Swiftly and Boldly
by Charles Lemos, Sun Jan 04, 2009 at 09:09:29 PM EST
"If we don't act swiftly and boldly, we could see a much deeper economic downturn that could lead to double-digit unemployment," President-elect Obama on Saturday in his weekly radio address.
As if clairvoyant in separate statements released last Friday afternoon, Senate Minority Leader Mitch McConnell of Kentucky and House Minority Leader John Boehner of Ohio voiced their concerns on passing what is likely to be the largest spending bill in the the nation's history without extended committee and floor debate.
"We agree with President-elect Obama that taking action to turn the economy around is job one. We also agree, though, that every dollar needs to be spent wisely and not wasted in the rush to get it spent," Senator McConnell said. "And we hope that Democrats in Congress don't attempt to shut the American taxpayer out of this process by trying to pass a bill that hasn't been the subject of bipartisan review and that hasn't been available for public inspection."
"Let's be clear," said Congressman Boehner, "it is essential that this legislation be debated in a fair, open, and honest way. Congress should have public hearings in the appropriate committees, the text of the measure should be made available online for the American people to review for at least one week, and it should be free from special-interest earmarks."
That the GOP is dragging its feet on the economic recovery stimulus package isn't shocking but to hear House Majority Leader Steny Hoyer suggest that the House of Representatives isn't likely to pass an economic stimulus bill by President-elect Barack Obama's first day in office is a tad disconcerting.
There's something about Steny, I don't quite understand. Why now the lack of urgency? The Democrats had previously said they wanted a bill ready for President Obama to sign immediately on entering office. Now the time frame for the House to pass a bill "is hopefully certainly by the end of the month," Congressman Hoyer said on Fox News Sunday.
The timetable is now out of the House by the end of the month and with hopes that it pass the Senate by the mid-February recess. It's not like the economy isn't convulsing. 4Q08 GDP likely contracted 4.3%, retail sales are plummeting, unemployment is likely to surpass 7% within the month, the commercial real estate bubble is about to hit and yet Congressional leaders on both sides of the aisle seem not to grasp the urgency of the matter nor the need for swift and bold action as the President-elect suggests. The longer we wait, the greater the climb out of the morass. The era of indecisive Democrats is over. Can someone please tell Steny Hoyer that? At very least, Congressman Hoyer might take a page from Senator Reid who was at very least demonstrating a can do attitude. Were going to do our very, very best, Reid said. Im not going to give you a timeline. Were going to do it as quickly as we can. Were going to be working nights. Were going to be working weekends. Were going to get this done.
Still it is the "boldly" that matters most. This weekend in San Francisco, the annual American Economic Association meeting took place. On Saturday, Charles Evans, the Governor of the Chicago Federal Reserve, noted many non-financial industries now face the risk of "long-term structural impairment." He wasn't specific as to which industries faced long-term structural impairment but that list likely includes the auto industry and any industry tied to home consumption.
Mr. Evans said fiscal programs to support growth "must be large in order to be effective and to instill badly needed confidence" given the severity of the economic downturn. He added that he believes "a big stimulus is appropriate but it is sobering to be deploying large amounts of taxpayer funds at a time when our fiscal balance sheet is already coming under significant stress." No doubt, we'll have to worry about sobering balance sheet in the future but the task now is to get the economy moving. If I am concerned about anything, it's retail sales falling further and thereby putting pressure on jobs and on the already overbuilt and underutilized commercial real estate sector. That shoe has yet to fully drop, but it will.
Today, Federal Reserve Bank of San Francisco President Janet Yellen echoed Evans' call. Ms. Yellen noted that the economy faces a "serious risk" of stagnating for an extended period of time and "it's worth pulling out all the stops" on fiscal stimulus.
And on Friday night, I attended a lecture by progressive economist Dean Baker. His take on the fiscal stimulus: "we need a big one." He also told me that the proposal should be front-end loaded with two-thirds of the spending for this fiscal year. Mr. Baker noted that there were many "shovel-ready" projects in transportation and urban renewal that were well suited to provide an expansionary lift.
So if swift is too much to expect from Steny Hoyer and the Democrats, can we at least expect bold? And not to press, but why must we wait a month for something that we have been talking about for two months now?