The GOP's Love-Hate Relationship with the Stimulus

[one...two...tree 2,762]

It's a bit like listening to Gollum talk about his precious ring. Bobby Jindal hates the recovery package; Bobby Jindal loves the recovery package. Mitch McConnell hates the recovery package; Mitch McConnell loves the recovery package. Eric Cantor hates the recovery package; Eric Cantor loves the recovery package. There's a lot of this going around.

Georgia's Republican senators, Saxby Chambliss and Johnny Isakson, voted against the $787 billion economic stimulus package, blasting the bill as a bloated government giveaway.

But their disdain didn't stop them from later asking Defense Secretary Robert Gates to steer $50 million in stimulus money to a constituent's bio-energy project.

Gates didn't do it, but Chambliss, Isakson and other Republican opponents of the stimulus aren't going empty-handed.

Billions of dollars worth of Defense Department stimulus money is paying for repairs and construction at military installations in areas represented by lawmakers who said "no" to the legislation, according to an analysis by The Associated Press.

The request from Chambliss and Isakson isn't the only one Gates and other top defense officials received before and after President Barack Obama signed the stimulus law in February. Their pitch stands out, though, because of the GOP's staunch opposition.

It's a familiar pattern. Republicans aggressively opposed the stimulus proposal earlier this year, insisting that it was a wasteful effort that couldn't possibly improve the economy (as opposed to, say, a five-year spending freeze, which would have worked wonders). Ever since, however, the conservative lawmakers who trashed the recovery bill are the same conservative lawmakers who think the economy in their area could really use some of those recovery funds.

This started within a couple of weeks of the stimulus package passing, and it's only become more common since.

The DCCC has even come up with a "Hypocrisy Hall of Fame" for recovery critics who are "celebrating the benefits of President Obama's economic recovery bill in their districts."

The campaign committee probably ought to save room for a lot of inductees.

http://www.washingtonmonthly.com/archives/...9_08/019659.php

[mRx 16]

The GOP isn't against stimulus packages. There is bipartisan support of the idea that economic prosperity is brought about by "consumption". According to D.C., the more we "use up", the better off we will be! Too bad it didn't work in Japan, and it didn't work in the 30's--it just wasted already scarce resources.

The GOP candidates are merely contrasting themselves against the failing Democratic administration--It's a political play, nothing more.

[mRx 16]

They even knew during the GD that spending wasn't the answer...

We are spending more money than we have ever spent before, and it does not work. After eight years we have just as much unemployment as when we started, and an enormous debt to boot.

-From the personal diary of U.S. Treasury Secretary Henry Morgenthau, May 1939

[one...two...tree 2,762]

Short of some radical answer, Matt - how would you stimulate the economy and stave off this Recession?

[luckytxn 2,265]

Let the correction happen with no help from the Feds. The weak will fail and the strong survive. After there will opportunites for others to fill voids and more jobs will happen and the lessons learned will be a good dose we needed. If the Feds step in it causes and deepens the crises more.

Of course the other countries that rely on us will be hurt worse but they shouldn't have rideen our shirt tails. The great depression was deepened and more painful because of our government interference.

Edited September 3, 2009 by luckytxn

[one...two...tree 2,762]

Let the correction happen with no help from the Feds. The weak will fail and the strong survive. After there will opportunites for others to fill voids and more jobs will happen and the lessons learned will be a good dose we needed. If the Feds step in it causes and deepens the crises more.

Of course the other countries that rely on us will be hurt worse but they shouldn't have rideen our shirt tails. The great depression was deepened and more painful because of our government interference.

That's just it though. You laissez-faire Libertarians fought long and hard for less regulations which led to banks and financial institutions getting so big that if they folded, they set the whole economy to collapse. A robust market needs a steady flow of credit. When banks stop lending, then we're all in trouble. You Libertarians and your pie-in-the-sky ideas are disasterous and a danger to this country. It's just too bad you don't recognize how extremely wrong your ideas are and instead believe the culprit is government.

