively.

Honeymoon? Gee, that went fast....

I'm surprised we haven't seen more focus on the Davis-Bacon provision in the bill. If we pay inflated wages to workers on stimulus projects, it becomes more likely that workers who would otherwise be employed in the private sector will be diverted to the stimulus projects.

One of the determinants of the effectiveness of the stimulus is the extent to which it employs otherwise idle resources. So wouldn't removing the Davis-Bacon provision both decrease the cost and increase the effectiveness of the stimulus?

Why the surprise? The Democrats want the Republicans on board so that they can say "everybody wanted it" when it inevitably fails to "stimulate the economy". Rush had it exactly right when he said that the bill is intended to stimulate the Democratic party.

I hope the Republicans hold firm with their new-found fiscal responsibility. They have a lot of repair work to do.

Stimulus Bill? What stimulus bill?

Ohhh ---- you mean the pork bill?

I'm surpriced by the combined facts that it didn't get through and that there's talk about reducing it. If anything, I'd have thought it would get bigger every time it would fail to work its way through Congress. This is a strange development.

I still regard myself as a neutral. I lean toward stimulus because all my life that has been conventional wisdom. I was taught in grade school that government must step in, as "last resort." Still, I would love to be truly convinced otherwise. I'd prefer to be convinced that this is not last resort, and that these are not extraordinary times, because the other argument, that stimulus is never justified seems extremist, and immoderate (Hooverish).

Now, given the plausible need for stimulus, and the old Keynes quote about digging holes and filling them up again, who is worried about stimulus being pork? It seems to me that if we truly need stimulus, messy spending is an acceptable path.

If conditions are not so extreme, great. In that case we can scale back on spending.

Gosh Rich, a totally irrational proposal will certainly convince me of the rationality of your position!

According to this:

http://www.cnn.com/2009/POLITICS/02/02/gop.stimulus.worries/index.html

the Senate Repubs listed about $20 billion they wanted removed. That's less than 3%, which I suppose counts as symbolic fiscal conservatism. I can't imagine getting these concessions and declaring some kind of victory.

So, yeah, $200 billion cut would be an improvement.

Odograph-

Maybe I should have modified my example and instead of asking for your income, I should ask for you to cosign a loan and give me the proceeds.

BTW, this proposal makes at least as much sense as the so-called stimulus bill and your comments. You don't care what it is spent on and a loan would be fine with you, right?

BTW, with all the talk about throwing more money at education, after Bush doubled spending during his years, the Chicago Sun Times and a link to the salaries if teachers. I was amazed to see classroom teachers earning more the $100,000 for a nine month job.

When the banks were failing, many groups on the Hill gathered around their many tables, frowned,bobbed their various greased and graying heads and, with very few objections from Democrats and a few face-saving objections from Republicans, they agreed with Bush/Paulson that $700 billion seemed a nice round number to solve a problem that everyone was reasonably certain existed. Few if any strings attached. No oversight worth speaking of.

Now our economy is failing (Yes folks, we are finally, officially, in a recession---though the word wasn't spread until the election was lost. You can take it from me,the recession was being felt in the country long before Pres. Bush left office.) At any rate, those frowning, greasy, gray heads, faced with spending a similar amount on helping me and my kind (as opposed to feeding corporate and Wall Street muckety-mucks)have been miraculously struck by a (certainly temporary and certainly partisan)bolt of fiscal responsibility. Instead of a massive uncontrolled Paulson-like intervention they now want to study each and every expenditure. Perhaps their personal partisan beliefs have convinced them that we can simply work our way out of this. Or perhaps a burning bush has convinced them that a miracle will save us all.

Here's a simple suggestion: You want tax cuts, increase the figure for that to $400B, and give it all to people who earn less than $150K. You want more money that will get into the system sooner, put $300B on projects that are already in the pipeline and $250B on WPA type projects--jobs that are here for a year or two. Get people to work cleaning up and developing our deteriorating State and National Parks,etc.I know some would call this part pork but that is, simply put, just a silly judgment. Pork is building bridges to nowhere. Pork is building a monument and dedicating it to the Senator who sponsored the pork. More people, with more money, buying more products.

And after that's agreed upon, add $450B for longer-term green energy projects, computerizing medical records, etc. More long term jobs, more purchasing power. Then pass the damn thing, please.

Everyone agrees, it seems, that we haven't been through this particular kind of crisis before. And it seems one person's "expertise" is pretty much equal to another's (equal numbers of experts on either side of the issue). And just about any decision would be more responsible than the bank bailout. So pass a bill already.

Sorry about the triple.

Help me understand Rich, do you believe that Keynesian stimulus is never justified in any real or parallel world, or you believe that it is not justified in this instance?

Games about my income seem to imply the former, which as I said in my first comment, seems an extreme and immoderate position.

seriously. you said honeymoon

I voted for Hope and Change and all I got was this lousy President!

Rich Berger,

You praise the Republicans for their "newfound sense of fiscal responsibility."
Really? Last I checked the ones in the Congress are all pushing their own
stimulus package that amounts to all kinds of tax cuts. It would seem from your
subsequent remarks that you are on board with this. But is this anymore fiscally
responsible than a big spending package? Are you one of those fantasists or
hawkers of a disgraced party line that believes that revenues go up when taxes
are cut?

Those rates were adequate to fund the federal government then, why not now?

Reagan persistently ran budget deficits. Federal spending was always greater than revenues.

Barbar-

That was a spending problem (although deficits were down as a percentage of GDP); tax receipts continued to increase as tax rates were cut. How can you have a problem with a deficit of $176 billion in 1989 and be cavalier about an extra $1T now? Take your pick.

According to Rasmussen only 37% of voters support the bill and the number has been dropping for weeks. Obama doesn't seem to have done a good job in convincing the nation, it makes sense for Senators and Representatives to oppose it. And it hasn't been just Republicans, Democrats have been joining them in opposition as well.

why doesn't the government issue coupons to taxpayers that can be used in retail stores (or must be used, say, within 3 mos). the retail stores can redeem the coupons for cash? wouldn't this solve the problem of taxpayers hoarding the tax rebates? this would be faster than any government spending plan with presumably a very high multiple.

Well, with the news today, we see that again tax cuts, the 2001, 2003, 2006, and 2008 tax cuts failed to save jobs, much less create jobs. The only stimulus we have in effect today are the old Bush tax cuts to boost the econony, still failing to create jobs, and still creating massive deficits and boosting the Federal debt.

In 1981, tax cuts coincided with the start of the Reagan recession, and then in 1982, the biggest tax hike on record was signed by Reagan, and a few months later the recession ended and the longest expansion on record ensued.

In 1994, near the beginning of the longest expansion in record, Clinton signed yet another tax hike after the Bush tax hike that got him defeated. The evidence would seem to argue that the crushingly high taxes of the Clinton years were much better at creating growth in jobs than the Bush tax cuts.

So, the way to cut the cost of the stimulus bills is to eliminate the tax cuts which definitely won't create jobs.

Tax cuts targetted at the poor, oops, sorry the proper term for the poor is "middle class" these days when $500,000 a year is a crushingly low limit on a taxpayer funded job....

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