Browsing the archives for the US Economy category.

The Republicans who voted for the stimulus bill in the Senate (all three of them)

Economy, Politics, US Economy, US Politics

UPDATE, 14 February: Yesterday, the Senate voted anew on the stimulus bill; this time on the final, unified version of the bill that came out of the conference, where House and Senate leaders hammered out a compromise between the two bills their respective chambers had passed. The breakdown of the vote was almost identical: see The Republican Senators who voted for the stimulus bill, Round II: The final bill.

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Less than two weeks ago, I wrote a post on The Democrats who voted against the stimulus bill in the House. Against the House’s version of the stimulus bill, that is. As you might remember, all 177 Republicans in the House voted against it and 11 Democrats joined them, which means that the bill passed by 244 votes to 188.

That vote passed the baton on to the Senate, and thus a new round of wrangling started. Centrist champions Olympia Snowe (R-ME) and Ben Nelson (D-NE) fought to cut stuff out of any stimulus bill they’d be asked to pass. Their selection of exclusions made little coherent sense and struck some of the most effective elements of the stimulus package from the Senate bill – all in the name of bipartisanship.

Yesterday the Senate voted on the result, and the vote was, as Ezra describes it nicely, “about as constructively bipartisan as kick in the head”.

Since it’s a very rare news report that links to the roll call, you can find it here:

00061 10-Feb H.R. 1 On Passage of the Bill Passed H.R. 1 as Amended; American Recovery and Reinvestment Act of 2009

That’s a vote of 61 to 37. All of three Republicans voted in favour: Snowe, Susan Collins (ME) and Arlen Specter (PA). Judd Gregg, Obama’s new Republican Commerce Secretary, abstained from the vote as promised, but in the Senate an abstention de facto equals a “Nay” vote. Every single Republican from a state South or West from Pittsburgh voted against the bill.

Let’s recall the compromises that were made to make this bill palatable for Senate Republicans:

The biggest cut, roughly $40 billion in aid to states, was likely to spur a fierce fight in negotiations with the House over the final bill. Many states, hit hard by the recession, face wrenching cuts in services and layoffs of public employees as they struggle to comply with laws requiring them to balance their budgets. [..]

In addition to the large cut in state aid, the Senate agreement would cut nearly $20 billion proposed for school construction; $8 billion to refurbish federal buildings and make them more energy efficient; $1 billion for the early childhood program Head Start; and $2 billion from a plan to expand broadband data networks in rural and underserved areas.

I don’t need to go into what these cuts meant, because assorted bloggers already presented the score:

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How bad is it?

Economy, US Economy


It’s bad, real bad: “Recession-battered employers eliminated 598,000 jobs in January, the most since the end of 1974, and catapulted the unemployment rate to 7.6 percent [..] the highest since September 1992”:

The grim figures were further proof that the nation’s job climate is deteriorating at an alarming clip with no end in sight. [..]

The latest net total of job losses was far worse than the 524,000 that economists expected. Job reductions in November and December also were deeper than previously reported. [..]

All told, the economy has lost a staggering 3.6 million jobs since the start of the recession in December 2007. About one-half of this decline occurred in the past three months.

UPDATED: The NYT has some ferocious-looking graphs on the numbers, with individual details for added depression: blacks have been especially hardest hit, enlarging the race gap in unemployment again; those with only high school are significantly harder hit than those with college degrees. So the vulnerable suffer most.

It also has some choice quotes to hit home the seriousness of the situation:

“Businesses are panicked and fighting for survival and slashing their payrolls,” said Mark Zandi, chief economist at Moody’s Economy.com. “I think we’re trapped in a very adverse, self-reinforcing cycle. The downturn is intensifying, and likely to intensify further unless policy makers respond aggressively.” [..]

As in previous months, employers [..] slashed their payrolls in almost every industry except health care. Manufacturers eliminated 207,000 jobs, more than in any year since 1982. The construction industry eliminated 111,000 jobs. [..]

