Thursday, January 29, 2009

Stimulus we can believe in...

Ok, so now we've explored unity as a rhetorical device, a strategic imperative and as a change from the "chilidish" things of our past partisanship. What is thus left, is the question of the stimulus itself, or to be specific, what is the purpose of the stimulus and how should it be achieved?

Republicans talk of stimulus as "targeted, timely and temporary". Even Vice President Biden warns of the need for the stimulus to not possess "a long tail" leading to future mandatory spending. But with America's roads, rails, water and basic systems receiving a D grade from the American Society of Civil Engineers, with the power grid failing under the stress and strain of a regular January snowstorm, with the US Postal Service considering scaling back deliveries of mail to 5 days a week, it is clear that the stimulus should go further.

In short, what is needed is not "targeted, timely and temporary" stimulus but rather a massive broadside of a stimulus, as far reaching as it is long lasting, that goes beyond the needs of the economic crisis at hand to address the fundamental structural weaknesses in the American economy as a whole. Such an economic package would have the following purposes:

1) Major economic stimulus in both the short and long term
2) Saving existing jobs and creating new jobs
3) Transforming the state of American infrastructure from thirdworld standards to envy of the world

Let's now conside how each of these can be achieved in turn:

1) Major economic stimulus 
Keep in the bill and indeed expand those elements that have been assessed by Moody's Investor Service as having a direct stimulative effect on the economy far greater then that of either personal or corporate tax cuts. Remove from the bill, those elements that don't deliver value for the tax payers dollar.

That means food stamps (yielding $1.73 of economic impact per $1 of government spending), extending unemployment benefits ($1.64) and infrastructure spending ($1.59). Each of these elements has been assessed by Moody's Investor Service as having a direct stimulative effect on the economy far greater then that of either an across the board tax cut ($1.03) or a corporate tax cut ($0.30!).

2) Jobs
As the saintly CNBC economic maven Erin Burnett notes: "Every billion dollars you spend on infrastructure CEOs will say is about 18 to 20,000 jobs."

With unemployment at 4.7mn and likely to climb far higher as the crisis's full force is revealed it would thus cost the Federal Government some $235bn to employ the entire unemployed workforce to date on infrastructure projects. In this Keynesian moment, that is probably a price well worth paying to not only stop unemployment but to secure the kind of infrastructure this nation needs - which leads us to our final point.

3) Transforming American infrastructure
The American Society of Civil Engineers have called for $2.2 trillion in infrastructure spending to modernise the very"roads and bridges, the electric grids and digital lines that feed our commerce and bind us together" that President Obama spoke of in his inaugural address. Although as the AP notes

"even though the pricetag to fix America's physical needs is $2.2 trillion over five years, it's really only half that bad because $1.1 trillion of that is already being spent or planned, Herrmann said. The biggest "gap" between what's being spent or planned and what's needed is an additional $548.5 billion in roads and bridges, the report said. Second is $189.5 billion for public transit."

As such it's clear that a different approach to stimulus could have the desired economic impact in terms of stimulating spending, ensuring jobs and building up the nation's vital infrastructure in one fell swoop. What is needed now is the political courage, and indeed partisanship, to create a new stimulus package capable of achieving these aims through dramatic government interventions in the domestic economy. The scale of such an effort is likely to be staggering, but it is matched by the very scale of crisis itself. It is to this issue that we shall turn our attention next.

Wednesday, January 28, 2009

The Stimulus Pie

“This is a screwed up, month-late Christmas tree with a bunch of thrift store ornaments.” – DC Duck

Apparently, not everyone is happy with the stimulus package. Marcus has commented on the question of unity surrounding the Obama team’s approach to the stimulus and posed two good questions: how does 44 deal with Congressional Republicans now that they’ve refused the offer, and what should the stimulus look like?

To tackle the first question, the unity approach marks a welcome change from the zero-sum game where the party in power gets its way and the opposition is frozen out until eight years later, when all policies are instantly reversed, and the only way to prevent extremes is to bog the nation down by electing an executive and legislature of different parties. Of all the childish things it is time to put aside, this one in particular should pass into its mortal maturity un-mourned.

Unfortunately, Congressional Republicans don’t seem to see it that way, and unity, by definition, requires consent by more than one actor, alas. What to do with the recalcitrant Republicans?

Imagine the stimulus package as a pie. The pie is made up of dollars and of political capital, and 44 offered the Republicans an approximate 40% of it (one-third of its money in tax cuts, some cosmetic victories by cutting out the provisions for contraception) – less than half of the pie, and certainly a great deal less than what they would have wanted, but nonetheless much more than a minority party, recently destroyed in a general election, would have any right to expect.

