A Better Stimulus NYT 2-9-09
A Better Stimulus BillPublished: February 9, 2009
In Elkhart, Ind., on Monday afternoon to rally support for an $800 billion stimulus and recovery package — and in his first prime-time press conference Monday night — President Obama said that he couldn’t guarantee that every item voted by Congress will work exactly as planned. But he warned that doing nothing could not be an option.He is absolutely right that Congress needs to quickly pass a stimulus bill, and the Republicans who have been blocking action are courting disaster. But a bill that is merely better than nothing won’t be nearly good enough. The economy is too fragile. And the numbers are too huge.
When members of the House and Senate sit down this week to craft a final version of their differing bills, they must include the most-effective provisions — those that provide powerful stimulus and help those Americans who are most in need.
There is a decent deal to be had in negotiations. Whether Congress and the administration get there will depend a lot on Mr. Obama’s leadership and his insistence on a better bill.
Both the House version, which passed nearly two weeks ago, and the version in the Senate that is expected to pass on Tuesday, provide adequate increases in unemployment benefits and food stamps — generally the two most-effective forms of stimulus. Those items must not change appreciably.
Aid to states is excellent stimulus because the money is funneled quickly to public employees, private contractors and beneficiaries of public programs. The Senate bill falls far short. It provides $40 billion less to the states than the House’s version — money that is mainly targeted at education budgets. It shortsightedly fails to include a $10 billion provision that would allow states to temporarily offer Medicaid coverage to uninsured people who are unemployed.
Negotiators should also salvage the child tax credit, worth up to $1,000 per child. The House wants to make the credit available to all working families. The Senate would make it available only to families with wages of at least $8,100. Negotiators should split the difference. The credit is robust stimulus because the recipients are likely to spend it quickly.
There are obvious compromises that could pay for these must-haves.
Nearly $70 billion of the Senate bill is spent on providing a one-year reprieve from the alternative minimum tax. The relief is needed. It also is a measure that passes easily each year on its own. A fair deal would be to take A.M.T. relief out of the package — contingent on a promise from Mr. Obama to champion a separate relief bill as soon as possible. Or leave it in but add it on top of — not in place of — the package’s other spending increases and tax cuts.
Tax cuts aren’t the best stimulus. But the House bill’s $3 billion to improve a first-time homebuyer’s tax credit already on the books is a reasonable attempt to spur demand. The Senate’s $39 billion in tax credits for anyone and everyone who wants to buy a house goes way too far, especially since the bulk of the credit would go to people who would buy a new house anyway.
The administration is also expected to unveil on Tuesday a plan to use tens of billions from the bank bailout fund to forestall foreclosures, which would more directly address problems in the housing market. Negotiators should go with the House version.
Odds are unfortunately high that even an $800 billion stimulus package will fall short of what’s needed to combat today’s downturn, and that more will be needed later. When the Obama administration asks for more, it will need to be able to make a compelling case that the first round was the best it could possibly be. It’s certainly not there yet.
Ruminations from the Sunday Papers and Other Suspicious Sources
"What prompted Tom Daschle to trade his legacy for a car service?" Stephen Amidon
"Nancy Pelosi told her leadership team that she had told the president, 'I don't mind you driving the bus over me, but I don't appreciate your backing it up and running over me again and again." Maureen Dowd
"Egyptians were excited about the president. Then came Gaza." Alaa Al Aswany ("Why the Muslim World Can't Hear Obama" NYTimes Op-ed)
"In New York, editorial pages on both ends of the political spectrum, The Wall Street Journal and the Times called for Daschle to step down. But not the Washington Post. In a frank expression of the capital's isolation from the country, it thought Daschle could still soldier on even though 'ordinary Americans who pay their taxes may well wonder why Mr. Obama Can't find cabinet secretaries who do the same.'" Frank Rich
"Most 'ordinary Americans' still don't understand why banks got billions while nothing was done (and still isn't being done) to bail out those who lost their homes, jobs and retirement savings." Frank Rich
"Americans resent people who appear to be living high off a system dominated by insiders with the right connections." Robert Reich (quoted by Frank Rich)
"Once upon a time, America thought Prince Charming would glide in and kiss her, reviving her from a coma induced by a poison apple of greed, deceit, carelessness, recklessness and overreaching.