“This is a horror show we’re watching,” said Lawrence Mishel, president of the Economic Policy Institute [..]. “By every measure available — loss of employment and hours, rise of unemployment, shrinkage of the employment to population rate — this recession is steeper than any recession of the last 40 years, including the harsh recession of the early 1980s.” [..]

[S]ome analysts contend that the current rate of 7.6 percent understates the labor market’s problems because the percentage of adults participating in the labor force has slumped, and those people are not listed as “unemployed.” Peter Morici, an economist at the University of Maryland, estimated that if the labor force participation rate today were as high as it was when President Bush took office, the unemployment rate would be 9.4 percent.

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Consuming From Income, Not Wealth

Economy, Politics, US Economy

I read an article called “A Smarter Stimulus” in the New Yorker when it first came out — I keep thinking of it again when I see disparaging references to the tax cuts in Obama’s stimulus plan, such as Frank Rich’s recent column.

I find the whole economic mess daunting and appreciated the clear explanation of one aspect of the proposed stimulus package that is encouraging.

Evidently not all tax cuts are equal.  The Bush tax cuts did not accomplish much because they were treated as a windfall, and people tend to shunt those into their savings accounts.  The Obama tax cuts will be different — they will take the form of less withholding from paychecks.  The article explains the difference, in terms of the effect on the economy:

The size of the windfall matters a lot: the bigger the windfall the more likely it is to be saved. One fascinating study of Israelis who received reparations from Germany found that those who received the biggest payments spent very little of the money, while those who received small payments spent it all

The key factor in these kinds of distinctions, Thaler’s work suggests, is whether people think of a windfall as wealth or as income. If they think of it as wealth, they’re more likely to save it, and if they think of it as income they’re more likely to spend it. That’s because many people tend to base their spending not on their long-term earning potential or on their assets but on what they think of as their current income, an amount best defined by what’s in their regular paycheck. When that number goes up, so does people’s spending. In Thaler’s words, “People tend to consume from income and leave perceived ‘wealth’ alone.”

So what does this mean for making a rebate work? If you want people to spend the money, you don’t want to give them one big check, because that makes it more likely that they’ll think of it as an increase in their wealth and save it. Instead, you want to give them small amounts over time. And you want the rebate to show up as an increase in people’s take-home pay, because an increase in steady income is more likely to translate into an increase in spending. What can accomplish both of these goals? Reducing people’s withholding payments.

That’s a large excerpt but not the entire article — I encourage you to read the whole thing.  The conclusion:

On its own, Obama’s rebate plan isn’t going to resurrect the economy. But it’s a policy that works with people as they are, rather than as we imagine they should be. And that’s a stimulus in itself.

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Still Not Used to an Articulate President

Politics, Uncategorized, US Economy, US Politics

I just watched Barack Obama’s chat with Matt Lauer before the Super Bowl. It appeared to be live — there were technical difficulties for example that presumably wouldn’t have happened in a taped segment, and some awkward camera cuts. Obama was funny, warm, and serious as called for and didn’t miss a beat when Lauer asked some gotcha-ish questions.

Nothing too deep of course — for example, Lauer asked Obama to face the camera and justify his preference for a national college football playoff to Floridians (whose Gators won the BCS Championship game). “Twenty-seven electoral votes,” Lauer kept saying. Obama smilingly found the camera and delivered his defense; “Congrats Gators, on an outstanding season. … Wouldn’t you feel better if you had beaten every team through a playoff system?”

There was more substance too, especially in terms of talking about the economy and the stimulus package. Obama made it clear that things are going to continue to get worse for several months, and then it would take a while after that before things got back “on track.” But he was full of reassurance, full of confidence that things WILL get back on track.

Throughout he was comfortable and smooth. It’s not solving the health care crisis or creating peace in the middle east, but it was still nice to see. (Right! A brain! Excellent.)

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Will the grapes of the House GOP’s wrath turn out to be sweet for the Democrats?