The Republicans refused. The problem they face is that 44 and the Democratic Congress have only to retain Democratic support and win over two Republican Senators to get a cloture-proof majority in the Senate and pass whatever stimulus pie they choose – not a hard job considering that all Obama has to do is convince two Republican Senators not to be the people who stopped the stimulus pie. If that isn’t leverage enough, he’s giving away cash like it’s going out of style, and it’s hard to believe there aren’t two Republican Senators who’d like a bridge constructed or a bus-fleet built in their state.

How to deal with R’s after the stimulus pie goes through is a new question. Marcus, and he’s not alone, is inclined to take a partisan line – 44 offered the R’s a chance at unity, they declined, so they get to be a beaten-up minority for the next few years. My own view on this is that 44 must stick with his unity approach – for the next pie, he must go back and offer them 40% again. If they take it, so much the better. If not, 44 and the Dems simply take more for themselves, the point being that negotiations don’t start with the Republicans demanding more and compromising at 40% - the deal starts at 40% and only gets worse for them. The next pie, 40% again, and so on.

This changes the game from a piece of public ritual drama where two sides are seen demanding 100% their way and then reaching the inevitable compromise, to one of real collaboration – the majority gets 60%, the minority gets 40%, and we move on to the next issue. The downside is that the ruling party, which could probably get a much bigger piece of the pie, has to give up a bit of its share in the name of unity government. The upside is that there’s a real chance that some lasting policy might come out of such a system.

Of course, Republicans could continue to not play, refusing their 40% on a regular basis. The downside is that this sinks any hope of unity. The political upside is that the Republican leadership has to return, time and again, to the rank-and-file and explain why they turned down a fair deal in favor of a worse one, and the rank-and-file must go back to voters and explain same.

Of course, the question of how much of the pie Republicans should get is only one part of the problem. Perhaps a more serious one is whether or not the pie is big enough. For a man who claims to like pie so much, the President has made this one perilously small. More on that to come.

Tuesday, January 27, 2009

The price of unity: part II

The thing about political unity is, I'm a fan. A big fan in fact. Not only does it provide some of my favourite rhetorical moments in an Obama speech but I actually believe there is a serious strategic imperative to it. Let's think about those two aspects before we consider where we go from here with regard to Obama, the GOP and the stimulus.

Rhetorically, unity is a beautiful, moving theme, The first half of Obama's acceptance speech at the Convention I found to be clever but conventional. The second half, where he spoke of both the power and practice of unity made my heart soar:

"We may not agree on abortion, but surely we can agree on reducing the number of unwanted pregnancies in this country.  The reality of gun ownership may be different for hunters in rural Ohio than for those plagued by gang-violence in Cleveland, but don't tell me we can't uphold the Second Amendment while keeping AK-47s out of the hands of criminals.  I know there are differences on same-sex marriage, but surely we can agree that our gay and lesbian brothers and sisters deserve to visit the person they love in the hospital and to live lives free of discrimination.  Passions fly on immigration, but I don't know anyone who benefits when a mother is separated from her infant child or an employer undercuts American wages by hiring illegal workers.  This too is part of America's promise - the promise of a democracy where we can find the strength and grace to bridge divides and unite in common effort."

That's the kind of unity I want: finding common ground where there has been division both needless and painful. What I don't want is to give away our values and our moment for the sake of attempting unity where in reality it does not exist. Rachel Maddow's "I won" segment last night captured this aspect of the issue beautifully.

As I struggled over this issue at lunch Frank reminded me that the thing about real bi-partisanship is, that you have to have a serious partner. In their treatment of the Administration's stimulus proposal there is little sign that the GOP is ready to be a real partner. And if the rhetorical lift was all that there was to it I'd be prepared to dismiss it out of hand and move forward as a good partisan once more, but alas there's more to unity then just language.

The rhetorical and emotional upsides of unity aside, there is a strategic aspect to it and that is the idea that one of the big reasons why government in the last 20 years has been as ineffective as it has been because of the lack of unity. Think Healthcare in '93, Social Security reform in '05 or the so-called War On terror, let alone Iraq. Where there is a lack of fundamental agreement, then it becomes very difficult to execute policy and achieve major outcomes, because the chances are you only passed your legislation by a hairsbreadth and then those that oppose you waged a guerrila campaign to undermine your efforts in practice thereafter.

More conceptually, where a lack of unity in the national polity exists there is a lack of will and will, as Clausewitz noted, is often the very essence of victory. Col. Harry Summers in his brilliant Clausewitzian analysis of Vietnam, 'On Strategy' concluded that lack of national unity behind that war was a  key cause of US failure as it manifested in a lack of national will with degenerative effects throughout the polity. If such is the case in foreign policy, how much more so the domestic polity?

Thus, Obama's paen to unity makes sense in both rhetorical and strategic terms. More unity = more force. More force = more results. Ta daaaa.

But what do you do when unity is unachievable for lack of a serious partner? Many, including myself at times argue for retrenching back to a more partisan line, but that still leaves open the key questions for understanding the current Washington situation: what do you do with the Republicans? And what kind of stimulus is actually needed? It is to these questions that we must next turn our attention.

