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And the Whittling Begins in Earnest

I love Harry Reid. And by “love,” I mean, “want to punch in the face.”

We begin in a position of popular electoral strength and end in Gutless Gulch with Senator Harry Reid now proposing that we cut back the tax cut portion of the bill *as a compromise* to cutting the $100 billion dollars “centrist” Republicans want to cut out of the spending side.

Can we get back to reality, here? “Stimulus” is defined by government spending that replaces slacking spending by the American people for the sake of keeping jobs. We can’t keep cutting stuff out of an already inadequate spending package and hope to possibly stem the tide. We’ve lost a trillion dollars in spending on the consumer side alone, but we’ve got no more than half a trillion in new spending.

Let’s be crystal clear about this: there is no such thing as wasteful spending in a mega-recession!

Some spending that offends the sensibilities of Republicans is fine to remove. I think family counciling is good, but if you want to leave that to Jesus, so be it. But don’t make that an economic issue, because it isn’t.

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Simple Economics, Simply Explained III

In order for you to buy things, they generally must first be manufactured, which requires that someone have a job in manufacturing the shit you want to buy. When you spend money, you almost always do so on things that were manufactured by people with jobs. And when we as a nation stop spending money because we’re worried about our own jobs, that means that the jobs of those people who produce the shit we want to buy with our money are in danger.

Likewise, if the government begins to spend money, its equally expected that they buy things produced by people who have jobs. If those people were in danger of losing their jobs, they might not be now, because the government is spending money. Thus government spending is a good thing in a down economy, because it replaces some of the demand lost to the market because we’re all scared of losing our jobs.

Cutting taxes, however, only benefits those people who have a source of income. That’s a smaller and smaller number of people with each passing day. Fully 7.6% – getting damned near one out of ten – of our population is getting no income to speak of at all. And those who are still getting paid are, again, afraid to spend any money and will likely use any extra cash to either save it up, or pay down credit card debt.

And as explained in another Simple Economics post, a dollar of spending is the same as a dollar of tax cuts in terms of our government’s budget.

See? Tax cuts = Republican bullshit. Stimulus (or spending or whatever) = saving our economy. Simple.

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7.6%

It has been announced that the national unemployment rate is currently 7.6%. Researchers at the Congressional Research Service previously announced that we can expect a bottom of 9% unemployment rate even with the stimulus package. Without it, we could be looking at 13%. Those numbers now seem frankly optimistic.

Can we please pass the stimulus bill, now?

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Yeah, About That Stimulus Plan. . .

“The honeymoon’s over,” so saith the pundit, so saith the flock.

This week has been a tremendous cacophony of negative press for President Obama, about how he’s hamstrung himself with Republicans and given them the opening they needed to assert their independence. About the stimulus package which is laden with pork. And this post from Josh Marshall, echoing the words of one of his bloggers, Theda Skocpol:

Speaking as a strong Obama supporter who put my energies and money into it, I am now very disillusioned with him. He spent the last two weeks empowering Republicans — including negotiating with them to get more into Senate and his administration and giving them virtual veto-power over his agenda — and also spending time on his personal cool-guy image (as in interview before the Super Bowl).

A “strong supporter,” you say? Geeze. Doesn’t it seem like we’ve heard this before, somewhere? Oh, that’s right: from Theda Skocpol:

Every day until November — and in person in next Tuesday’s debate — McCain and his people are going to raise one smear of Obama after another. Will Obama respond effectively and keep his lead? A lot is at stake here: the 2008 election and the future of American politics, its capacity to cut off the kind of vicious falsehoods that have worked so well in the past. Are we going to want to live in the kind of polity we will end up with if Obama fails to respond with sufficient strength and specificity?

Blah, blah, blah. Another Concern Troll who thinks that the possession of a degree makes one immune from being called a Concern Troll. Another weak supporter of Barack Obama who gets all nervous and jerky whenever the wind blows south. Fer chrissakes, let’s all just breathe.

I remain convinced that one of the reasons Barack Obama is president despite being black and having a funny name is that he’s the only politician out there with the balls to speak to us like adults. And clearly in some cases, that’s a big risk. But when dickheads in the Republican Party start using charts to obfuscate (second reference of the night!) and claiming that no government has ever created a job in the history of mankind (uh. . . the Great Pyramids? Every standing army in the history of man? The Erie Canal? NASA? The local county dog catcher? The Lieutenant Governor of Maryland?), we don’t need pundits to tell us they’re full of shit.

Republicans are slitting their own throats with all this horseshit, pure and simple. Sure, Joe the Plummer thinks we need to kill the stimulus package. I’ll let that stand on it’s own merits. But most Americans understand that we’re in deep and need help sooner rather than later. To reiterate yet another point, Americans want effective action, not inaction as an alternative to less-than-effective action.

And we don’t need Tweety Matthews asking politicans to “explain this to my grandmother, if she was alive: how does this bill create jobs?” Earth to Douche-nugget: your grandmother is certainly old enough to have lived through the Depression. She doesn’t need any explanations, and neither do you. You’re just talking down to the American people because you think they’re stupid.

