# Pushing through a stimulus package **URL:** \ **Category:** Great Debates\ **Created:** [January 7, 2009, 6:22pm UTC](https://boards.straightdope.com/t/pushing-through-a-stimulus-package/480254 "2009-01-07T18:22:26Z")\ **Posts on this page:** 16\ **Page:** 1
**Author:** ![Snag](https://avatars.discourse-cdn.com/v4/letter/s/94ad74/32.png) [@Snag](https://boards.straightdope.com/u/Snag)\ **Post date:** [January 7, 2009, 6:22pm UTC](https://boards.straightdope.com/t/pushing-through-a-stimulus-package/480254/1 "2009-01-07T18:22:26Z")
The Democrats will soon be in full control of the executive and legislative branches, down to a difference of two seats in the federal government. It seems to me that, with a nation in crisis the best way to push through an aggressive stimulus plan, is to threaten to raise the cost of the next one of the GOP votes this one down. And the one after that. And so on. It’s simple, there is a big clock ticking, and I believe the GOP need to call a time out and come up with a new plan anyway. If Democrats do not back down on this, wouldn’t this be a the decisive way to wrest their political power back in full? If they win 10% of those who have been against them to support their position, they could hold power for up to a decade. The GOP arguably also has another slim majority in the Judicial branch. But those wheels grind a little slower. It’s not likely to a be as dynamic as a senate v.s. the presidency and the house over the nest six months to a year. I say it’s inefficient for Democrats to capitulate to a GOP in crisis. Why wouldn’t they take the brass ring now? And if not now, then when. What say you? ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [January 7, 2009, 8:15pm UTC](https://boards.straightdope.com/t/pushing-through-a-stimulus-package/480254/2 "2009-01-07T20:15:21Z")
It is in the Democrats interest to get a stimulus plan passed as fast as possible. If partisan bickering slows or prevents passage of a bill, this will be seen as arguing over trivia while the economy melts down. The disgust people will feel for congress will be intensified, and since the Democrat party is in charge of the government it will hurt them the most. It is congress’s job to pass legislation. If they pass the stimulus faster it will be seen as congress doing its job better.The GOP could slow the bill if they chose, that is why the Democrats want some Republican buy in on the stimulus package. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 7, 2009, 8:36pm UTC](https://boards.straightdope.com/t/pushing-through-a-stimulus-package/480254/3 "2009-01-07T20:36:18Z")
> [@Snag](#): > > **Pushing through a stimulus package** Apropos of nothing, the thread title reminds of a cartoon from the 1980s: A sign in a drugstore says, “Try the new REAGANOMICS!” Pharmacist explains to customer, “It’s a laxative.” ---
**Author:** ![Snag](https://avatars.discourse-cdn.com/v4/letter/s/94ad74/32.png) [@Snag](https://boards.straightdope.com/u/Snag)\ **Post date:** [January 7, 2009, 9:20pm UTC](https://boards.straightdope.com/t/pushing-through-a-stimulus-package/480254/4 "2009-01-07T21:20:00Z")
> [@puddleglum](#): > > It is in the Democrats interest to get a stimulus plan passed as fast as possible. If partisan bickering slows or prevents passage of a bill, this will be seen as arguing over trivia while the economy melts down. The disgust people will feel for congress will be intensified, and since the Democrat party is in charge of the government it will hurt them the most. It is congress’s job to pass legislation. If they pass the stimulus faster it will be seen as congress doing its job better.The GOP could slow the bill if they chose, that is why the Democrats want some Republican buy in on the stimulus package. I expect the GOP to obstruct it from going through in any case. I’d be pleased if they don’t, but until it happens I see no reason to figure it in. They want the price to go down on this package. Thus, I think their options would be greatly narrowed for them if they are told the cost only goes up over time. There is some strong opinion that the package is already too small to do much good. Arguments can be made on this point and should be as they stand against much of the conventional wisdom which has not worked. In fact, if that is correct, a delay might at least have the consolation prize of more money invested back into the system. If, for the first time in years, the GOP are faced with the reality that will have to start accepting some deals that go against their grain, some fiscal conservatives will budge to do the conservative thing. Which can be seen as taking the best deal they can get against a hard seller. It’s usually counterintuitive to a marketplace frame of mind for the seller to be raising the price to make the deal. The GOP has long dealt with a Democrats who do not lay out the law forcefully. But if the Democrats do this and don’t blink, it begins to change political realities in a big way. ---