"But then the prince got distracted, seeing Lincoln in the Mirror, and instead gave the kiss of life to a bunch of flat-lining Republican tax cut fetishists....and Larry Summers ended up making Henry Paulson seem riveting.." Maureen Dowd
"Bloomberg reported last week that Summers is already freezing Volcker out of many of his deliberations on economic policy." Frank Rich
The Virginia Tech Betrayal "Richmond lawmakers have callously rejected a gun control proposal sought as a memorial to the 32 students slain in the Virginia Tech massacre." NYTimes Editorial
"When the bailout plan is announced on Monday, look for evidence that policy makers understand that saving the banking system does not mean saving all of its bankers and shareholders." NYT editorial
"Plan B--Remember the old Plan B? Until our economy went kerflooey, it was a whimsical reverie aabout the life that you could swap for the old one that you were leading...It took many forms, the old Plan B, but it's getting harder to conjure up any of them in detail. The idea of it is fading from our memory, obscured under the pile of bad news about layoffs and bank failures, beneath the letters with your 401k returns, which you learned to stop opening." David Segal NYT Week in Review
"You Try to Live on 500k in This Town--Private school $62,000 per student. Mortgage $96,000 a year. Co-op maintenance fee $96,000 a year. Nanny $45,000 a year. The President's Wall Street salary cap threatens life as some know it in Manhattan." Allen Salken NYT
"Yankees' Rodriguez Said to Test Positive in 2003--Alex Rodriguez, who is the highest-paid player in baseball and is widely viewed as the most talented, tested positive for performance-enhancing drugs in 2003, according to two people familiar with the results. Rodriguez tested positive while he was playing shortstop for the Texas Rangers and on his way to winning the first of his three MVP awards...He's now in the second year of a 10-year contract that will pay him at least $275 million." Michael Schmidt in the NYT
"Back on the Geopolitical Stage (in Afghanistan-Pakistan), a 'Larger-than-life' Holbrooke--'We are still in the process of digging our way into the debris,' Mr. Holbrooke said...'We've inherited an extraordinarily dysfunctinal situation in which the very objectives have to be reviewed.'...But no one yet knows how his often pyrotechnical style--he whispers, but also pesters, bluffs, threatens, stages fits and publicizes--will work in an administration that prizes low-key competence or in a region that is dangerously unstable.
"'Richard Holbrooke is the diplomatic equivalent of a hydrogen bomb,' said Strobe Talbott, a former deputy of secretary of state and a friend."Jodi Kantor, NYTimes
Pensions in Detroit out more than $2 billion--Ill-advised, high-risk ventures cited as part of the problem--Experts say the board's losses could deepen this year as pension funds around the country revalue holdings in commercial real estate, mortgages and other investments....George Orzag, a captain with the Detroit Fire Department and a trustee of the police and fire pension system for 21 years said mayoral appointees on his board pushed some bad investments. "Politics, absolutely, said Orzag."
Jennifer Dixon and Tina Lam in the Detroit Free Press
Conservatives who dine out too often on liberals' follies forget how to cook for themselves, Jim Sleeper in TPM
MUNICH, Feb. 8 -- President Obama's national security team gave a dire assessment Sunday of the war in Afghanistan, with one member calling it a challenge "much tougher than Iraq" and others hinting that it could take years to turn around. Washington Post
Sunday, February 8, 2009; Page B07
"Descended from the apes!" exclaimed the wife of the bishop of Worcester. "Let us hope that it is not true, but if it is, let us pray that it will not become generally known."
GOP Up Against the Blue Wall--
But now the Republican electoral lock has been replaced and surpassed by "the blue wall." That's the term Ronald Brownstein, the political director of Atlantic Media Co., applies to the Democrats' advantage.
In an important article in National Journal last month, Brownstein notes that 18 states and the District of Columbia have voted Democratic at least five times in a row, supporting Democrats from Bill Clinton through Barack Obama. Those states -- concentrated in the Northeast and the upper Midwest and on the Pacific Coast -- provide 248 electoral votes, 29 more than the old Republican lock and more than 90 percent of the electoral college majority.
Democrats also hold at least 33 of the 36 Senate seats from those states (with the Minnesota race still undecided), 12 of the 18 governorships, and the vast majority of House and legislative seats. The wall appears to be solid.