Culture, Politics, US culture, US Economy, US Politics

I already noted that the significant dilution of the stimulus bill, when it was only going to be rejected unanimously by the House GOP anyway, drove some people up the wall. “Now that [Obama has] offered concrete concessions to the GOP only to have them publicly throw them back in his face, there simply isn’t any super-secret strategy that can [..] make it all make sense,” wrote Stephen Suh angrily at Cogitamus. Why bother even striving for compromise?

This question will get more acute by the day, as a recent post by Kevin Drum illustrates. He reports on the Obama administration’s push to extend the February 17 deadline for TV stations to switch from analog to digital transmissions. Not exactly a hotly partisan issue, right? The Senate promptly arrived at a bipartisan bill – which it passed unanimously. Every Republican agreed. But then the bill went to the House.

Only 22 House Republicans voted in favour. 155 voted against it. Drum: “100% of Senate Republicans voted in favor but 90% of House Republicans voted against. Shazam! Apparently the House GOP caucus really has decided to blindly stonewall everything Obama wants, no matter what.” He posits: “This is even more of a wakeup call than the vote on the stimulus bill.”

Right. The House GOP leadership is startlingly open about its intentions too, observes Dan at Bleakonomy. It will block and obstruct whatever comes its way, so Republicans can freely blame the Democrats for everything when the economy hasn’t recovered yet in six months. Yes, six months – if things haven’t improved in six months, the Republicans intend to say that it’s all the Dems’ fault and that the stimulus “didn’t work” because they “didn’t have the input in this”.

Of course, the current crisis is turning out to be the worst in almost three decades and is guaranteed to have an impact lasting (much) longer than six months, so … GOP profit!

Yet still there are valid reasons not to come down on Stephen’s side of the argument … yet. (I mean, apart from the stimulus bill not actually being all that bad.) The obvious one is the enormous contrast between House and Senate Republicans on the TV bill. If the Senate GOP shows any remotely similar divergence from the House Republicans’ obstruction course on the stimulus as well, Obama’s strategy may still come to “make sense”.

Then there’s the question of strategy. I already linked to Josh Marshall’s argument that offering the Republicans significant compromises, only for them to reject everything anyway, will help to brand them as the party of ‘no’. Which will marginalise them even further in 2010 so the Dems can go the long haul. Kevin Drum links to more evidence on that count too: a poll conducted by Democracy Corps on January 14-19.

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The Democrats who voted against the stimulus bill in the House

Economy, Politics, US Economy, US Politics

UPDATE, 13 February: For an overview on today’s vote, see this new post: The Democrats who voted against the stimulus bill in the House, part II: Once more round the bend.

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Yesterday, as Americans will know, the House of Representatives passed the $825 billion stimulus package that was proposed by the Democratic leadership. It passed by 244 votes to 188, without a single Republican vote in favour. 11 Democrats voted against.

Who were those Democrats? The Clerk’s Office of the House has the roll call:

46 28-Jan H R 1 On Passage Making supplemental appropriations for fiscal year ending 2009

The Democrats who voted nay were:

  • Allen Boyd – FL 02
  • Bobby Bright – AL 02
  • Jim Cooper – TN 05
  • Brad Ellsworth – IN 08
  • Parker Griffith – AL 05
  • Paul Kanjorski – PA 11
  • Frank Kratovil – MD 01
  • Walt Minnick – ID 01
  • Collin Peterson – MN 07
  • Heath Shuler – NC 11
  • Gene Taylor – MS 04

WSJ’s Washington Wire notes that “Bright, Parker, Kratovil and Minnick are freshman lawmakers, while Boyd, Cooper, Ellsworth, Peterson, Shuler and Taylor [and Minnick – nimh] are members of the fiscally conservative Blue Dog Coalition.”

Mind you, the Blue Dog Democratic Coalition has 47 members in all, so almost 6 out of 7 Blue Dogs actually voted in favour.

Democratic votes against the stimulus package in the House of Representatives vote of 28 January 2009

Democratic votes against the stimulus package in the House of Representatives vote of 28 January 2009

As the quickly improvised map above shows, most of the Democratic Nay votes come from rural and small-town districts, and six of the 11 Democratic Representatives who voted against were from the South. That’s still a small minority of Southern Dems in the House though.