[mRx 16]

Short of some radical answer, Matt - how would you stimulate the economy and stave off this Recession?

Anything other than the Keynesian view is cast aside as radical--regardless of how well it worked for centuries. But, since your interested:

This recession doesn't need to be staved off; doing so only rain-checks the inevitable. (Example: the credit expansion of the dot-com bubble never was able to be liquidated, and it was rolled over directly into the housing bubble).

This recession is very serious, and with current policies, is headed straight to another Great Depression. The most responsible course would be to:

-Cut taxes (and cut government spending respectively--this is how Reagan F'ed up; he cut taxes, but not spending)

-Let toxic business go bankrupt. Bailing out zombie banks and corporations sets a dangerous morally hazardous precedent. Banks going under would have no effect on the banking economy--those toxic banks would have their assets sold off to more capable and financially responsible companies (such as Leaman Bros. healthy assets going to Barclays and Nomura Holdings and WaMu going to Chase Manhattan). There is no reason to reward failure with bailout.

-Housing prices need to be permitted to fall. Government price controls like housing credits (currently 8K, with rumors of a 15K bill by end of '09), government subsidized loan modifications, and government manipulated loan agencies (FHA, Fannie, and Freddie) need to be abolished. These are parellels to the price controls of Hoover and FDR, and caused more harm than they did good.

Obviously, to never again endure a recession, the government monopoly of money needs to be eliminated. (This includes shutting the doors of the Fed, eliminating fractional reserve banking, and returning to a commodity-based money.)

I think these steps, while painful in the short-term, will bring about a real economic correction.

[Niels Bohr 72]

Shutting the doors on money to the FED? Ridiculous MATT. The very foundation of money had to do with funding the military for protection, and to pay off debts that the US owed to maintain the US as a world power. Heck, Alexander Hamilton created the system so that the US could protect itself from collapse.

[mRx 16]

Let the correction happen with no help from the Feds. The weak will fail and the strong survive. After there will opportunites for others to fill voids and more jobs will happen and the lessons learned will be a good dose we needed. If the Feds step in it causes and deepens the crises more.

Of course the other countries that rely on us will be hurt worse but they shouldn't have rideen our shirt tails. The great depression was deepened and more painful because of our government interference.

That's just it though. You laissez-faire Libertarians fought long and hard for less regulations which led to banks and financial institutions getting so big that if they folded, they set the whole economy to collapse. A robust market needs a steady flow of credit. When banks stop lending, then we're all in trouble. You Libertarians and your pie-in-the-sky ideas are disasterous and a danger to this country. It's just too bad you don't recognize how extremely wrong your ideas are and instead believe the culprit is government.

Steven, blaming this on lack of regulation entirely evades the fundamental root cause--credit creation. Robust markets do not need endless flows of credit. That is how booms and bubbles are born. The natural rate of interest must correspond with the supply of the savings and the demand for loans, otherwise resources become misallocated, and recessions come about to correct this misbalance.

The current policies are what's disasterous and a danger to this country, Steven. Empirical proof is evident of this. Japan intervened into their economy and followed Keyne's advice to the tee, and look how that turned out--10 stimulus packages/ 100 trillion yen later, they were no richer or prosperous than they were in the onset of the recession, and a whole lot deeper in debt!

The facts are in your face, my friend, and you think sound economic policy is pie-in-the-sky?

[one...two...tree 2,762]

Short of some radical answer, Matt - how would you stimulate the economy and stave off this Recession?

Anything other than the Keynesian view is cast aside as radical--regardless of how well it worked for centuries. But, since your interested:

This recession doesn't need to be staved off; doing so only rain-checks the inevitable. (Example: the credit expansion of the dot-com bubble never was able to be liquidated, and it was rolled over directly into the housing bubble).