What price unity?

This weekend, even the purveyor of conventional wisdom extraordinaire David Gregory noted when interviewing White House economic chief Larry Summers that the $825bn Obama stimulus package may be too small to turn the economy around.

Meanwhile, the ever astute Bill Moyers Journal discussed whether Obama's unity-first approach came at too high a price if it meant trading actual positive economic impact for GOP support.

These two questions are linked and strike at the heart of the political debate about what kind of Administration this is. 

The Administration began by offering $300bn in tax cuts to please GOPers, despite liberal economist views that tax cuts are not as stimulative as spending. At Obama's request, House Dems have now cut $200mn in birth control funding from the stimulus package to placate social conservatives. Obama has met with GOP leaders three times to personally seek common ground. Rahm has had countless phone calls with them. And, oh yes, there's an economic crisis of titanic proportions underway that just yesterday claimed at least 73,000 jobs.

And yet House Republicans have already decided to vote no.

Obama wants bi-partisanship and clearly considers the pursuit of unity through compromise to be both the goal and the approach that guides his first major Congressional challenge, but liberals are right to fear that at a certain point bi-partisanship comes at too high a price. If the GOP continue in their obstinacy then Obama should declare his diplomatic efforts at an end due to Republican intransigence, strip those provisions from the package that were there to assuage conservatives, restore the mass-transit spending that the Administration replaced with tax cuts, and pass a Democrats-only bill that actually stimulates the economy, saves and creates jobs and pays out huge sums for the massive infrastructure challenges that this nation faces.

Such a package would likely cost far more then $825bn and would be a deeply partisan affair but if Nobel Laurette Paul Krugman is right (and he's been right about this whole imbroglio thus far), that's what it'll take to save us from depression. The President may soon be forced to choose between bi-partisan unity and the economy. I think we know what the unemployed would choose.

Tuesday, January 20, 2009

January 20th, 2009

"Out of many we are one and while we breath, we hope." - Barack Obama

With language like this, oratory that soars in both heart and head, how can expectations for tomorrow be anything less then epic? And as they say in West Wing, when expectations are so high the only thing you can do is exceed them.

And so tonight, even as we worry over whether the stimulus is large enough, whether Afghanistan is intractable, whether Chuck Todd will ever again cover a campaign so perfect, we know that Obama will give a speech for the ages come tomorrow.

Lincoln's inaugurals. FDR's. JFK's. And now Obama's. We get to see history tomorrow and it will be both an honour and a privilege. With this in mind On Politik offers it's heartfelt thanks to the survivors of Gore 2000, Carnahan '02, Ohio for Kerry and Madrid for Congress: Our time for change has come.

Tuesday, January 13, 2009

On Politik On The March!

Can victory be far behind?

A word to our readers:
It's a week exactly until the 44th President of the United States takes the Oath of Office. Having chronicled and commented on what history may record as the most edifying, engaging, and entertaining presidential campaign in modern political history, we're expanding our remit at On Politik to explore the broader aspects of the word 'politik'. We will continue to comment on electoral politics, of course, but we will also address policy (foreign and domestic), the politics of governing (not just winning elections) - 'politik' in its truest sense as the business of the polity.

Sunday, January 4, 2009

Richardson's Loss Could Be Senate Dems' Gain

Let it Snowe...

Happy New Year. We kick off this year the way we closed the last - with the discomfiture of a governor. This time it is Bill Richardson of New Mexico, laid low by charges that his Administration illegally gave state contracts to a firm that had donated substantially to his political campaigns. While the case itself will take some months to investigate and adjudicate, Richardson has withdrawn his appointment as Commerce Secretary.

Who should take his place in the Cabinet? Kathleen Sebelius, floated early as a possible nominee, would be on the list. Bill Daley, Commerce Secretary under Clinton and, like Obama, a Chicagoan of note, is a dark-horse contender but a worthy one. Into this hat it's worth tossing the name of Sen. Olympia Snowe (R-ME), a Republican who serves on the Senate Commerce Committee. She'd come into the job with the issues at her fingertips, and her nomination would further support Obama's pledge to reach across the aisle. More than that, her appointment would open a Senate seat in Maine, to be filled by the appointee of Democratic Governor Jim Baldacci. The appointee would then run for (re)election in 2012 in a state that generally votes Democrat except against its two incumbent Republican Senators (the other is Susan Collins; Maine has two Democratic Congressman, a Democrat-controlled State Senate and House, and a Democratic Governor in Baldacci), inching Democrats closer to the filibuster-proof majority.

And now, from the Department of Disturbing Coincidences: when not abroad, I have lived in three American states (not counting short hitches on political campaigns) - New Mexico, Illinois, and New York. Their governors as of this time last year: Bill Richardson, Rod Blagojevich, Eliot Spitzer. Quite.