Stimulus Package Weakened – What do you call someone who eliminates hundreds of thousands of American jobs, deprives millions of adequate health care and nutrition, undermines schools, but offers a $15,000 bonus to affluent people who flip their houses? A proud centrist. For that is what the senators who ended up calling the tune on the stimulus bill just accomplished. Even if the original Obama plan — around $800 billion in stimulus, with a substantial fraction of that total given over to ineffective tax cuts — had been enacted, it wouldn’t have been enough to fill the looming hole in the U.S. economy, which the Congressional Budget Office estimates will amount to $2.9 trillion over the next three years. Yet the centrists did their best to make the plan weaker and worse.
One of the best features of the original plan was aid to cash-strapped state governments, which would have provided a quick boost to the economy while preserving essential services. But the centrists insisted on a $40 billion cut in that spending. The original plan also included badly needed spending on school construction; $16 billion of that spending was cut. It included aid to the unemployed, especially help in maintaining health care — cut. Food stamps — cut. All in all, more than $80 billion was cut from the plan, with the great bulk of those cuts falling on precisely the measures that would do the most to reduce the depth and pain of this slump.
See what got cut.:
Stimulus Cut to the Point of Not Being Able to Weather the Storm – There’s a hurricane coming. Meteorologists aren’t sure what category it will be but know it will be the worst in generations. There’s a warehouse full of sandbags. What do you do? Some folks in town are arguing that using the entire warehouse would be wasteful and leave the next generation without any sandbags. Half the sandbags might be enough to stop the surging waters, they argue. Then again, half might not be enough.
“Use them all,” suggests economist James Galbraith. “If it turns out that you’ve used too many, then you’ve got extra sandbags. Big deal. If you use too few, they’re all destroyed.” Yet as the economic hurricane hits, President Obama and the U.S. Congress – driven by centrist senators from both parties – have decided to leave a few sandbags in the shed, hoping the waters won’t rise too high. The stimulus package scheduled to be voted on Tuesday, say contrarian economists, is simply too small to withstand the economic storm that’s coming.
Stimulus Cuts Could Be “Disastrous” According to Economists – The bill the Senate is expected to send to a conference committee as soon as Tuesday includes provisions — particularly the $69.8 billion one-year “patch” on the alternative minimum tax (AMT) — that key economists and budget specialists say are less likely to have the maximum anti-recessionary impact than direct spending provisions calling for substantial purchases by all levels of government. The Senate has compounded the weaknesses in the bill by sharply cutting what economists agree are essential ingredients of a stimulus bill, including $40 billion in aid to states and $16 billion for school construction.
The reaction to the changes adopted at the behest of a small but key group of “centrist” Senators was strong. “The compromise is worse than the original bill because it is smaller, and the changes appear to have reduced rather than increased the bang-for-buck effectiveness of the bill,” said Berkeley economist J. Bradford DeLong.
Jeffrey D. Sachs, Quetelet Professor of Sustainable Development at Columbia — considered one of the world’s foremost economists and a leading advocate of “shock therapy” as applied to former Eastern bloc countries — said that “comparing the House and Senate versions, the Senate version is clearly worse: more tax cuts, less infrastructure, and less in transfers to state and local governments.”
University of Texas economist James Galbraith was more outspoken: “The behavior of the so-called bipartisan group has been outrageous. On the economics, they are pretending to know things they can’t possibly know: specifically, (a) how deep and serious the crisis actually is, and (b) what is ‘stimulus’ and what is not.
Menzie D. Chinn, professor of Public Affairs and Economics at the University of Wisconsin, said about the Senate bill, “I don’t understand the direction of the movement toward cutting spending. Cutting the transfers to the states seems particularly ill-advised, as we have a good feeling that the propensity to spend out these funds will be high and relatively quick.”
The Congressional Budget Office (CBO) also performed calculations to indicate what kind of new spending and tax cuts would be most effective. The changes in the Senate bill to bring Senators Collins, Specter, Snowe, and Nelson on board appear to directly contradict the CBO recommendations.
The CBO calculated the multiplier effect — “the cumulative impact on GDP [Gross Domestic Product] over several quarters” — of various types of spending and tax cuts. “For example, a one-time increase in federal purchases of goods and services of $1.00 in the second quarter of this year would raise GDP by [a low estimate of] $1.00 to [a high estimate of] $2.50 in total over several quarters.” In other words, the higher the multiplier, the better the stimulus effect.
Who’s Behind the Stupidity That’s Weaking the Stimulus? – Rush Limbaugh’s listening audience is relatively narrow — it is predominantly white, male and politically conservative — but highly motivated. Many of the 20 million or so who tune in each week are willing, even eager, to pummel their opponents with letters, phone calls and e-mails to make their voices heard. They can make a difference. Among their achievements, talk radio listeners helped kill President George W. Bush’s immigration reform effort. Recent polls suggest that, despite Obama’s high approval ratings, public support has declined for his stimulus bill since Limbaugh and his broadcast peers began railing against it.
Joe Scarborough Forgets the Recent Past – Paul Krugman debunks Joe Scarborough’s talking points on how the Republican party has actually governed as compared to their rhetoric. It would be nice if we had more progressives than just Paul Krugman who actually know something about economics allowed on our airwaves to shoot these guys down when they tell such obvious lies.
Scarborough: Let me just say though, George Bush over the past eight years had the most disastrous spending policy. They decided to cut taxes. They decided to increase the deficit. They decided to increase entitlement spending while they were fighting two wars. They made no tough decisions what so ever. You can’t say that that’s the traditional conservative approach to economics. It was a disaster and I think we can all agree with that can we not?