The dilution of the stimulus bill during its preparation for the House vote has driven some liberal observers up the wall, and hyperbole aside not without reason. So many concessions, and still not a single Republican vote? Why bother in the first place?

But on the side of the defense, Josh Marshall argues that it might all turn out to be smart strategy; with Marc Ambinder chiming in that what may seem like Democratic gullibility is also done with an eye of unrelated upcoming votes. The Congressional Progressive Caucus, in its turn, has made a point (in a memo that’s not on their own website – what’s up with that?) of highlighting all the priorities it did manage to get into the bill. For example, a “20% temporary increase in maximum food stamp level above the FY2009 level for two years” (cost: $24 billion), “Medicaid payments to states (FMAP)” (cost: at least $15 billion) and “Unemployment benefits (UI) extension” (cost: at least $12.7 billion).

Now to wait how many of their proposals make it through by the time the Senate’s done with the bill as well.

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Why did Sanders, Feingold, Harkin and Byrd vote against Geithner?

Economy, Politics, US Economy, US Politics

The Senate yesterday voted to confirm Tim Geithner as Obama’s new Treasury Secretary – but the vote was narrower than expected, at 60-34. Apparently, it was the slimmest margin of confirmation for a Treasury Secretary since WWII.

Among those who voted nay were the Democrats Russ Feingold, Tom Harkin and Robert Byrd, as well as Bernie Sanders, the self-described socialist from Vermont who was elected as independent but caucuses with the Democrats. I’m generally a fan of Feingold and especially Sanders, and lukewarm about Geithner (not so much about the tax issue as rather because he’s too cautious and too involved in the current failings of the financial system). So I’m curious why they went all out and voted against him.

I tried searching for any statements from them on the matter, but there’s nothing on any of their Senate homepages. For Byrd, all I found (in three zillion copies of a news agency report) is that he commented after the vote, “Had he not been nominated for treasury secretary, it’s doubtful that he would have ever paid these taxes.” But Firedoglake has the statement from Feingold. For him, too, it was the tax issue that did it:

“I voted against the nomination of Timothy Geithner to be the next Secretary of the Treasury with some reluctance. President Obama, like any other President, is entitled to have the Cabinet he wants, barring  serious disqualifying issue, and Mr. Geithner is a very able nominee in many ways. And while I am troubled by Mr. Geithner’s track record on some of the issues that have contributed to the credit market crisis, I do not base my vote on what is, to a certain extent, a matter of policy disagreement.

“Mr. Geithner’s tax liability is a different matter, however. I am deeply troubled by his failure to pay the payroll taxes he owed, despite repeated alerts from his employer at the time, the International Monetary Fund, that he was responsible for paying those taxes. Moreover, his earlier interactions with the Internal Revenue service over his failure to pay sufficient payroll taxes for his household employees make Mr. Geithner’s explanations of his failure to pay his own payroll taxes even less satisfactory. The failure to comply with our nation’s tax laws would be problematic for any Cabinet nominee, but it is especially disturbing when it involves the individual who will be charged with overseeing the enforcement of our tax laws.

“With the condition the economy is in, and the state of our country’s financial institutions, the stakes could not be greater for the next Treasury Secretary. While I could not support his nomination, I respect Mr. Geithner’s abilities and I look forward to working with him to address the serious problems facing our country.”

Meanwhile, the Radio Iowa blog has the statement from Tom Harkin. For him, the tax issue and Geithner’s co-responsibility for the current crisis as chief regulator of the financial institutions weighed equally in his decision:

“I strongly believe that, save in extraordinary circumstances, the President should have the right to select his own team.  President Obama believes that Mr. Geithner is the best person for this job, and it pains me to go against the President’s wishes on this matter.

