From today’s Journal:
In a passage from his 2006 book, “The Audacity of Hope,” he sounds like a Republican complaining about the stimulus. “Genuine bipartisanship,” he wrote, “assumes an honest process of give-and-take, and that the quality of the compromise is measured by how well it serves some agreed-upon goal, whether better schools or lower deficits. This in turn assumes that the majority will be constrained — by an exacting press corps and ultimately an informed electorate — to negotiate in good faith.
“If these conditions do not hold — if nobody outside Washington is really paying attention to the substance of the bill, if the true costs . . . are buried in phony accounting and understated by a trillion dollars or so — the majority party can begin every negotiation by asking for 100% of what it wants, go on to concede 10%, and then accuse any member of the minority party who fails to support this ‘compromise’ of being ‘obstructionist.’
“For the minority party in such circumstances, ‘bipartisanship’ comes to mean getting chronically steamrolled, although individual senators may enjoy certain political rewards by consistently going along with the majority and hence gaining a reputation for being ‘moderate’ or ‘centrist.'”
Sound familiar?
The hypocrisy kind of makes me sick. As do the people who remain willfully blind to it. Because he’s going to bring “hope.” And “change.”
[Update early afternoon]
The stock market has lost about 20% during the month since he took office. Is it still too early to start talking about “the failed Obama presidency?”
The stock market has lost about 20% during the month since he took office.
Change!
Wow, the quote makes me want to buy the book. But I think such blatant hypocrisy is more than I can take.
Hypocrisy in itself is not the problem. It’s just not for everyone. After all, responsible, mature people, such as myself, can dole out hypocrisy with the responsibility and maturity it demands. The rest of you should do as we say, not as we do.
That depends. If one voted for the guy, one may begin talking about it now but it’s unlikely to get a hearing except among those who didn’t vote for him.
If one didn’t vote for Hoover II, it is not permitted to speak of his failed presidency until after he has left office and all of his grandchildren have passed away.
That’s why it’s now permissible for Republicans to speak of how the New Deal was a failure. Of course, we still get an argument about why (they say it failed because it didn’t spend enough), but you may have noticed very few of Hoover II’s defenders these days are claiming the New Deal succeeded.
It takes two to tango, Rand. If the Republicans will only accept tax cuts, and a stimulus bill requires spending, there will be no bipartisanship.
Bipartisanship is defined as a Republican selling out his values. If a Democrat does that, it’s treason.
I know of no Republican who would accept only tax cuts. This is just more of the straw-man bullshit that you folks have been dishing out.
Does a stimulus bill require spending?
People won’t go out and spend more money until they’re fairly sure they themselves are in good shape to weather whatever hard times they’re expecting.
The first step to getting out of a recession is letting people identify and work toward that comfort threshold, so that eventually a few will feel confident enough to resume spending — and as consumer spending gradually ramps up, the key factor will change from being personally confident against hard times, to generally confident that hard times are passing.
Reagan and his econ advisers understood this. Hoover II and his fortune tellers do not.
The only GOP alternative to the stimulus bill presented in the Senate (the DeMint amendment, aka “The American Option”, I suppose to distinguish it from the majority’s un-American plan) was 100% permanent tax cuts, weighted towards the wealthy, at a ten year cost of over $3 trillion. It received 36 votes (out of 40 GOP Senators voting). So yes, Rand, there are Republicans who would accept only tax cuts.
How can you be bipartisan when 90% of the other party is, for all practical purposes, insane? The stimulus plan did end up getting votes from 3 out of 4 of the non-insane GOP Senators, that’s not bad at all.
http://wonkroom.thinkprogress.org/2009/02/02/senate-conservatives-plan/
http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=111&session=1&vote=00038
I’m hoping when he leaves office I still have some change!!
Rand – then please outline acceptable spending for the Republican party. All I have heard from Republicans and this blog is “tax cuts.”
Well Chris, I gather investments in transportation infrastructure are palatable to the Republicans. Personally, I wouldn’t mind some investment in bankruptcy courts to expedite the restructuring of businesses and states that are instead receiving bailouts as part of the stimulus package. Then again, I’m not a Republican. And sure, tax cuts and regulation reduction would be nice.
“I know of no Republican who would accept only tax cuts.”