Krugman: You’ve got some mythical image of what a modern conservative is. Reagan increased spending while cutting taxes. Bush increased spending while cutting taxes… Who is your ideal here?
IRS Ruling Changed Tax Rules Just for Banks – Typically, businesses are limited in how much they can lower their tax liability when they acquire another company with built-in losses. But the IRS decision exempted banks, essentially providing no cap for how much a healthy bank could deduct from its taxes by realizing the losses that came with the troubled bank it acquired. Several lawmakers cried foul when they learned about the preferred tax treatment for banks, saying the IRS had no authority to overturn tax policies without congressional input. A measure that would do away with the preferential treatment for any bank deal announced after Jan. 16 of this year is in both the House and the Senate versions of the stimulus bill still being ironed out by Congress. Reversing the tax change could save the Treasury an estimated $4.34 billion between 2009 and 2013, according to Congress’ Joint Committee on Taxation.
$3.9B in Approved Hurricane Aid Still Unspent – A massive effort to fix public works destroyed more than three years ago by the Gulf Coast hurricanes remains largely stalled, leaving more than $3.9 billion in federal aid unspent and key repairs far from complete. The scale of that job is enormous. The Federal Emergency Management Agency (FEMA) has promised $5.8 billion to repair everything from flooded libraries and schools to sewer systems and roads that were ruined when Hurricanes Katrina and Rita obliterated huge sections of coastal Louisiana and Mississippi in 2005.
Republican National Committee Chairman Does Double Talk – Most state governors, including many Republicans, are strongly behind a stimulus bill that will fund government projects to put large number of people back to work and get the economy moving again.
“It comes at a time when we need it,” Florida’s Republican governor, Charlie Crist, recently stated. “People need jobs. It’s about jobs, jobs, jobs.”
However, newly-elected Republican National Committee Chair Michael Steele believes that government-funded jobs don’t count as real employment because “a job is something that a business owner creates.”
“What this administration is talking about is ‘making work.’ … It’s not a job,” Steele explained during a Sunday appearance on ABC’s This Week. “It ends at a certain point. … These road projects that we’re talking about have an endpoint. … There’s no guarantee that there’s going to be more work when you’re done that job.”
ABC host George Stephanopoulos objected, “We’ve seen millions and millions of jobs going away in the private sector, just in the last year.”
“They come back though,” Steele insisted. “That’s the point. They’ve gone away before and they’ve come back. And the point is, the small business owners take the risks. They’re the ones that are out there in the morning putting the second mortgage on the house … so that they can employ your kids.”
Describing the present once-in-a-generation economic crisis as merely “the downside” of a recent period of economic expansion, Steele told Stephanopoulos that all we really need is “tax credits and relief for small-business owners, incentives for people to get back into the credit markets, to deal with the mark-to-market rules that have stymied the banks and deal with the housing crisis.”
As Newsweek argues, however — responding to comments by Steele, among others — “Borrowing and spending are pretty much how the government has pulled itself out of every modern recession. … In a period when Americans are losing jobs at a furious clip, when the economy is shrinking rapidly, when monetary policy is near exhaustion, and when tax cuts aren’t likely to work as they do in ordinary times, the highest priority is simply to stop the downward spiral.”
Republican National Committee Chairman’s Campaign Monet Funny Business – Michael S. Steele, the newly elected chairman of the Republican National Committee, arranged for his 2006 Senate campaign to pay a defunct company run by his sister for services that were never performed, his finance chairman from that campaign has told federal prosecutors. The recent allegations outlined four specific transactions. In addition to the payment to Steele’s sister, Fabian said that the candidate used money from his state campaign improperly; that Steele paid $75,000 from the state campaign to a law firm for work that was never performed; and that he or an aide transferred more than $500,000 in campaign cash from one bank to another without authorization.
Texas Evangelicals Funded Effort to Kill Palin ‘Troopergate’ Probe – Gift records show that an evangelical group and two law firms working with it shelled out $185,000 to represent six Alaska legislators in an unsuccessful bid to quash the state legislature’s investigation into “troopergate.” The evangelical group — Liberty Legal Institute — is affiliated with Focus on the Family’s James Dobson [strict father promoter]. Liberty is the legal arm of the Free Market Foundation, which “lists its guiding principles as limited government and promotion of Judeo-Christian values,” according to the Anchorage Daily News.
Doctor Doctored Data in Autism Study According to Investigation – The doctor who sparked the scare over the safety of the MMR vaccine for children changed and misreported results in his research, creating the appearance of a possible link with autism, a Sunday Times investigation has found. Confidential medical documents and interviews with witnesses have established that Andrew Wakefield manipulated patients’ data, which triggered fears that the MMR triple vaccine to protect against measles, mumps and rubella was linked to the condition.
The Ultimate Authoritarian – nI previously featured this guy in my Bad Deeds for his statement, “I believe there were no gas chambers … I think that two to three hundred thousand Jews perished in Nazi concentration camps … but none of them by gas chambers.” But there’s more…
[Bishop] Richard Nelson Williamson opposes women attending college or university, the wearing of trousers or shorts by women and has urged greater “manliness” in men. He is quoted as saying: “A woman can do a good imitation of handling ideas, but then she will not be thinking properly as a woman. Did this lawyeress check her hairdo before coming into court? If she did, she is a distracted lawyer. If she did not, she is one distorted woman.
In a 1997 letter to friends and benefactors of the SSPX seminary in Winona, Minnesota, Williamson denounced the film The Sound of Music as “soul-rotting slush” and stated that “by glorifying that romance which is essentially self-centered, (the film) puts selfishness in the place of selflessness between husband and wife, and by putting friendliness and fun in the place of authority and rules, it invites disorder between parents and children..”
Regards,
Jim
Andy Hailey