**Author:** ![Grumman](https://avatars.discourse-cdn.com/v4/letter/g/43a26b/32.png) [@Grumman](https://boards.straightdope.com/u/Grumman)\ **Post date:** [January 8, 2009, 6:37am UTC](https://boards.straightdope.com/t/pushing-through-a-stimulus-package/480254/5 "2009-01-08T06:37:30Z")
> [@Snag](#): > > It seems to me that, with a nation in crisis the best way to push through an aggressive stimulus plan, is to threaten to raise the cost of the next one of the GOP votes this one down. And the one after that. And so on. I would consider such a tactic unacceptable, and would oppose any politician who tried to use this sort of threat to pass this plan. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [January 8, 2009, 2:55pm UTC](https://boards.straightdope.com/t/pushing-through-a-stimulus-package/480254/6 "2009-01-08T14:55:05Z")
The Democrats are not unified on this in the first place. There are a few of them that are uneasy about such a large spending bill. So ‘ramming it through’ is not going to be as easy as you think. What Obama is doing is trying to get a consensus vote so the Democrats have political cover. If they could ram a package through and did so, they would completely own the consequences. If the economy continues to tank and the huge deficit suddenly became part of the problem, the Democrats would be solely to blame. It’s much better for them if they can get enough Republicans on board to truly call the bill bipartisan. And btw, there is plenty of ‘strong opinion’ that the package is far too big, and too reckless. ---
**Author:** ![Simplicio](https://avatars.discourse-cdn.com/v4/letter/s/c37758/32.png) [@Simplicio](https://boards.straightdope.com/u/Simplicio)\ **Post date:** [January 8, 2009, 3:06pm UTC](https://boards.straightdope.com/t/pushing-through-a-stimulus-package/480254/7 "2009-01-08T15:06:39Z")
Something like [80%](http://www.politico.com/news/stories/0109/17204.html) of the public favors the stimulus bill. I seriously doubt that the GOP will oppose it in any meaningful way. > [@sam stone](#): > > There are a few of them that are uneasy about such a large spending bill. So ‘ramming it through’ is not going to be as easy as you think. A few maybe, but I doubt anywhere close to the 41 Dem congressmen or nine Dem senators necessary to block it. And that presumes that every memeber of the GOP caucus votes against it, which won’t happen either. There may be some quibbling over the details, but the stimulus bill will pass easily and quicly with large margins in both houses. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [January 8, 2009, 3:38pm UTC](https://boards.straightdope.com/t/pushing-through-a-stimulus-package/480254/8 "2009-01-08T15:38:35Z")
> [@Simplicio](#): > > Something like [80%](http://www.politico.com/news/stories/0109/17204.html) of the public favors the stimulus bill. I seriously doubt that the GOP will oppose it in any meaningful way. > > A few maybe, but I doubt anywhere close to the 41 Dem congressmen or nine Dem senators necessary to block it. And that presumes that every memeber of the GOP caucus votes against it, which won’t happen either. > > There may be some quibbling over the details, but the stimulus bill will pass easily and quicly with large margins in both houses. I certainly hope we won’t be running our economy based on the results polling data. Of course people want free money!! And note that Obama is pushing for a stimulus package at the low end of what economists are suggesting is needed, which is telling me that he’s looking for something that will pass with Republican participation, not trying to force a confrontation with Republicans. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [January 9, 2009, 4:42am UTC](https://boards.straightdope.com/t/pushing-through-a-stimulus-package/480254/9 "2009-01-09T04:42:30Z")
