When the government won't act, climate change will

It's often been said that the only thing that lifted the United States out of the depression was World War II -- one massive stimulus package.

It seems possible that climate change's devastating effects may serve a similar role.

Dumbocracy

Yes, Duncan is right, it would be nice if our most preeminent source of news and opinion would allow us to ignore these idiots. But while The Times is going to bring national prominence to what is, basically, the muttings of a crank at closing time, at least they provide some insight into just how confused these people are.

SEATTLE — Keli Carender has a pierced nose, performs improv on weekends and lives here in a neighborhood with more Mexican grocers than coffeehouses. You might mistake her for the kind of young person whose vote powered President Obama to the White House. You probably would not think of her as a Tea Party type.

But leaders of the Tea Party movement credit her with being the first.

A year ago, frustrated that every time she called her senators to urge them to vote against the $787 billion stimulus bill their mailboxes were full, and tired of wearing out the ear of her Obama-voting fiancé, Ms. Carender decided to hold a protest against what she called the “porkulus.”

“I basically thought to myself: ‘I have two courses. I can give up, go home, crawl into bed and be really depressed and let it happen,’ ” she said this month while driving home from a protest at the State Capitol in Olympia. “Or I can do something different, and I can find a new avenue to have my voice get out.”

This weekend, as Tea Party members observe the anniversary of the first mass protests nationwide, Ms. Carender’s path to activism offers a lens into how the movement has grown, taking many people who were not politically active — it is not uncommon to meet Tea Party advocates who say they have never voted — and turning them into a force that is rattling both parties as they look toward the midterm elections in the fall.

Ms. Carender’s first rally drew only 120 people. A week later, she had 300, and six weeks later, 1,200 people gathered for a Tax Day Tea Party. Last month, she was among about 60 Tea Party leaders flown to Washington to be trained in election activism by FreedomWorks, the conservative advocacy organization led by Dick Armey, the former House Republican leader.

[...]

The daughter of Democrats who became disaffected in the Clinton years, Ms. Carender, 30, began paying attention to politics during the 2008 campaign, but none of the candidates appealed to her. She had studied math at Western Washington University before earning a teaching certificate at Oxford — she teaches basic math to adult learners — and began reading more on economics, particularly the writings of Thomas Sowell, the libertarian economist, and National Review.

Reading about the stimulus, she said, “it didn’t make any sense to me to be spending all this money when we don’t have it.”

“It seems more logical to me that we create an atmosphere where private industry can start to grow again and create jobs,” she said.

[...]

Ms. Carender is less certain when it comes to explaining, for instance, how to cut the deficit without cutting Medicaid and Medicare.

“Well,” she said, thinking for a long time and then sighing. “Let’s see. Some days I’m very Randian. I feel like there shouldn’t be any of those programs, that it should all be charitable organizations. Sometimes I think, well, maybe it really should be just state, and there should be no federal part in it at all. I bounce around in my solutions to the problem.”

Although it would be even more helpful if The Times added some context to the ravings of these fools and the con-men they follow.

WASHINGTON (MarketWatch) -- The $800 billion federal stimulus bill has boosted employment by 1 million to 2.1 million and helped the economy grow about 1.5% to 3.5% larger than it would have without the stimulus, the nonpartisan Congressional Budget Office said Tuesday.

Those estimates are in line with the CBO's previous estimates, and those of other economists who've looked at the economic impact of the American Recovery and Reinvestment Act, which was passed about one year ago.

There were few surprises in the CBO analysis, which was based largely on general equilibrium models of the economy that use economic theory and historical data to estimate how the economy would perform under different scenarios. Read the full report on the CBO website.

What's new in the latest CBO report is an attempt to push back at critics who have argued against the stimulus from a number of theoretical vantage points.

In a special appendix, the CBO answered those critics and justified its own approach.

[...]

The CBO replies: The theory that government spending will crowd out private spending is based on "unrealistic" assumptions. "This type of model generally assumes that people are fully rational and forward-looking, based their current decisions on a full lifetime plan." These models assume that people "have full access to credit markets" to maintain their desired level of lifetime consumption, even if they lose their job temporarily. These theories also assume that involuntary unemployment is impossible.

None of those assumptions are realistic. If the government were crowding out the private-sector, interest rates would rise to reflect less private investment in the future. Interest rates aren't rising, CBO said.

I know there is a small but emphatic group of people who think "the elites" are imposing some form of economic and political oppression on them, but it does tend to be helpful to understand the subject on which one is ranting.

