February 12, 2009
I’ve taken exactly three semesters of economics in my life, but that shouldn’t stop me — or you, if you are similarly untrained — from contributing to the national dialogue on what to do about you-know-what. Even Nobel economists in their more introspective moments admit their proposals are mostly guesses. So brush up your Samuelson, start quoting him now, and who knows? They may all kowtow.
What’s really frightening is that the purported solution to our little problem is being crafted by ... Congress, that backbiting body of sausage-makers. For my part, the very worst approach to dealing with the economic crisis is the “package.” Actually, packages are the very worst approach to dealing with anything legislative, because so many little devils can be snuck into the details. If Congress had the will, it would prohibit adding unrelated amendments to any bill. It’s incredible to think that, to use the most recent example, the bank bailout bill passed last fall contained a host of crazy little provisions like the well-publicized tax break for manufacturers of wooden arrows. It’s as if you were writing a book on Romantic poetry and slipped a recipe for chocolate-chip cookies into the footnotes. Or ground a little sawdust into your sausage.
Though Congress, at the urging of President Obama, has apparently agreed to exclude “earmarks” from the stimulus bills, the omnibus package on the economy is still a bad idea. I confess that I have not read the measures — the House’s version runs 778 pages and downloading it would sorely challenge my laptop as well as my attention-span — but the summaries in the news reveal enough: You’ve got tax cuts, you’ve got homeland security, you’ve got education, broadband access, wellness programs, NASA, pandemic flu preparedness, even (to quote the Senate’s official outline of its bill) “family-friendly military construction projects.” And of course, all those “shovel-ready” jobs. Yeah. Get the shovel ready for this elephant.
Aware of the smallness of the human mind and the greediness of the human heart, the president would better have sent to Congress a series of much smaller bills, each carefully targeted to achieve specific results and prioritized by urgency, so that citizens and their representatives could clearly understand where their money — it is their money, after all, however deferred to the yet unborn — was going. How can he advocate “transparency” in government by pushing a bill so big and murky that nobody really knows everything that’s in it or what it will finally do?
Beyond transparency, however, is a question more basic: Will this giddy gush of dollars really work? The scatter-gun impetuosity of the package almost guarantees enormous waste.
The most infuriating part of this massive mess is the hundreds of billions in tax cuts — another lousy 500 bucks per taxpayer, which won’t do a thing for the economy, just like the earlier ones didn’t. You’d think the downturn would make people turn down that old supply-side baloney, but the Republicans are still hammering at it, and Obama and Co. have, in true party spirit, become sheep instead of shepherds. It makes you wonder if the president’s “soaring rhetoric” was just so much soaring rhetoric.
Another area of concern is the blurring of distinction between the goal of stimulating the economy and the various social goals set forth by Obama in the campaign: the move towards universal health care, the development of “green technologies,” the building of new energy and transportation infrastructures, and many others, parts of which are packed into this package. The debate among pundits after the election was whether those ambitious goals should be presented incrementally or immediately. Obama has chosen the immediate, but by including them in a short-term stimulus bill — goals which actually require careful long-term planning, commitment, and funding — he may well have inhibited their chances of success down the line.
What’s needed quickly is stabilization as well as stimulus. State and local governments are now paralyzed by revenue shortfalls, confounding their balanced-budget mandates and denying essential services to those who need them most. Here in New York, Governor Paterson is proposing to cut Medicaid and education funding; Mayor Bloomberg wants to eliminate the city’s child dental-care program to save $3 million; and the Metropolitan Transit Authority, despite record ridership, is seeking a one-dollar increase in the subway fare. On your side of the continent, California’s bond rating is now the lowest of any state’s, and Governor Arnold is shutting down the government on alternate Fridays. At least forty states are facing similar problems.
Full federal compensation for state budget shortfalls makes eminent sense. It is the states and localities, after all, that serve the people most directly and most efficiently, and fund and administer most of those “shovel-ready” projects. Infusions of federal cash into state budgets would do more to stave off unemployment and reverse the sliding economy than all those new federal programs lumped into the package might ever do.
Yet, the Senate cut aid to states by $40 billion. Why?
I fear for the effectiveness of this legislation. Too much sausage eaten up too fast doesn’t nourish but nauseate.