> [@John\_Mace](#): > > I certainly hope we won’t be running our economy based on the results polling data. Of course people want free money!! And note that Obama is pushing for a stimulus package at the low end of what economists are suggesting is needed, which is telling me that he’s looking for something that will pass with Republican participation, not trying to force a confrontation with Republicans. The way you say that, it sounds like ‘economists’ are universally in favor of not just a stimulus, but a huge stimulus. In fact, I can point you to economists all over the place who are very worried about the impending fiscal blowup, and who think that a stimulus is dangerous. For example, Harvard’s [Greg Mankiw](http://gregmankiw.blogspot.com/2008/12/stimulus-spending-skeptics.html) thinks that there is still room for monetary policy stimulus, and that tax cuts are a better stimulus than spending. Christina Romer, one of Obama’s top economic advisors, agrees with this. She and her husband last year co-authored a paper which showed that the biggest bang for the buck in terms of economic stimulus is a permanent tax reduction. You can read that [here](http://www.econ.berkeley.edu/~cromer/RomerDraft307.pdf). [NYU Economics Professor David Backus](http://gregmankiw.blogspot.com/2008/12/backus-on-spending-stimulus.html) is also a skeptic. His points: > [@](#): > > Here are some reasons for doubt, and I’m sure you and your readers have others: > [ul] > [li] Hard to do. It’s not easy to spend large amounts of new money quickly. Harder still to do it in a way that creates good value for society and doesn’t bring out the worst in our politicians. (I can hear Jon Stewart on the Daily Show: “Where’s Ted Stevens when we need him?”)[/li][li] Bad timing. Right now, most forecasts call for continued shrinkage in the first half of 2009, modest growth in the second half, when the stimulus starts to come online, and faster growth in 2010, when spending hits high gear. This is, of course, the classic argument against countercyclical fiscal policy: it’s hard to get the timing right.[/li][li] Small multiplier. Let us say that for every dollar of extra government spending, GDP goes up m dollars, where “m” is the multiplier. Undergraduate textbooks, including your favorite, sometimes suggest m is large. The evidence is fuzzy, to be sure, but to me it suggests a multiplier around one, maybe smaller. Even stimulus cheerleader Paul Krugman only claims 1.1. If that’s the case, the impact of government spending (say 700b over two years) is barely enough to reverse the decline in GDP we expect to see over the next two quarters.[/li][li] Long-term budget issues. I don’t spend much time in Washington, but I thought the mainstream view among government economists was that our retirement and health-care programs were likely to bust the budget over the next 2-3 decades. Recent directors of the CBO under both Republican and Democratic Congresses have made this point, and I hope I wasn’t the only one listening. The US is not Argentina, but it still seems a little incongruous to advocate massive increases in spending when the long-term problem is paying for spending already on the books.[/li][li] It’s the financial system, stupid. Japan in the 1990s is a Rorshach test for macroeconomists, so I can’t claim everyone sees this as I do. But my take (borrowed from Anil Kashyap) is that Japan demonstrated that the real issue in financial crises is the financial system. If we don’t fix it, no amount of fiscal stimulus will make much difference. That’s one of the reasons I’m optimistic about the US right now: unlike Japan, we faced our problems, ugly as they were, and have acted decisively to correct them.[/ul][/li] [University of Chicago Economist Robert Lucas](http://online.wsj.com/article/SB122999959052129273.html) thinks the proper response is further monetary easing by the Fed, and not spending. A very serious indictment of a huge stimulus comes from [Willem Buiter](http://blogs.ft.com/maverecon/2009/01/can-the-us-economy-afford-a-keynesian-stimulus/) (Professor of European Political Economy, London School of Economics and Political Science; former chief economist of the EBRD, former external member of the MPC; adviser to international organisations, governments, central banks and private financial institutions.) His criticism is that the U.S. has been living high on the hog because of ‘alpha’, the ability of the U.S. to borrow money at much better rates than other countries. This is what has allowed the U.S. to maintain a large current account deficit and finance an economy driven by consumer