Swiftly and Boldly

"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. “We’re going to do our very, very best,” Reid said. “I’m not going to give you a timeline. We’re going to do it as quickly as we can. We’re going to be working nights. We’re going to be working weekends. We’re 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?

Tags: Charles Evans, Congressman Steny Hoyer, Dean Baker, Economic Recovery, Fiscal Stimulus, Janet Yellen (all tags)

Comments

10 Comments

Re: Swiftly and Boldly

If Americablog is correct about the 40 percent  of the "stimulus" being in the form of tax cuts, the bill will be a waste of time. It will not be enough from everything I have read to address the issues of the recession, creating the template for next economic boom or creating new jobs.

I expect the Democrats to lose heavily in 2010 because they simply are still stuck in the Reagan era mentality of  cowarding to the GOP. They just don't get it. I don't think this generation ever will.

by bruh3 2009-01-04 09:47PM | 0 recs
Re: Swiftly and Boldly

Krugman: "The biggest problem facing the Obama plan, however, is likely to be the demand of many politicians for proof that the benefits of the proposed public spending justify its costs -- a burden of proof never imposed on proposals for tax cuts."

by Steve M 2009-01-04 10:20PM | 0 recs
Re: Swiftly and Boldly

If he is unwilling to fight for the correct economic strategy to aid recovery by preventing the economy from falling into a deeper recession or, worse, a depression, there is no fight he is willing to fight. I have read economists write that this recession can be 2 to 5 years long depending on macroeconomic policies. I have not read one, whether conservative or liberal, who stated tax cuts are the correct approach. This is strictly being done out of fear of the GOP and Conservative Democrats. It makes him look weak.

by bruh3 2009-01-04 11:00PM | 0 recs
Re: Swiftly and Boldly

Disagree...

I'm looking at these tax cut proposals and they are all very smart...  like $3,000 credit to businesses for every person they hire.  In most cases, if people don't take advantage of them, it costs us nothing...

I think that the policy wonks realized that they needed people spending now... more than they needed building roads later...  The GOP support is a bonus.

by LordMike 2009-01-04 11:09PM | 0 recs
Re: Swiftly and Boldly

If you have any interest in doing a diary about your findings, I'd very much like to read more.

by Steve M 2009-01-05 06:00AM | 0 recs
Re: Swiftly and Boldly

It's not about cost. It's about the spending that will produce demand. If a business does not need an additional employee because the economy is in a deep recession, and there is no demand, a 3000 credit will not matter. I think part of the problem really is too many of you bought into the Reagan era 'tax policy" solves everything mentality. When looking at economic, there is a time and place for everything. Tax policy is not always a bad thing. But, for producing demand it is because of the problem with the demand or spending problem. Both consumers and businesses are pulling back. We need to correct tht. This is not going to change given the continued weakness across the world is finance and demand. I really can't make this simplier. I am not even an econ person. I just know the concepts well enough to know when I am being fed b.s. And, like I said, not one economist I have read, conservative or liberal, thinks tax policy or monetary poliices will solve this severe a problem in a lack of demand/spending.

by bruh3 2009-01-05 07:18AM | 0 recs
Re: Swiftly and Boldly

Despite your obvious keen economic interest, I'm going to give Obama and his team of economic advisors more credence than I give you.  

by lojasmo 2009-01-05 01:16AM | 0 recs
Re: Swiftly and Boldly

Despite your jab at me, I am going to listen to all the conservative and liberal economists who have said that tax policy is not the way to go rather than rely on Obama and his team alone. It's the way to produce an objective standard that does not require a) that I be a greater expert (or you) than Obama and b) we can know whether they are doing something for politics or for effective to solve the problem.

I will be frank- I know none of this matters to you. Obama walks on water. Thus objective standards such as economists discussing the issue before Obama proposes it is not a standard you would even consider. Read something more than political blogs.

by bruh3 2009-01-05 07:21AM | 0 recs
by bruh3 2009-01-04 09:49PM | 0 recs
Re: Swiftly and Boldly

This was my biggest concern for an Obama administration. Obama is deeply cautious and pragmatic, I worried that he would shrink from necessary political fights, especially over economic issues. The initial signs from Obama and his economic team were very positive, it looked like he and his team understood the depth of this crisis and was willing to take the steps necessary to pull out of it. Now that the Republicans are finding their ideological feet it looks like Obama may step back, switching from direct government investment to more tax cuts.

I hope, in the end, he realizes that this is a fight he must win, we cannot compromise our way out of this economic crisis. He has to lead us out of it.

by souvarine 2009-01-05 05:25AM | 0 recs

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