This recession is very serious, and with current policies, is headed straight to another Great Depression. The most responsible course would be to:

-Cut taxes (and cut government spending respectively--this is how Reagan F'ed up; he cut taxes, but not spending)

-Let toxic business go bankrupt. Bailing out zombie banks and corporations sets a dangerous morally hazardous precedent. Banks going under would have no effect on the banking economy--those toxic banks would have their assets sold off to more capable and financially responsible companies (such as Leaman Bros. healthy assets going to Barclays and Nomura Holdings and WaMu going to Chase Manhattan). There is no reason to reward failure with bailout.

-Housing prices need to be permitted to fall. Government price controls like housing credits (currently 8K, with rumors of a 15K bill by end of '09), government subsidized loan modifications, and government manipulated loan agencies (FHA, Fannie, and Freddie) need to be abolished. These are parellels to the price controls of Hoover and FDR, and caused more harm than they did good.

Obviously, to never again endure a recession, the government monopoly of money needs to be eliminated. (This includes shutting the doors of the Fed, eliminating fractional reserve banking, and returning to a commodity-based money.)

I think these steps, while painful in the short-term, will bring about a real economic correction.

There is some good points in what you are saying, Matt. It is no doubt a convoluted mess - this relationship between government and the private sector. However, those relationships, however dysfunctional they may be now, were set in place for sound reasons. Take for example, farm subsidies. Farm subsidies kept family farms from going bankrupt, buffering them from the volatility of the market. You can't just say - we should have let those family farms fail because that's the natural selection of the market working. There are many factors (weather, soil, infestation, disease) that can affect a farmer's crops on top of the simple supply and demand of the market. On the flip side though, there is that danger of keeping an institution afloat when it is failing by its own hand.

My argument is that a financial relationship between the public and private sector is a necessary and inevitable part of the market. As idealistic and pure as it seems to wish government away completely from the market, it cannot. The market could not function - at least not in a way that would build a sustainable economy.

[Danno 1,228]

It's a bit like listening to Gollum talk about his precious ring. Bobby Jindal hates the recovery package; Bobby Jindal loves the recovery package. Mitch McConnell hates the recovery package; Mitch McConnell loves the recovery package. Eric Cantor hates the recovery package; Eric Cantor loves the recovery package. There's a lot of this going around.

Georgia's Republican senators, Saxby Chambliss and Johnny Isakson, voted against the $787 billion economic stimulus package, blasting the bill as a bloated government giveaway.

But their disdain didn't stop them from later asking Defense Secretary Robert Gates to steer $50 million in stimulus money to a constituent's bio-energy project.

Gates didn't do it, but Chambliss, Isakson and other Republican opponents of the stimulus aren't going empty-handed.

Billions of dollars worth of Defense Department stimulus money is paying for repairs and construction at military installations in areas represented by lawmakers who said "no" to the legislation, according to an analysis by The Associated Press.

The request from Chambliss and Isakson isn't the only one Gates and other top defense officials received before and after President Barack Obama signed the stimulus law in February. Their pitch stands out, though, because of the GOP's staunch opposition.

It's a familiar pattern. Republicans aggressively opposed the stimulus proposal earlier this year, insisting that it was a wasteful effort that couldn't possibly improve the economy (as opposed to, say, a five-year spending freeze, which would have worked wonders). Ever since, however, the conservative lawmakers who trashed the recovery bill are the same conservative lawmakers who think the economy in their area could really use some of those recovery funds.

This started within a couple of weeks of the stimulus package passing, and it's only become more common since.

The DCCC has even come up with a "Hypocrisy Hall of Fame" for recovery critics who are "celebrating the benefits of President Obama's economic recovery bill in their districts."

The campaign committee probably ought to save room for a lot of inductees.

http://www.washingtonmonthly.com/archives/...9_08/019659.php

Forgive me for missing your logic here Stephen but why wouldn't any representative work to bring a share of the pie back home?

Just because they argued against it's passage means nothing.