spending. The U.S. has this alpha because it has historically been the safest place to put money. That safety is being shaken now, and a few years of gigantic deficits could destroy it completely. If that happens, then the current account deficit will cause the dollar to collapse, and destroying the basis of the U.S.'s consumer economy. [Economist Tyler Cowen of George Mason University](http://www.marginalrevolution.com/marginalrevolution/2008/12/i-am-initiated.html) points out that a stimulus is designed to protect industries from collapse if they are merely undergoing a temporary reduction in demand. But if what’s happening is a fundamental shift in the economy, a stimulus will have the effect of throwing a wrench into the works and acting as a brake on a shift that needs to happen. Cowen argues that such a shift is certainly part of the current downturn - a shift away from housing construction, a move away from debt-financed consumption, a move away from a moribund U.S. auto industry, etc. These are all changes that have positive long-term consequences but short-term pain. Using a stimulus to prevent the pain will also prevent the needed restructuring. These are all things I’ve been yakking about on this board for weeks. I think Obama’s economic team is actually leaning in this direction, which is why the stimulus has been shifting more towards tax cuts and away from spending. But for tax cuts to work, they have to be seen as permanent, and they have to be aimed at people who already pay tax. Temporary tax credits to the lower income classes who do not pay tax are about the worst thing you can do - temporary taxes tend to get saved instead of spent, and in any event, temporarily propping up more consumer spending with debt solves nothing, and in fact makes the problem worse in the long run. Finally, for those who think the New Deal was an unmitigated success and want to repeat it, [a survey of Economic Historians](http://www.jstor.org/pss/2123771?cookieSet=1) shows that fully half think that the ‘New Deal’ prolonged and deepened the Great Depression instead of helping the recovery. ---
**Author:** ![What\_the](https://avatars.discourse-cdn.com/v4/letter/w/f4b2a3/32.png) [@What\_the](https://boards.straightdope.com/u/What_the)\ **Post date:** [January 9, 2009, 11:54am UTC](https://boards.straightdope.com/t/pushing-through-a-stimulus-package/480254/10 "2009-01-09T11:54:11Z")
I may have missed mention of it above but … the Dems don’t want to push thru a bill that is perceived as being 100% Dem and more expensive than the alternatives. What if it fails horribly? The next election is in two years and people are not going to be patient after being sold on “change”. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [January 9, 2009, 3:24pm UTC](https://boards.straightdope.com/t/pushing-through-a-stimulus-package/480254/11 "2009-01-09T15:24:44Z")
Looking at the news this AM, it looks like there is already some serious resistance to Obama’s proposal from key Congresscritters on both sides of the aisle. This will be interesting to watch. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [January 9, 2009, 6:16pm UTC](https://boards.straightdope.com/t/pushing-through-a-stimulus-package/480254/12 "2009-01-09T18:16:34Z")
What else can they do? I don’t favor stimulus programs. I fought the TARP because I thought it would just be stolen by the thieves that have been looting the system for years. It just became money for the bankers to do with as they please. The thawed lending did not happen. They just bought up banks or stashed the cash. The bankers knew full well why the program was initiated. They knew the point was to begin lending to jump start the economy. They did not do the right thing. Whats left? ---
**Author:** ![Simplicio](https://avatars.discourse-cdn.com/v4/letter/s/c37758/32.png) [@Simplicio](https://boards.straightdope.com/u/Simplicio)\ **Post date:** [January 9, 2009, 7:32pm UTC](https://boards.straightdope.com/t/pushing-through-a-stimulus-package/480254/13 "2009-01-09T19:32:05Z")
> [@John\_Mace](#): > > Looking at the news this AM, it looks like there is already some serious resistance to Obama’s proposal from key Congresscritters on both sides of the aisle. This will be interesting to watch. You’re talking about [this?](http://www.cnn.com/2009/POLITICS/01/09/democrats.stimulus/index.html). Again, it seems like more arguing over the details of the stimulus package then any serious attempt to block it. ---