Damn right. We also want commerce-killing laws taken off the book. Start with the Community Reinvestment Act, the Freddy Krueger of the subprime catastrophe. Amend the market-to-market rules to allow some flexibility to deal with this issue of financial institutions loaded with mass quantities of high-risk nobody-knows-how-to-value assets.
Killing Sarbanes-Oxley wouldn’t be a bad measure. Not a factor in this crisis, but its astronomical costs to business has prevented a lot of startups, so I hear. Somebody should figure out a cheaper more efficient alternative to that piece of quackery.
The only GOP alternative to the stimulus bill presented in the Senate (the DeMint amendment, aka “The American Option”, I suppose to distinguish it from the majority’s un-American plan) was 100% permanent tax cuts, weighted towards the wealthy, at a ten year cost of over $3 trillion. It received 36 votes (out of 40 GOP Senators voting). So yes, Rand, there are Republicans who would accept only tax cuts.
As is usually the case, Jim is unacquainted with both logic and the English language. The fact that Republicans only proposed tax cuts tells us absolutely nothing about what they would accept.
Amend the market-to-market rules to allow some flexibility to deal with this issue of financial institutions loaded with mass quantities of high-risk nobody-knows-how-to-value assets.
Completely unrelated to the thread, but I still don’t understand the “mark-to-market” obsession. If you change these rules, not only will they apply to the current situation, but they’ll also apply to the far more common situation where companies attempt to hide business problems from their investors and creditors.
As I see it, the real problem is that the company is forced to sell off assets at a time when assets are poorly valued by the market. This mandatory action is what causes failure cascades in the markets. Suspending mark-to-market is a shifty kluge that in my opinion will cause more problems than it fixes.
Rand, you are right that simply requesting tax cuts to be permanent does not equate to tax cuts being enough. However, with being permanant, tax cuts do not provide a stimulus at all. You give me $500 once while telling me the economy is on the brink of collapse, and I’m going to hold on to that $500. If you make it permanent, then I’ll spend some time working out my yearly budget to see how that money will help.
I also agree with Alan. If you want to know alternatives to spending, the answer is clearly discussed on this blog on a regular basis; remove industry destroying regulations!
Rand, you are right that simply requesting tax cuts to be permanent does not equate to tax cuts being enough.
I wish that people would be more accurate in their language. A tax-rate cut is not a tax cut.
Rand: The sentence
Republicans will accept only tax cuts.
can be read two ways, either as:
1) Republicans will only accept tax cuts.
or as:
2) Republicans will accept a package that is nothing but tax cuts.
Since you worded it in this ambiguous way, when you could just have easily have worded it as 1), I assumed you meant 2). Do you allow that 2) is true, and not a strawman?
The Democrats’ stimulus proposals have an underlying rationale: to temporarily borrow money in order to put people to work (or keep them from being laid off) and to strengthen the social safety net. Their plans assume that Keynes was right about depressions, and that the money borrowed this way will be recouped by a hastened economic recovery.
The Republicans have no plan other than “cut taxes (and borrow more money) forever”, the same plan they espouse when times are good. There is no theoretical or intellectual basis for their ideas, they’re just a reflex at this point.
Do you allow that 2) is true, and not a strawman?
No.
Go to a dictionary, a children’s one if you must, and sound out the words and look at the definitions of “accept” and “propose.”
Fair enough. Indeed, Jim and Chris are completely wrong if they are applying there is a tax cut in the stimulus bill. All that’s in the bill is a tax rebate. Err, not even a rebate, because you can get the money whether you pay taxes or not. It’s a government handout. Tax rate remains unchanged, and really if you tax rate is high enough, you don’t even get the handout.
And this: with being permanant should read without being permanent. So as to say, that a one time tax cut (something we are not getting) isn’t sufficient either. A permanent reduction in the rate of taxes is what would stimulate the economy. I don’t think that ever happened under Bush, besides the “Estate Tax”, which was sunsetted…
Rand: so the Republicans proposed, and voted for, a bill that they would not accept? Do you think they were acting in bad faith?
> The Democrats’ stimulus proposals have an underlying rationale: to temporarily borrow money in order to put people to work (or keep them from being laid off)
Note that tax cuts also “put people to work”.
People with money do four things. They pay down debt, they save, they invest, and they consume. All of those things lead to jobs. (Paying down debt transfers money to folks who do those four things. Eventually it ends up in the hands of someone who does the latter three. Savings get transferred to folks who invest and/or consume. Both lead to jobs.)