“I believe that Mr. Geithner is a person of obvious talent and experience, and I bear no ill will toward him whatsoever.  However, after careful deliberation, I simply could not overcome my very serious reservations about this nominee for two reasons. Mr. Geithner made serious errors of judgment in failing to pay his taxes, and he made serious errors in his job as chief regulator of the financial institutions at the heart of the current financial crisis.

“Nothing would make me happier than for Mr. Geithner to prove me wrong by serving with distinction. I wish him every success as Treasury Secretary – we will all be rooting for his success.”

If anyone sees the statement by Bernie Sanders, do leave a link in the comments. UPDATE: Sanders’ statement is in the next blog post.

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Dow 36

Economy, Funny, Politics, US Economy, US Politics

Noting that Kevin Hassett, of Dow 36000 fame, is now director of economic policy studies at the conservative American Enterprise Institute and confidently proclaiming his neo-Hooverite recipes for tackling the financial crisis, Neil Sinhababu of Donkeylicious sighs, “I guess it’s kind of like the Iraq War, where you can give really bad advice and still hold onto an awesome think tank job.”

Which leaves us, he adds, only with the power of satire. Crude satire, to fit crude stupidity. Here’s Neil’s reworking of Hassett’s now-notorious book – and here’s mine:

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Recognizing When You’re Wrong

Economy, Politics, US Economy, US Politics

Yesterday, President Elect Obama pulled off what I think is one of the hardest political acts to perform; he admitted he was wrong.  From back in the campaign, Obama suggested that part of his stimulus package would be a tax credit to businesses who create jobs.  In 2007, Obama was one of the senators pushing the “Patriot Employer Act”.  That bill would try to designate businesses who hire more US workers and reward them with tax credits.  Last week, that policy started to take the form of a $3,000 tax credit for each job in Obama’s stimulus package.  But the cry against this came from all quarters.  Republicans, economists, business writers and members of his own party brought up their concerns that this plan won’t work.  It’s like eliminating the tax on gasoline when prices are high: lots of politics, no benefit. 

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A bit of grin and bear it, a bit of come and share it

Economy, Politics, US Economy, US Politics
Soup line, part of Franklin D. Roosevelt Memorial (Image used under CC license from Flickr user gamillos)

"Soup line", part of Franklin D. Roosevelt Memorial (Image used under CC license from Flickr user Gabriel Millos)

If the erupting economic crisis hasn’t already led to soup lines and double digit unemployment, Kevin Drum argued yesterday, it is only thanks to the safeguards that were put in place since the crash of 1929.

Without Social Security, Medicare, unemployment insurance and deposit insurance; without the Treasury pumping capital into the banking system and the abandonment of the gold standard, we would already have reached that point.

So “thanks, FDR,” Drum writes*, “thanks, modern mixed economy” – and thank you LBJ as well, Eisenhower too, and all their counterparts here in Europe for that matter. Add those to your reasons to be cheerful. If it had been up to the Goldwater-Reagan ideology, this crisis would already have incurred much more suffering.

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* Though it’s an interesting afterthought that Roosevelt, “concerned about the moral hazard” involved, actually opposed creating the deposit insurance system, along with banking industry groups. Seems like the idea actually came from his left: he thought it went too far and even threatened to veto the legislation.

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Taking a moment to realise how different it could have been

Economy, European Politics, Politics, US Economy, US Politics, World Economy

This is Josh Moulitsas-Soros, acting CEO of Observationalism.com.

Most readers know that the views expressed on this blog are…

OK, just joking.

Ezra Klein uses the progressive blogosphere’s shitstorm in a teacup of the day to reflect on the agenda of the Third Way think tank, and how events since 2004 have overtaken it and made it irrelevant. It’s a good way to consider just how different things could have gone – and while we’re at it, to consider the looming reversal of roles between US liberals and European lefties.

It’s just four years ago, when Third Way was announced on November 11th, 2004, that this seemed like a good idea:

This was a week after John Kerry lost the presidential election, and the young organization was sold as a DLC for the next-generation. “As Democrats continue to stagger from last week’s election losses, a group of veteran political and policy operatives has started an advocacy group aimed at using moderate Senate Democrats as the front line in a campaign to give the party a more centrist profile,” wrote The Washington Post.