**Author:** ![Sinaijon](https://avatars.discourse-cdn.com/v4/letter/s/dc4da7/32.png) [@Sinaijon](https://boards.straightdope.com/u/Sinaijon)\ **Post date:** [January 9, 2009, 7:36pm UTC](https://boards.straightdope.com/t/pushing-through-a-stimulus-package/480254/14 "2009-01-09T19:36:49Z")
> [@Snag](#): > > If Democrats do not back down on this, wouldn’t this be a the decisive way to wrest their political power back in full? I certainly hope both parties are viewing this as ‘How can we fix things’, rather than ‘How can we use this to our advantage to maximize our own gain.’ I suppose reality is somewhere in the middle, but I think it was a little too much of the latter that got us into this mess. ---
**Author:** ![GIGObuster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gigobuster/32/421_2.png) [@GIGObuster](https://boards.straightdope.com/u/GIGObuster)\ **Post date:** [January 9, 2009, 11:14pm UTC](https://boards.straightdope.com/t/pushing-through-a-stimulus-package/480254/15 "2009-01-09T23:14:15Z")
> [@Sam\_Stone](#): > > Finally, for those who think the New Deal was an unmitigated success and want to repeat it, [a survey of Economic Historians](http://www.jstor.org/pss/2123771?cookieSet=1) shows that fully half think that the ‘New Deal’ prolonged and deepened the Great Depression instead of helping the recovery. There are other items that I see are being ignored when declaring the New Deal a failure. \* [http://thinkprogress.org/2008/11/23/will-new-deal/](http://thinkprogress.org/2008/11/23/will-new-deal/) > [@](#): > > As Nobel-laureate Paul Krugman wrote recently in the New York Times, “There’s a whole intellectual industry, mainly operating out of right-wing think tanks, devoted to propagating the idea that F.D.R. actually made the Depression worse. So it’s important to know that most of what you hear along those lines is based on deliberate misrepresentation of the facts. The New Deal brought real relief to most Americans.” > > Krugman observed that the true short-comings of the New Deal policies resulted from the fact that they were not bold enough over the short-term: > > [The truth is that the New Deal wasn’t as successful in the short run as it was in the long run. And the reason for F.D.R.’s limited short-run success, which almost undid his whole program, was the fact that his economic policies were too cautious. […] > > In short, Mr. Obama’s chances of leading a new New Deal depend largely on whether his short-run economic plans are sufficiently bold. Progressives can only hope that he has the necessary audacity. Looking at the graph on Think Progress, regarding private investments, it is clear that when the US was just getting to the levels before the crash in 1937 that then the application of more orthodox methods (some New Deal measures then were limited or removed) to deal with the depression then caused a drop that was not then resolved until WWII. \*(Among them, I think, the very gross omission on ignoring that the New Deal prevented the bulk of the US population from listening to the siren songs of fascism and communism) ---
**Author:** ![Snag](https://avatars.discourse-cdn.com/v4/letter/s/94ad74/32.png) [@Snag](https://boards.straightdope.com/u/Snag)\ **Post date:** [January 11, 2009, 6:52am UTC](https://boards.straightdope.com/t/pushing-through-a-stimulus-package/480254/16 "2009-01-11T06:52:57Z")
FWIW, Obama seems to be indicating over the last couple of days is that he’s going to start at the low end of stimulus package. He warns though that it is likely to go higher if we don’t see quick results. Enough congressional Democrats think it’s too little to where we have seen the first riff between them and the white house elect. Something else could come along in the next weeks as well to drive the price upwards. Like job losses. If so we’re sure to see more upward pressure from all quarters. Also, it’s going to be near impossible to keep track of that initial flow of money, whatever it is. We’ll probably need the last half of it or so in installments if we try to build in new oversight as we go along. I’d think any significant transparency is going to take a while to achieve, and putting it in place will slow down how much money gets out. Which leads me to ask, a bit OT – will this one time boost to the underground economy, which is inevitable, be a good thing? And could it be shut out significantly if more stimulus is needed over the next few years? Or could it effect further stimulus’ to continue?