Fiscal Libertines

By Fester;

The Senate proposed stimulus is going to pull off an interesting and hard to brag about two-fer.  It will be less effective and more expensive than the stimulus proposal that passed the House.  I can see coherent policy processes frequently producing a bill that is more expensive but also more effective, or less expensive and less expansive in its reach, but to be more expensive and less effective is usually not a desired or praiseworthy result.  The Wanker Caucus in the Senate has managed that feat and they are proud of their work.  As a wonk, I am deeply offended. 

From CAP:

The Senate compromise recovery and reinvestment legislation provides for 12 to 15 percent fewer jobs created or saved than the House-passed Recovery and Reinvestment Act despite costing slightly more. The House-passed legislation creates or saves between 430,000 and 538,000 more jobs than the Senate compromise....

The 12 percent to 15 percent range reflects different estimates for the effectiveness of different provisions. Three sets of estimates were used: Congressional Budget Office “pessimistic” estimates, CBO “optimistic” estimates and the widely cited estimates of Moody’s Economy.com chief economist Mark Zandi. Using the CBO pessimistic estimates, the Senate compromise produces 538,000 fewer jobs than the House-passed legislation. Using the CBO optimistic estimates, the Senate compromise produces 430,000 fewer. Using the Mark Zandi figures, the Senate compromise produces 441,000 fewer jobs.

Note that CAP is using a pair of bi-partisan numbers from the CBO and the numbers generated by a senior advisor to the last Republican presidential nominee.  This is not a particularly ideological argument being made unless the shape of the earth is in dispute. 

Let's assume good faith on the part of the people who will vote to pass the stimulus package and also on the part of those who oppose it.  The dividing question is whether or not there is a significant drop in employment that could have significant cascading effects unless there is a large money injection into the economy.  Assuming good faith, people who oppose the bill either don't think there is a need for such a stimulus, or that tax cuts are the solution to all problems.  Assuming good faith, people who support the bill want to see employment significantly rise above projected baseline and if one is fiscally prudent, would like to see minimal expenditures to achieve that impact.

I could see an argument that is intellectually honest from the Wanker Caucus that the bill itself was too large and the employment situation could be resolved at a lower cost than proposed in the House or the Senate.  I could see it if they proposed to strip out some of the least effective provisions such as the tax loss carry-back proposal in the House version.  I could see intellectual seriousness if that was the case.

Instead, we have fiscal libertines in the Senate who yanked out known and effective proposals that are fiscally prudent such as food stamp aid, assistance to the states and school construction or renovations and replaced those spending slots with large scale transfers to the affluent and influential in the form of an AMT patch, and home flipping assistance. 

Ross Douhat goes to town against centrism as a pose struck by the Wanker Caucus:

But what Nelson, Collins, Specter and Co. have done isn't a new kind of politics. It's the definition of politics as usual. And in this particular case, there's a reasonable argument that it's actively pernicious - that if you can't shrink the stimulus package much more substantially than the centrists have done, you shouldn't shrink it at all. There's a case to be made for a stimulus that's radically different than the one we have now; there's a case to be made for a stimulus that's like the one we have now, but a great deal smaller and more targeted; and there's a case to be made for a stimulus that's absolutely gargantuan. But thanks to the centrists, we're getting the cheapskate version of the gargantuan version: They've done absolutely nothing to widen the terms of debate about what should go into the bill, and they've shaved off just enough money to reduce its effectiveness if Paul Krugman is right - but not nearly enough to make it fiscally prudent if the stimulus skeptics are right.

Comments

[LIbertines]

ahh something refreshing and not emo-ish. i love emo
but i've been trying to get away from it all morning on
purevolume with my only success coming in the form of
the libertines. thank you guys.