Page 1 of 2 Obama must bet the house
By Julian Delasantellis
Who might have thought, and at this early a point at its term, the educated,
sophisticated and cultured Obama administration's philosophy of governance
would so abruptly shift from intelligent analysis of the issues to this, from
Blood, Sweat and Tears Go Down Gambling (1968):
Down in a crap
game, I've been losing at roulette
Cards are bound to break me, but I ain't busted yet
'Cause I've been called a natural lover by that lady over there
Honey, I'm just a natural gambler but I try to do my share
Go down gambling, say it when you're running low
Go down gambling, you may never have to go.
But if he loses
this gamble, President Barack Obama will be forced to go, no later than by the
beginning of 2013, and his bold
dreams of an American society changed and reformed will go long before that.
It's summer in the United States, and all one ever hears on the news, besides
people claiming to be Michael Jackson's lifelong best buddy who couldn't get to
the Los Angeles memorial service because their shift at the fast-food
drive-through hadn't ended yet, is people talking about the anomalous summer
weather in the US Northeast. Cool, cloudy and rainy - it's enough to make one
doubt the existence of global warning should they not have taken an
introductory statistics class and learned about the concept of standard
deviation.
Also seemingly withering in the summer gales are the green shoots, the
catch-all term for the alleged signs of economic recovery that fueled the
almost 40% stock market rally of spring. From lousy retail sales fueled by
plunging consumer sentiment, to a still-inhibited and dysfunctional banking
system, and, most of all, to a jobs recovery that seems to have been born
stillborn before its very first cries, the economic recovery that first seemed
to be more than a summer cloud in the skies of 2007 now looks almost certain to
have its absence darken the skies until at least the middle of 2010 - just
months before the mid-term Congressional elections that will determine whether
Obama continues to enjoy the benefits of a co-operative legislature (well, sort
of) up to his own re-election attempt in 2012.
Like all of us, Obama's present and future decisions are limited by those of
his past. Because of this, he may find himself forced to take some big gambles
with upcoming policy prescriptions because all the standard policy
prescriptions look so problematical.
Coming out of the 2008 election, the Republican Party in the US resembled not
so much an organized political ideology and advocacy movement but a group of
Hiroshima survivors - dazed, confused, shellshocked, and, as far the opinion in
which they were held by at least most of their fellow citizens, leaching from
out of their brains was the radioactive toxicity of their atrocious policy
ideas.
As the new administration settled toward power, the Republican Party's old
horses reverted back to form to settle on the strategy that worked so well with
them during the first two years of Democrat Bill Clinton's term in 1993 - to
just say no, to everything, always; to say "no" and "move the goalposts" even
if the Obama Democrats were agreeing with them.
The first practical application of this strategy was the unanimous Republican
opposition in the House of Representatives, even in the face of heavy Obama
lobbying, to HR1, the American Recovery and Re-Investment Act, (ARRA) most
commonly known as the stimulus bill. In the US Senate, the bill got the three
Republican votes, Susan Collins and Olympia Snowe from Maine, and Republican
since turned Democrat Arlen Specter of Pennsylvania, that it needed to reach 60
vote supermajority, but, as we shall see, the votes turned out to be very
expensive.
Amazingly enough, what the bill does with its US$787 billion price tag (reduced
from its original amount to pick up the support of the three Senate
Republicans) is ultimately immaterial. Still, in terms of state-of-the-art
policy science from the Recessions for Dummies playbook, it is
interesting as a sign of these times.
Business and individual tax breaks got $212 billion in the futile attempt to
get some Republican support for the bill; $267 billion went to such classical
"counter cyclical" recession spending such as increased unemployment spending
and nutrition assistance known as foodstamps, and, most controversially, and
most fatefully, $226 billion for general government spending on things such as
bridges, highways, public transit, enhanced broadband access, and, seemingly,
thousands and thousands of other government spending programs shoveled into the
bill prior to its arrival on the desk of the president.