In other words, Third Way was formed under the theory that the Democrats’ problem in 2004 was that they were too far to the left, and as such, had lost middle class voters. The organization focused on upper middle class voters and followed the Mark Penn strategy of machine gun bursts of small, bite-sized policies meant to attract professional whites and rural voters.

Ezra does a good job in briefly sketching how quickly the Third Way’s strategy became an anachronism:

This year, Barack Obama was, on domestic policy, the most moderate of the major Democrats, which put him substantially to the left of every major Democrat running for president in 2004. His health care plan was more universal than Gephardt’s, his Iraq plan was more aggressively focused on withdrawal than Dean’s, and he was a black liberal from an urban center. Clinton and Edwards ran on similar platforms. None of them bore any obvious resemblance to the office park bait Third Way advocated. [..]

Third Way [..] were built as the vessel for a particular argument about the path to a Democratic resurgence, and their side of that debate lost. [..] Democrats have won atop something like the opposite of their advice and very different from their predicted majority coalition, which may explain why they’re acting so defensive.

All of which provides a good Zen moment to consider, even amidst my kind of bellyaching about Obama’s appointees, the blessings there are to count. You could have ended up with the Third Way recipe. Instead, the Democratic Party’s has moved left even as it gained political dominance.

This doesn’t just hold up in comparison with what the future looked like in 2004, either. Take the 850 billion euro economic stimulus plan the Democrats are preparing. That’s 6% of America’s GDP, more or less. Now compare the €200-billion stimulus plan that EU leaders eventually agreed on last week that involves the member states pumping the equivalent of 1.5% of GDP into their economies.

Alternatively, consider the £20-billion British stimulus package that Gordon Brown is proposing. On the eve of the EU summit, it stirred the German finance minister into a frenzied tizzy in Newsweek about “tossing around billions,” a deplorable “breathtaking switch” to “crass Keynesianism,” and the “breathtaking and depressing … speed at which proposals are put together .. that don’t even pass an economic test” – and that’s a plan that involves, if I’m getting the numbers right, all of 1.6% of British GDP.

Basically, after years in which European lefties like me groaned about a Democratic Party so milquetoast it would be a right-wing party in our countries, we’re suddenly faced with American peers who are moving more boldly to tackle the economic crisis than any EU government seems able or willing to do. While Obama’s party appears to be prepping a rapid shift of perspective to rediscover the wisdom of Keynesianism, the European governments are shackled by the EU’s deficit rules. It might not be long before we actually cast a jealous eye on those American peers we disdained just a few years ago.

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What’s with the horsemen?

Economy, Politics, US Economy, US Politics

After I passed on John Judis’ take on the auto bailout here, we had a bit of a discussion in the comments section. So who could sketch my amazement to see, via TNR, that Bill Kristol – that Bill Kristol – gets it. Here he was, last Monday:

Last week, Senate Republicans picked a fight with the U.A.W. on union pay scales — despite the fact that it’s the legacy benefits for retirees, not pay for current workers, that’s really hurting Detroit, and despite the additional fact that, in any case, labor amounts to only about 10 percent of the cost of a car. But the Republicans were fighting Big Labor! They were standing firm against bailouts! Some of the same conservatives who (correctly, in my view) made the case for $700 billion for Wall Street pitched a fit over $14 billion in loans for the automakers.

There is, of course, plenty in his column to take issue with as well. But there don’t seem to be many nits to pick with this summary:

So Senate Republicans chose to threaten to filibuster the House-passed legislation embodying the George Bush-Nancy Pelosi deal. The bill would have allowed President Bush to name a car czar, who could have begun to force concessions from all sides. It also would have averted for now a collapse of the auto industry, and shifted difficult decisions to the Obama administration.

Instead, Bush will now probably have to use the financial rescue funds to save G.M. [..]. And Senate Republicans now run the risk of being portrayed as Marie Antoinettes with Southern accents.

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