The fact is, the bill was passed and all Americans will have to repay this debt, For the Rep not bring any of this wasteful spending home would be a "double punishment".

Lets put it in household terms...

Your wife wants a new and bigger TV, you argue against it but she over-rides your veto and buys the TV anyway.... are you a hypocrite to watch the tv you now are making payments on... even though you didn't want it?

[one...two...tree 2,762]

Forgive me for missing your logic here Stephen but why wouldn't any representative work to bring a share of the pie back home?

I forgive you, but please try rereading it, think it over some more before posting a response.

[mawilson 2,133]

Short of some radical answer, Matt - how would you stimulate the economy and stave off this Recession?

You wouldn't. Recessions happen for a reason. The economy needs to deleverage, eliminate

failing participants, and wring out imbalances. Home prices need to fall further, irresponsible

banks need to go bankrupt. The FDIC exists to bail out the *depositors* - people like you

and me; bank shareholders and investors in the banks' bonds should absorb the losses - even

if it means getting completely wiped out.

The consumer is tapped out and can't buy any more from the Chinese (who incidentally are

financing our debt.) The fastest way for deleveraging to occur is for the consumer to decrease

spending and save. It will be painful as the economy contracts, but we'll all be better for it in

the long term.

Stimulus just postpones necessary change and makes the eventual reckoning even more painful.

Japan tried to stimulate its way out of its massive problems last decade only to prolong its agony.

China is now going the stimulus route and will suffer an even worse fate.

[Heracles 417]

Short of some radical answer, Matt - how would you stimulate the economy and stave off this Recession?

You wouldn't. Recessions happen for a reason. The economy needs to deleverage, eliminate

failing participants, and wring out imbalances. Home prices need to fall further, irresponsible

banks need to go bankrupt. The FDIC exists to bail out the *depositors* - people like you

and me; bank shareholders and investors in the banks' bonds should absorb the losses - even

if it means getting completely wiped out.

The consumer is tapped out and can't buy any more from the Chinese (who incidentally are

financing our debt.) The fastest way for deleveraging to occur is for the consumer to decrease

spending and save. It will be painful as the economy contracts, but we'll all be better for it in

the long term.

Stimulus just postpones necessary change and makes the eventual reckoning even more painful.

Japan tried to stimulate its way out of its massive problems last decade only to prolong its agony.

China is now going the stimulus route and will suffer an even worse fate.

Spot on there

The only stimulus money I agree on is investing in long-term projects for America. Infrastructure projects such as improving the nations dilapidated subways and 20 year old trains. Upgrading some of the popular yet embarrassing airports. We all get to benefit from such projects, they generate jobs and best of all they uplift peoples' optimism.

As you said, bailing out shareholders, executives etc, who took excessive risk or turned a blind eye to it, is simply not acceptable and a huge waste of money.

The best way to slow down spending, aka buying ####### from China, is to slap on a UK style federal sales tax of 15%; at the very least for the short-term. This will grind excessive spending to a halt. We barely make anything here anyway and our trade deficit is bloody ridiculous.

Edited September 3, 2009 by Booyah!

[mawilson 2,133]

The best way to slow down spending, aka buying ####### from China, is to slap on a UK style federal sales tax of 15%; at the very least for the short-term. This will grind excessive spending to a halt. We barely make anything here anyway and our trade deficit is bloody ridiculous.

Well, I don't think we need another tax. Consumer spending has already slowed down naturally,

which is why the government is trying to "stimulate" it. (Gee, could it be because certain

corporate interests want to maximize their profits?)

The most important thing was to avoid a downward spiral of the economy - a vicious cycle

in which all the negative problems feed on each other, e.g. disappearing jobs and evaporating

wealth from tanking home values and investments force consumers to retrench, which in turn

drives companies to lay off more workers, which slows spending even more, etc etc

It looks like the vicious cycle is over, no thanks to the government - it all happened before

a single stimulus dollar was spent. Now we just need to give the economy a chance to naturally

deleverage.