But the real importance of the bill was none of this. What HR1 really did was,
like a change in property ownership notice moving through a courthouse shaped
like a bizarre MC Escher maze, was begin the transfer of ownership of the
current economic calamity from George W Bush to Barack Obama, far earlier than
the Obama people would have either expected to or preferred.
At first, that didn't seem to be such a bad thing. With the "green shoots" of
non-recovery sprouting in March, all seemed to be falling in place to have
Obama anointed among the pantheon of legendary economic administrators along
such visionaries such as Lee Kwan Yew of Singapore or Jean Monnet of the
European Common Market. Then, as the shoots faded well before the onset of
summer, the Republicans actually looked at what they had opposed, and found, in
Americans' historically schizophrenic relationship with their government,
fertile grounds for mischief.
The problem is that the phrase "economic stimulus" means different things to
different people, specifically, to economists and then to "normal" people.
For economists, what is spent on a stimulus package is seen as less important
than the question of just how much is spent. As to what it should be spent on,
well, that really didn't matter. John Maynard Keynes believed that it was
better to hire unemployed workers to dig ditches and to then fill them up all
day then to have people involved sit idly by in indolence.
For the people, the argument that the ditch-diggers' paychecks went right into
the economy and stimulated the economic demand that whatever event that caused
the economic slowdown suppressed, smacked of government waste and perhaps
cronyism. No, the people's belief, affirmed many times last year on cold
campaign evenings in Iowa and New Hampshire, was that if the people were to be
taxed, it should only be for spending that provided a clearly demonstrable
economic benefit - something like a new or repaired bridge, roadway, tunnel,
airport, even new computers in elementary schools.
There are some obvious drawbacks to limiting stimulus spending to the latter
classification. First, there just aren't that many infrastructure projects that
could be rapidly funded and which could provide that much immediate boost to
the economy.
The economy may need $1 trillion or more of stimulus, but, at least in the
short term, it probably doesn't need $1 trillion of bridges. The available
amount of skilled labor alone necessary to build these edifices would be a
limiting factor - the workers, from architects to pipe fitters, customarily
work on one project before heading out to another. Add into that calculation
the time needed to properly site these projects, and then defeat or more likely
buy off the inevitable not-in-my-backyard lawsuits as common in American
suburbia as barbecue charcoal means that no young policy wonk should come to
the decision table with only his Erector Set building toy if he wanted to be
considered a person with a serious near-term policy remedy to a country's
economic problems.
America's most expensive public works project, the so-called Boston "Big Dig",
came in, at 20 years of construction, about 10 years late. In Manhattan, work
is progressing on the Second Avenue Subway, at least 75 years after the idea
was first proposed. Here in Seattle, the first phase of a regional light-rail
transit line is scheduled to commence operation on Saturday seven years late -
but not to worry. The final expansion and completion of the entire system is
still set to open on time, in 2030.
If you're not going to be able to fill up the stimulus stew pot with just the
meat of real infrastructure spending, what will? Unfortunately, it does have to
be all those government spending initiatives with only the most tenuous
connection to economic progress, sometimes called "pork".
If you follow the politics and economics of the US recovery effort like a
baseball fan watching the wee hours satellite broadcasts of ESPN Sportscenter,
than you probably already know of the two websites - www.recovery.gov, run by
the US government, and www.recovery.org, run by a government auditing company,
Onvia - that are covering the stimulus like minor league pitching statistics.
A few weeks ago, the Republican leader in the US House of Representatives, John
Boehner of Ohio, tried to get the red meat of his party's base baying by
claiming that not one penny of ARRA had yet to arrive in his state. A few
minutes on recovery.org and recovery.gov proved that this was just yet one more
Boehner boner; as of last week, just over $2.9 billion out of a total of $7.9
billion allocated to Ohio had been spent. For the country as a whole, the
comparable numbers, five months following ARRA's passage, are $60.4 billion
spent, $175 billion allocated but not spent.
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