Not stimulus

I don't think I was alone in guessing that the White House, like most economists, didn't feel the $700 billion stimulus package was enough, but it was all that was politically feasible. Nor was I alone in guessing that they would find smaller spending and tax credit fixes as they monitored the economy, particularly jobs recovery.

That seems to be happening.

Driving the call for more stimulus efforts is the unemployment rate, which now sits at 9.8%, and is expected to rise into next year, even though the recession may have already officially ended. Republicans, who have long been critical of the $787 billion stimulus that passed in February, are likely to support some, if not most of these new spending programs, in part because they are politically popular. Texas Republican John Cornyn, a vocal opponent of the February stimulus, said recently that he was in favor of some more federal spending efforts. "I think there are things we need to do to help people who need help," he said Oct. 4 on ABC's This Week.

Other Republicans, like economist Kevin Hassett, a former adviser to McCain's presidential campaign, say it might be better to focus on policy fixes that could have long-term impacts, not just short-term impacts. "You can have a stimulus every quarter from now until we go bankrupt," Hassett said. "But would that be good policy?"

I shudder to think where we'd be with a President McCain.

The medium is the message on fraud stories

In today's paper edition of the New York Times, the headline reads,

Few Cases of Fraud Involving Stimulus Money Have Been Detected, Officials Say

Oddly, the electronic edition of the same story is headlined,

On the Lookout for Stimulus Fraud

The messages convey vastly different notions, as the latter seems to imply that fraud is rampant. The story -- whether on paper or gamma rays -- remains the same.

Compared with the immense size of the stimulus program, the actual number of arrests so far has been microscopic. Earl E. Devaney, the chairman of the Recovery Accountability and Transparency Board, the watchdog for stimulus money, said recently that federal prosecutors were looking at only nine stimulus-related cases, including accusations of Social Security fraud and of businesses improperly claiming to be owned by women and members of minorities.

“Quite frankly, I’m a little surprised it’s that small,” Mr. Devaney testified recently before the Senate, explaining that his office passes along questionable expenses to the various federal inspector general offices following the money, as well as to the Department of Justice. “I know, from talking to them, they’re very interested in sending some very loud signals early, as often as they can, with this money.”

The small number of cases is partly a function of how much stimulus money has been spent so far, and how it has been spent. While more than $150 billion of it has been pumped into the economy, according to a recent report by the White House, some $62.6 billion of that was in the form of tax cuts. Of the rest, $38.4 billion was sent to states for fiscal relief; $30.6 billion was spent to help those affected by the recession by expanding unemployment benefits and other safety-net programs, and $16.5 billion was spent in areas like infrastructure, technology and research.

The biggest accusations of stimulus-related fraud so far have not involved the theft of public money at all. Rather, they have involved con artists fleecing gullible people and businesses hoping to profit from the stimulus.

Is the difference in headlines the result of the different places these stories appear during the "purchase cycle?" After all, if you're reading the paper, you've already paid your $2.00. If you're perusing on-line, the headline needs to hook the reader to click on it. Or is it just sloppy journalism by the online edition?

Centeragious and Obama's "outreach"

With all due respect to Mr. Krugman, this idea that Obama "negotiated with himself" which then resulted in a weaker stimulus bill than he could have otherwise gotten...well...I'm not getting that. Yes, he encouraged and wanted "bipartisanship," but there was no way the bill was going to get past the threat of a filibuster without a few Republican votes, not to mention the "centrists" in the Democratic side of the aisle as well. If you want to place blame, blame the "centrists" who, as Krugman, Bard-like, puts it, "extracted their pound of flesh" in order to maintain their "centrist" bona fides. One of them even more or less admitted they weakened the bill.

Beyond that, Obama has again illustrated that he's looking beyond the daily/nightly news cycle. And he's looking beyond this stimulus bill. By reaching out to Republicans he didn't invite an ineffective, weak stimulus bill, but by doing so he did look reasonable and made Republicans look obstructionist. And when it became clear that Republicans weren't going to play ball and were instead going to rehash the last eight years of terrible economic direction, he and his administration changed the tone, to devastating effect.

All of that -- the outreached hand followed by the stern lecture when the hand was refused -- may just have furthered his mandate, at least when it comes to handling the economy.

Heckava job, Senators

Tim Fernholz thinks the compromise ironed out by the Senate's "centrists" is a bad deal.