Everybody breathe. It’s going to be OK.

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Republicans Have Abandoned Facts. Surprised?

I suppose it makes sense that if you have nothing to contribute to the struggle to prevent a Depression – but you desperately want to appear important or at least less than vacuous – you’d need to fudge a few facts to make your point. John Thune’s mode of choice is meaningless charts and visual aids. Call it the USA Today School of Obfuscation. A nameless schmuck named Dan Gross who, as near as I can tell, doesn’t even rank a Google search, was on 1200 Pennsylvania Avenue on MSNBC to try out his own unique brand of obfuscation: outright lying.

“The metropolitan area with the lowest unemployment rate is Washington DC.”

That’s funny. Because it ranks 45th among states. How could it possibly rank 1st among cities? I think anyone whose been to any portion of Washington immediately outside Pennsylvania Avenue would have to know that’s a load of crap.
[youtube]http://www.youtube.com/watch?v=V6FKPMjDHDA[/youtube]

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“Waste!” So Saeth Reuters News Service

In discussing the Senate Democrat’s strategy meeting with President Obama, Reuters let’s it’s bias slip through the editorial board. Tsk, tsk! Journalists are supposed to be unthinking drones of information regurgitation! That’s called “objective reporting.”

Senior Republican senators warned on Sunday their party was unlikely to back the stimulus bill without changes to cut waste and to ensure the package provides an immediate boost to the deteriorating economy.

Emphasis mine, of course. You really needed to be told that. . .

So, it’s “waste,” according to Reuters News Service. I tend to agree with Barney Frank that if you’re keeping cops on the streets and nurses in hospitals, then that’s not waste, that’s job protection and exactly what the stimulus bill calls for. They took it out, but money for planned parenthood to keep unemployed or underemployed people from having unwanted pregnancies was probably also a good idea.

What makes Republicans really upset is not the lack of tax cuts: ferchrissakes, 40% of the damned bill is targeted to tax cuts. What upsets them is that they’re used to Bush-style tax cuts that just simply give money away. The tax cuts in the current stimulus package are in the form of tax incentives for companies who save jobs and work towards a greener business model. In other words, we’re using the tax cuts to stimulate the economy in ways that are proven to work. They’re not simply giving up cash to corporations and hoping they’ll magically just start spending money.

Meanwhile, the Democrats are once again letting the Republicans make themselves feel more important than they are. Republicans can’t think of one thing to do with this crisis except exactly what they’ve been doing for the last eight years. We can have an argument about who is most responsible for the problems later, but there’s no question that tax cuts have been done for eight years and been proven ineffectual. Why the hell doesn’t someone besides Barney Frank just come out and say that?

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Here We Go Again. . .

If anyone needs any specific reason to think that the Republican Party has run plum out of ideas, check out their obstructionist tactics on the stimulus bill. Where have we heard about this one before? Oh, yes. I remember: the bank bailout bill that in obstructing they hamstrung their candidate and cost themselves the election. Looks like the House and Senate Republicans are planning on going for a double-dip because, “ooh! Wasn’t that lovely!”

It’s kinda nice watching the Republicans play Keystone Cops for a change.

I’m not sure that I agree with Josh Marshall‘s assertion that obstruction is the GOP’s best stand-out political move is, as he says, the best cynical political move. Of course, I understand that in pure political calculus, if the stimulus fails and Republicans opposed it, they create a necessary differentiation between the parties. That difference can be filled in with their own ideas which they can sell to a disaffected public.

But as I probably already said once or twice before the election, I don’t think any normal person whose job is at stake gives a rat’s ass about politics right now. Think the Republicans may be vastly underestimating the “flighty” public and it’s “fan-boy love” of Obama. Americans gravitated to Obama because of his competence at at time when we have need of real leadership. The party that chooses to stand on the sidelines and complain will be the party remembered for. . . having stood on the sidelines. Americans will remember that the Republicans chose to do nothing.

Locally, that’s why my thinking is beginning to change on the Renn Square project as well. Whatever our differences and suspicions about the project, we’d do well to find a way to improve the project in ways that benefit our ideals rather than seeking to kill the plan which at this point looks kind of necessary.

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Paul Krugman on Why Spending Can Outlast the Recession

As always, an interesting and enlightening post from Paul Krugman on why the stimulus spending can outlast the official recession without worrying about whether it’ll do more harm than good. In short, and lamentably: because the employment problems of the large mass of Americans are doubtless going to stick with us long after the bean counters declare the recession over. He puts it at about 2011.

By the way, while I realize that his Nobel prize was about actual theoretical economics, I think he deserves an extra reward for being that smart and still being able to explain it to the rest of us.