Jim, have you ever taken a course in prepositional logic? At this point, it has to become a serious question.
Just to expand briefly, we know what the Republicans proposed. We also know what they were offered (Porkulus, created entirely behind closed doors by Congressional Democrats). We can draw no logical conclusion from these facts what they would accept. The only way to determine that would have been via a good-faith negotiation, which never happened, because Obama “won.”
Rand: we can draw one of two logical conclusions from the GOP votes for the DeMint plan. Either A) they would accept the DeMint plan (100% permanent tax cuts), or B) they would not accept the DeMint plan. I believe A is more likely, but you seem to be holding out for B, that they would propose and vote for a plan that they would not in fact accept. What evidence do you have that their support for the DeMint plan was not in good faith?
Andy: Tax cuts do not necessarily create jobs. Hiring someone is a high-risk investment in this economy — there is no guarantee that their work product will recoup the cost. The person with the money can instead choose to preserve their capital for another day by putting it in a mattress or the equivalent.
Jim says: Either A) they would accept the DeMint plan (100% permanent tax cuts), or B) they would not accept the DeMint plan.
Nothing about whether or not they’ll accept additional pork? Perhaps they can’t accept the plan because of too much Dem spending. 100% tax cuts vs 100% tax RATE cuts? So many possibilities…
Market-to-market (MTM)is the same mechanism that regulates the buying of securities on margin. Depending on the security in question (stocks, forex contracts, commodity futures), you have a specific margin requirement. If the security drops in value, you get a margin call.
Banks create money on margin. The Fed requires fractional reserve) in certain assets, and if that reserve drops in value the bank is hit with a de facto margin call.
MTM works fine as long as true value of all assets is known.
Fannie, Freddie and the investment banks had so much of their fractional reserve socked into exotic financial instruments (subprime mortgages and instruments backed by such) that the regular accounting rules couldn’t value properly. If The Rules don’t know a security’s value, the default setting is near zero. The huge flood of these toxic assets should have prompted SWIFT action to pass emergency modifications to MTM and/or the valuation rules.
Jim, you twit, stop using circular logic to try and etch out a precipice from which is can continue to spout stupidity.
Your stuck on what the Republicans should do in a Stimulus package when that is the whole point. There shouldn’t be, a micromanaged, pork laden, hyperinflation generating package of any kind.
Anything that needs to be done to fix the recession should be thoroughly debated, worked on in detail, and spelled out one coherent step at a time. Not a blunderbuss of pointless earmarks rushed through congress before anyone could read it.
The root cause of the major issues that led up to this recession are what need to be addressed. Not business as usual and throw good money after the bad and hope everything gets unstuck in there, somewhere, some how. When the people that put together a stimulus don’t even know, can’t even say with certainty, what it specifically will fix or how then you have a problem.
When democrats say that the New Deal took too long to work because it wasn’t aggressive enough then they display a lack of analytical ability. When Obama says that Japan’s lost decade was the result of not “acting boldly enough” he display his economic ignorance. In both cases it was when the root cause of the financial problems where directly dealt with that finally saw a return to better economic times.
The topic of this thread is bipartisanship. The Dem position is that we need a large stimulus package asap. The GOP position isn’t as clear, because (aside from the DeMint amendment) they haven’t offered an alternative. But for the sake of argument, let’s say that the GOP position is “no stimulus spending.”
How exactly does a bipartisan negotiation resolve this difference? Make a smaller stimulus package? Throw in some other things that the GOP likes, e.g. a temporary fix to AMT creep? Take out some things that the GOP particularly dislikes, such as family planning funds? The package that was just passed includes all those changes, to its detriment as an example of clear policy making, but to its benefit as an example of bipartisan compromise. And for this people like Rand tar Obama as a deceitful hypocrite.
I haven’t seen anything from the GOP side that even approaches seriousness as a response to the situation we are in. The DeMint amendment is a case in point — does anyone really believe that the solution to a temporary recession is a permanent change in tax rates?
It’s hard to be bipartisan when the other side isn’t even trying to make sense.
I would far rather have the “not serious” plan of the GOP than the actual “plan” passed by the Democratic Party, which consists basically of handing out my tax dollars to Democratic Party voting blocks. It’s not “not serious”, it’s the opposite of serious. You can’t seriously consider family planning funds to a serious element of the goals you claim for that legislation.