David Broder in the Washington Post
From Deborah Solomon Interview with Felix Rohatyn, NYT Magazine
We should point out that you’re the investment banker credited with solving New York’s fiscal woes in 1975 and saving the city from bankruptcy. The New York City crisis was less dangerous than the current situation. Maybe for the first time in history, the U.S. is faced with doubts about its destiny. In less than 50 years, we have gone from the American Century to the American Crisis.
What do you make of President Obama’s $800-billion-plus stimulus package? I totally support Obama, but I would argue in favor of a greater amount of infrastructure investment and probably fewer tax cuts. There should be less concern about rapid liquidation and greater emphasis on long-term investments.
The emphasis now seems to be on shoring up levees and making repairs to crumbling structures instead of building new ones. Repairs are very important, as is new construction, and there should be a mix of both. If we have a major nuclear program in the next 25 years, for instance, then we have to do something about the infrastructure that goes with that, from creating an energy grid to dealing with nuclear-waste disposal.
Legal Affairs Judge Posthumously Clears Man Convicted Of Rape Timothy Cole was accused of rape in 1985. His conviction was based on the victim's testimony, but there was no physical evidence tying him to the crime. He died in 1999, before DNA evidence proved he was not the rapist.
The Sweet Payoff--Safire in the NYT Magazine
In one experiment, subjects were divided into two groups and told to reflect on an incident in which they felt powerful or on one in which they felt powerless. Each group was then given a supposedly unrelated task that involved gauging how much each participant would be willing to pay for a variety of products. For items that carry little association with status — a ballpoint pen, a sofa, etc. — there wasn’t much difference between what the two groups would pay. But subjects who had put themselves in a powerless frame of mind were willing to pay measurably more than the other group for high-status items — an executive pen, a fur coat, a silk tie. In a more recent study, Rucker and Galinsky found that individuals who felt less powerful showed a preference for clothing with larger and more conspicuous luxury logos.
Their thinking is that the little boost of, say, pricey chocolate, might not be solely about mood but about responding to threats to status or competence, Rucker told me. Ideally you would respond to such challenges directly: standing up to a boss who is pushing you around, demonstrating skill to silence skeptics and so on. But often the sources of undermined confidence are more abstract. “What’s happened in modern society under capitalism is that people have found consumer products as an outlet, a safety valve for addressing these threats in a very indirect fashion,” Rucker contends.
The Other Side of Desire reviewed by Lori Gottlieb NYT Book Review
I once dated a man who seemed perfectly normal until the day he asked me to dress up for sex. By “dress up” I don’t mean in lingerie. He asked me if I’d dress up as a cop. My experiences in costume had been restricted to school plays and Halloween, so I was confused. “Do you have a uniform?” I asked. “No,” he replied, reaching behind his headboard for a shiny pair of handcuffs. “Just these.” I high-tailed it, raced home and called my friends to tell them what a freak this guy turned out to be.
Four Journeys Into the Far Realms of Lust and Longing
By Daniel Bergner
208 pp. Ecco/HarperCollins Publishers. $24.99
Surveying the Outer Reaches of Lust (January 24, 2009)
What Do Women Want? (January 25, 2009)
But was he? After reading Daniel Bergner’s unsettling but riveting new book, “The Other Side of Desire,” I’m no longer sure where normal ends and abnormal begins. Take the people Bergner, a staff writer for The New York Times Magazine, introduces us to: a devoted husband with a foot fetish, a fashion maven who’s a sadist, a man who becomes sexually attracted to his young stepdaughter (Woody Allen, anyone?) and an advertising executive who lusts after amputees.
Thirty-six out of 41 Republican Senators voted for the proposed DeMint amendment to the stimulus bill — a massive package of permanent tax cuts that would create a huge hole in the budget, while doing very little to help the economy.
There isn’t much room for bipartisanship when 87.8% of the other party is totally irresponsible.
(Paul Krugman NYT Blog)
More by this Author
Twice in recent weeks otherwise excellent NY Times editorials endorsing and congratulating Barack Obama referred to the "necessary war in Afghanistan" without explaining what is so necessary about the war,...
The best approach to improving motor vehicle fuel economy may be to apply a ehicle weight tax. This tax could be tapered in over a 5 to 10 year period with the effect of roughly equalizing the fuel cost per mile in the...
Unemployment Compensation--Tips for Claimants The purpose of this document is to provide information which may be useful to individuals who have found themselves in the unfortunate situation of losing their jobs and...