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Behavioral Economics and the Obama Tax Rebate

Felix Salmon of Conde-Nast has the scoop on what makes the Obama team’s projected tax rebate potentially more effective than the Bush tax rebates: behavioral economics, or the study of how people’s behavior changes in relation to money. The basic idea is that by lowering taxes temporarily rather than applying a rebate, people see more money in their paychecks and spend accordingly, whereas with a rebate check they’d be more apt to either save it or pay down credit card bills.

My only concerns with this are: either way, it’s a tax cut while we need to spend money. How is this different than what the Bush Administration has been doing, philosophically? And also, what happens when the snap-back occurs? What happens when the rebate goes away and people are still spending like it was there?

BTW, CNN released a PDF of the entire proposed stimulus package yesterday. I’m combing through it and will provide my own two cents on the package later today. Or at least, so I hope.

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Wow! Busy Morning

Whoa. Puff, puff, puff.

I’ve been working on my news feed this morning, and there’s enough news for the day that I almost won’t need to fill up the feed with anything new for a while. But here’s a few stories I’m watching right now:

  • Sad news for all those poor suckers who got taken in by the Gen-See Capital Corporation. They won’t probably be getting any money back, and if they do, it won’t be for years.
  • the D&C is reporting this morning that Wilmot owes the city $18 million that the mayor says they will need to find “options” to recoup. Sounds like a lawsuit to me. And here they are, also asking for money to renovate East View Mall. Ain’t that some shit?
  • Double-banger, here. While the stimulus package reaches a whopping $850 billion dollars, a recent WSJ/CBS poll shows huge, unprecedented support for both President Elect Obama and the stimulus package which has grown so gargantuan. Hey, maybe this president will actually ask us to ante up and kick in this time, instead of telling us to go shopping like on 9/11.
  • And just because I think it’s interesting, it seems that the recession is starting to hit the fine dining establishments of New York and Chicago. I find this interesting in particular because I suspect this wouldn’t have been the case twenty years ago. My suspicion is that The Food Network and Bravo have created a new “foodie” culture of middle-class food enthusiasts who now make up more of the customer base of such restaurants than they ever have in the past.
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Obama Aide Says Stimulus Will Not Include Much Internet Money

Many of us had hoped that the stimulus package, with its focus on infrastructure projects, would also consider Internet pipes to be part of that infrastructure. Looks as though we may be disappointed. Reuters is reporting this afternoon that Obama aides are signaling that any improvement to existing infrastructures would have to come from “existing structures,” and that the stimulus will probably not include much money for such projects. According to the article:

Blair Levin, a top aide to Obama, said the broadband piece of the stimulus package must be “timely, targeted and temporary.”

I’m not entirely sure what “temporary” means to broadband, but it seems definitive – from this aide’s perspective, anyway – that the stimulus will not include broadband access.

There’s two ways of looking at that, and I’m not sure what the correct one is, if there is one. I tend to think of broadband systems as a modern extension of what we think of as infrastructure. The lack of good connection to the Internet is now probably as prohibitive to rural community job growth as roads and bridges have been in the past. But at the same time, roads and bridges belong to the states, towns, counties and people of the United States. Internet pipes belong to telecom companies. Thus funding huge expansion of Internet cabling is probably as much a sop for big corporations as it is anything else.

Ah, the constant tension between Internet Freedom and Internet Corporatism. It never ends.

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Tax Cuts? Fine, But They’re Not a Solution

As has been getting a fair amount of press over the last couple days, one of the components Barack Obama would like to see in the Stimulus Package would be about $300bn in tax cuts. Most of those tax cuts will be slated for either middle class families or companies who invest. Hilzoy at the Washinton Monthly wrote up a post about why this is sort of a bad idea, which I tend to agree with.

The trouble with a tax cut is that, with the credit crisis and employment numbers still looming overhead, most of us in that middle income bracket are not going to be inclined to spend more money simply because we have a few extra bucks a week. Not that those dollars aren’t appreciated, but experience with the Bush tax rebates has proven that we’re more inclined to use that extra money to try and pay down our debt. If the average debt per household were to be lowered in some appreciable way, that would be great. But the boost in spending that might help us out of the economic ditch wouldn’t happen.

The other problem is that, of course, the money we’re spending for the stimulus isn’t coming out of thin air: we need to pay it back. Right now is not the time to be worried over our national debt, but frankly when the time comes to pay back what we needed to spend, these extra tax cuts probably aren’t going to help much.

And while the Washington Monthly seems to suggest that Obama is making good on campaign promises, the trouble there is that he’d told us he could make those tax cuts happen based on the already-existing budget. So, does he intend for these to be additional tax cuts, or are they the tax cuts he originally talked about?

Overall, I’d say that if the tax cuts called for in the stimulus are additional, they seem like an unnecessary and expensive distraction. But then, that’s exactly the kind of thing Republicans are looking for to justify their existence, which is the other reason for the tax cuts. The cuts seem designed to mirror those temporary tax cuts implemented during the Bush Administration to great aplomb from Republican Congressmen. The Obama Team may be thinking that setting up the exact same programs within the stimulus package can add a bit of sugar to the medicine for Republicans.