I think family planning funds are a perfectly appropriate use of stimulus funds. We’re in a very unusual situation. The Keynesian prescription is to spend a lot of money as soon as possible, to put the currently (or about-to-be) underused parts of the economy to use.
So how do you pick what to spend money on? One criteria is to spend it on things that have a good “multiplier”, so that the money in question will quickly circulate through the economy and do more good. Another criteria is to buy things that are worthwhile in the longer term. Keynes famously wrote that in a depression it would make sense to bury money in deep wells and then pay people to dig it up. But if we have to spend this money, we might as well get things, like roads, bridges, NIH research, better-insulated houses and government buildings, and yes, family planning programs, that will bring benefits down the road when the emergency has passed.
There are only so many bridges that are ready to be built, so you can’t quickly spend $500B on that, or any other single thing. You have to spread it around to lots of very different programs, which will employ different types of people in different areas. Hence, family planning.
If you don’t buy the Keynesian analysis then no stimulus spending makes any sense. But if you do, family planning funds make as much sense as anything. There is a long term benefit to reducing the incidence of unwanted parenthood; if we have to spend money, we might as well buy some of those benefits.
Jim, keep up with “the Democrats can do no wrong.” You defend the indefensible. Over 4+ billion to ACORN, a group that should be prosecuted under RICO. Chicago bribery (yes, I grew up there) at it’s finest. Total waste.
Go back to the depression of 1920… wait, there was none, because the government cut taxes. How about the depression of early 1960’s under Democrat Kennedy…the Go-Go 60’s? Or the 80’s with Reagan. Tax rate cuts have always worked. Keynes doesn’t.
The best times in America were between 1955 to 1968. Gee, the Space Program actually got something done, and increased wealth, with the (original) demand for integrated circuits, computers, etc. And look at the Interstate system at the same time!
You claim that there are only so many bridges, etc. Chicago has land set aside for the 3rd Airport north of Kankakee that could be used now for a 3rd expressway between Joliet and Valparaiso Indiana. If that took over 25+ billion, it would be money well spent, as long as it was a freeway. And the Airport too, while you’re at it – maybe freight only, but look at the location!
I’m sure you could find good projects for 500 billion inside the U.S. The key word is good, not spending for the Keynesian illogical reasons like filling holes. And, of course, cut taxes and regulations like Sarbanes-Oxley.
Aren’t family planning funds designed to shrink the tax base?
What evidence do you have that their support for the DeMint plan was not in good faith?.
I have no evidence of that, and I need none, because I have made no such claim, you illogical troll.
The fact that they would accept the Demint plan in no way implies that they would accept no other, except to people who are incapable of rational thought.
OK, after sleeping on it, I realize now that what the troll was saying was that the Republicans were willing to accept only tax cuts (as though there’s something wrong with that), so I’ll apologize to the troll for that little misunderstanding.
The way that it was originally phrased, though, was clearly meant to imply that they would accept nothing else. Which is just more misleading, deceitful, straw man bullshit that was the topic of this post.
Apology accepted.
> I think family planning funds are a perfectly appropriate use of stimulus funds.
Why aren’t “family spending funds” a perfectly appropriate use of stimulus funds?
Families that have money spend it. Tax cuts are an easy way to put money into families.
Why is Jim opposed to spending that doesn’t go through government?
“Family spending funds” are one form of stimulus, which is why the plan includes tax credits, unemployment assistance, and aid to states, all of which will turn into money in the hands of the citizens most likely to spend it (i.e. the poor or unemployed).
Tax cuts for the better-off aren’t as effective, because the recipients may save it or sit on it.
> Andy: Tax cuts do not necessarily create jobs.
Sure they do.
> Tax cuts for the better-off aren’t as effective, because the recipients may save it or sit on it.
Wrong. Saved money goes into circulation. The only way that “sitting on it” removes keeps money out of circulation is if they convert to greenbacks (or gold) and stash that in their mattress.
BTW – It’s also false that you can’t have negative interest rates. You can – it’s a simple contract that says that you’ll pay back $90 in a year for every $100 borrrowed. When you point that out to folks who bleat about negative interest rates, they raise objections that are easily addressed by conditions on said loans.