An agreement has been reached on the stimulus legislation, and it is an agreement we could refer to as "galactically stupid." The decision to cutting $40 billion in state aid, another $20 billion in school construction, $2 billion for rural broandband access in favor of $30 billion in tax rebates for people who buy homes and cars is a travesty; the former option is more stimulative to the overall economy and targets needed investments, while the latter has a small stimluative value, is regressive and would be a step towards puffing the housing bubble up again. Noam's take is spot on -- "What a relief that those fat-cats in bankrupt states and crumbling schools won't be shaking the rest of us down--not this time." And economist Dean Baker e-mails with the following idea:

We should talk about the spending cuts as job cuts. So cutting $100 billion from the stimulus means that they cut 500,000 jobs. (Working with the Romer-Bernstein numbers, $100 billion would increase GDP by $150 billion. This equals 1 percent, which they calculate translates into 1 million jobs. We divide by two [2-year savings] and get 500,000 jobs.) So the Collins-Nelson crew just cost 500,000 people their jobs. Isn't fiscal responsibility wonderful?

It's a delight.

The conference committee to iron out the differences between the Senate and House versions is growing to be interesting. Cutting aid to the states when some may be running out of money to pay unemployment benefits is appalling and cutting school contruction is just stupid -- it's both great stimulus and important for the long term health of our communities and economy. While trying to put the work of stimulating the economy on the backs of people who, worried about their jobs, are not going to be thinking a tax credit for a new house or new car is all that apealling, recalls a world in which we do not currently live. Hopefully, Obama's events this week, together with pressure from the administration's economic team will fix this damned thing.

"Get offa my lawn...again"

I don't know if the power of President Obama's scathing sarcasm was the deciding factor.

But I do know that Barry still has the power to push John McCain's buttons.

Via TPM.

"Now is the time..."

It's about time:

The writer is president of the United States.

Obama is getting impatient. Finally.

It's as though he purposely gave Republicans time to carp and whine and emit their little dog whistles about fiscal discipline and tax cuts and Democrats' plans for forced abortions using YOUR TAX DOLLARS. He's flattered them by meeting with the intransigent, economically illiterate idiots, even on Capitol Hill, something the Republican who preceded him in office would never have considered.

Having done that, having let them hold their breadth until we are beginning to turn blue in the face, he said this morning, "Enough. Time for the adults to do what needs be done."

Reid thinks he has the votes.

Stimulus now

Michael Grunwald makes the mistake of considering David Brooks serious, but then goes ahead and dismantles the silly and serious arguements against the Democrats' stimulus package.

In fact, this crisis is an ideal opportunity for Obama to start keeping his campaign promises: providing tax relief and health security for ordinary Americans, restoring our economic competitiveness, and reducing our dependence on environmentally disastrous fossil fuels that increase the power of our enemies. It's hard to imagine when he'll have a better opportunity. Nothing in the historical record suggests that when Congress has more time to deliberate-and more time to confer with the special-interest lobbyists and local-interest political advisers that dominate the decision-making of its members-it will enact fair tax policies, sustainable energy policies, wise infrastructure policies, responsible fiscal policies or any other policies tainted by long-term thinking or national-interest considerations. If Obama wants to push 21st-century change through Capitol Hill, he needs to use this emergency.

Read, as they say, the whole thing. This is the real test of the young Obama presidency. It seems fairly obvious that Republicans and Democrats have two completely opposing ideas of how the economy works. True, he'll need some Republicans in order to counter likely Blue Dog dissent and to avoid a filibuster (though there is always another option), but in the end he's not going to get any real Republican support. Will he decide, fuck it, and do what he and his very smart advisors think? Or will he settle for a significantly less effective package only to whittle off a handful of Republicans in the process?

Relief

The stimulus bill does have its disappointing elements, particularly in its short change for mass transit, but this is very positive.

Congressional Democrats developed the package in close consultation with President Obama. Health care provisions of the bill taking shape in the Senate are broadly similar to those in the House bill, though they may prove less expensive. Obama aides and advisers said the president would insist on health insurance assistance for the unemployed as part of a final bill, which he wants to sign by mid-February.

The legislation would allow states to provide Medicaid to an entirely new group: those who are receiving unemployment insurance benefits, their spouses and children under 19.

Medicaid is normally for low-income people, and for decades it has been financed jointly by the federal government and the states, with the federal share averaging 57 percent of costs.

The economic stimulus bill prevents states from enforcing a means test, saying, “No income or resources test shall be applied with respect to any category of individuals” who become eligible for Medicaid because they are receiving unemployment benefits. The federal government would pay 100 percent of the costs for people enrolled under this option through December 2010.

Republicans said this proposal would take a big step toward federalizing Medicaid. For their part, Democrats said the changes took a major step toward their goal of coverage for all Americans.

For those of us wondering if we'll have a job in six months, this would come as an enormous relief and one less thing to keep us up at night.

David Leonhardt highlights the positives and the negatives of the package.