Renegade — the president's secret service code name — is pushing hard for "his" stimulus bill as it reaches the House floor today. What's in is? That's difficult to tell as the horse-trading continues, and as Obama tries to rope in at least some Republican support. FDR and the Democratic Congress in 1933 simply steamrolled the Republicans who demanded balanced budgets and reactionary policies — but never mind. In the end, this will be a package crafted not only by 535 lawmakers, but countless lobbyists and staff. My biggest fear is that it will not be a renegade stimulus — transformative and focused on the future.
Let me count the ways:
1. Tax cuts in the current environment won't provide help. U.S. tax rates and dodges are already generally at lows not seen since the Coolidge years. Obama promised a working-class tax cut. Fine. He's bowed to Grassley to provide more alternative-minimum tax relief. OK. But these should be different bills. They're not stimulative. Individuals will squirrel away their checks or use them to pay down credit-card debt. Corporations are already paying nothing in many cases. As for "investors and risk-takers" — the Bush years demonstrated that tax cuts on investments merely fuel speculation while encouraging job-killing mergers and offshoring. Not for nothing did wages stagnate during those halcyon years. Perhaps worst of all, it continues the destructive "tax cut" entitlement mindset that Americans can get something for nothing.
2. Speaking of tax cuts, so much of the stimulus is going to fill holes in state budgets left by years of tax cuts and tax-limitation initiatives, pushed to great political gain by "conservative" activists — and financial gain by the plutocracy. For example, schools, universities, even child-care centers would get $150 billion in new spending. Another $127 billion would go to shore up Medicaid. Still more billions would be pumped into ailing state unemployment trust funds. Yet most of these shortfalls are the result of years — even decades — of state policies that artificially kept taxes low or the base too narrow — a revenue stream too small or cyclical for the needs of complex, modern states. Thus, instead of stimulus, we get a little repair of past misgovernance and neglect or a fill-in for lost sales taxes. I'm sure the tax-cutter demagogues will keep right on at the state level.
3. So far, the most transformative elements are getting shafted. Mass transit and Amtrak funds were slashed to make room for tax cuts. Expanding transit, providing more and convenient, reliable passenger rail service and expanding high-capacity freight corridors — even before we get into high-speed rail — would provide years of good jobs that can't be sent overseas. It could seed new companies developing innovative and less expensive ways to do transit and rail. It would provide a backbone for increased productivity. Most importantly, it would be a huge advance in fighting carbon emissions and improving energy efficiency. In addition, and also because of the low-tax mania, many transit systems are ailing, even as demand is growing. These need emergency aid — but then steady, perpetual streams of subsidy.
4. So far, too little is focused on sustainability. For example, what relatively little that will actually go for infrastructure on "roads and bridges" won't require them to be existing structures that need repair or widening. I see nothing to rebuild downtowns, retool suburbia for a less-car centric future, or make inner-city schools appealing for higher-income families — in other words, to stop sprawl cold. Sustainability is also about public investments that reap wide and long-term returns, creating jobs, increasing productivity, spawning new sustainable industries. Think of the 21st century equivalent of Hoover Dam or the Tennessee Valley Authority. Can the dog's breakfast of a bill that includes computerizing medical records — a fine thing, but watch it create jobs in Bangalore — do this?
So far, I'm skeptical. And despite what some polls say, I don't think Obama has too many chances to fail. The public won't stand for it. The right-wing thugs will capitalize on it. Our Chinese bankers are getting nervous. And the world of troubles bearing down on us won't slow a millisecond.
In #4 you mention computerization of medical records may “create jobs in Bangalore.” Though it is a minor point in your article, I beg to differ.
I am something of an expert on HIPAA and I can say that one of the first lawsuits under that statue involved a chain of sub-contracts that led to workers offshore where HIPAA is un-enforceable. The EU’s Safe Harbor standards even require closer control of medical records than the US does.
In order to meet the regulatory requirements most companies will need to hold this information close to their own vests and they are responsible for anything that subcontractors do AND KNOWING WHAT THOSE PRACTICES ARE.
Those HIPAA ‘covered entities’ that don’t know this may still use such off-shore resources but I don’t think it will be a booming industry unless or until we have shared secure repositories for health records. So far, the industry can’t even decide what these will look like or who will fund them so they are currently limited to local efforts like Washington’s OneHealthPort.
Obama’s problem is that he needs the stimulus to prop up an economy in freefall. While it’s debatable how long the time horizon should be, most “believe” that it should be limited to the next two or three years. Longer than that, and the deficit spending begins to crowd out private sector borrowing necessary for sustained recovery.
I suspect that this problem is so much deeper than we know that even the trillions we do use cannot alter the fundamental crisis. We have too much debt to service while the prospects for long-term growth are being dimmed by Peak Oil and ongoing environmental issues. Obama’s bad bargain is inescapable. Try to levitate the old economy or risk being a one-term president.
Of course, it’s not just our problem. The whole world is now so tightly intertwined that American prosperity depends on salient factors outside our direct control. Thomas Friedman’s “flat world”, however, has no workable mechanisms for regulating macroeconomic breakdowns.
We got into this crisis by denying fairly obvious things. Like limited and declining resources, an overutilized planet, asset bubbles, and long-term debt accumulation. This may be a hole you don’t dig yourself out of. If we’re lucky, we may engineer new frameworks for dealing with a global civilization. I’m not hopeful about that but the coming storm may dramatically alter the way we see things.
It’s as if someone were trying to float a boat off a sandbar by artificially flooding the area with water, without blocking off the holes, river channels, and spongy sand pits that will drain off or absorb the water instead of lifting the boat.
The federal government has a chance to do something historic here; but instead of requiring, by enforceable mechanisms, that the money be used as intended, it has fudged with half measures, providing the money but not the binding requirements and oversight.
It enacts bailout and stimulus legislation, but refuses to follow-through by specifying and controlling the use of funds, rejecting this as heavy-handed “interference” beyond the pale of democracy. Instead, it says “pretty-please” to the financial corporations and other recipients, shrugging its shoulders and hoping for the best.
There is also the problem of timing. Obama says that there is “not a moment to spare” on the stimulus plan, but many of the projects likely to receive funding will not be in a position to make use of it for many months or years.
This, of course, is a recipe for waste, diversion, corruption, and ineffectiveness. Budget conservatives on both sides of the aisle will then step forward, claiming that big government is incompetent to solve the nation’s problems.
Meanwhile, such enormous amounts of debt-fueled spending will have taken place, that it will be all but fiscally impossible to attend to important and pressing problems (such as national health-care reform), even if the public appetite for interventionist government hadn’t been ruined by the small returns on the nation’s massive outlays.
You really expect change? With the same old special interests, faces, and political parties at the helm of State? Real change would involve nationalizing the banks, putting on trial the Bushies and investment bankers, throwing the lobbyists out, throwing the Republicans out and the Demos too, shooting the executives of Goldman Sachs… well I could go on and on, but the stimulas is obviously going to be about status quo.
I was at least hoping they would get a CCC thing going and rip all of the salt cedars out of the Southwest (a small dream I know).
https://www.guardian.co.uk/world/2009/jan/30/france-general-strike
https://www.guardian.co.uk/world/2009/jan/30/france-general-strike