Page 1 of 2 12 LastLast
Results 1 to 10 of 11

Thread: Stimulus Misdirected - WSJ Article

  1. #1
    SiriuslyLong is offline
    Guru
    SiriuslyLong's Avatar
    Joined: Jan 2009 Location: Ann Arbor, MI Posts: 3,560

    Stimulus Misdirected - WSJ Article

    http://online.wsj.com/article/SB1000...=ITP_opinion_0

    By ROBERT B. REICH
    Whatever the outcome of the upcoming midterm elections, the activist phase of the Obama administration has likely come to a close. The president may have a fight on his hands even to hold on to what he's already achieved because his legislative successes have been large enough to fuel strong opposition but not big enough to strengthen his support. The result could be disastrous for him and congressional Democrats.

    Consider the stimulus package. Although it's difficult to separate the consequences of fiscal and monetary policy, most knowledgeable observers conclude that the stimulus has had a positive effect. Real GDP is now increasing at an annual rate of 2.4%, and although the recovery is still fragile it's unlikely we'll fall back into a full-fledged recession.

    Yet the official rate of unemployment remains above 9%, not including millions either too discouraged to look for work or working part-time when they'd rather have full-time jobs. Almost half of the jobless have been without work for more than six months, a level not seen since the Great Depression.

    The central problem continues to be inadequate aggregate demand. The administration's original sin was not spending enough and focusing the stimulus more directly on job creation.

    In fairness, no one knew how sick the economy was in February 2009 when Congress approved the initial stimulus. Yet by late spring 2009 the White House knew the extent of the damage and should have pushed much harder for significantly more spending. Almost a third of the initial stimulus, moreover, came in the form of temporary tax cuts, which already had been proven relatively ineffective at spurring demand after President Bush tried them in 2008. And many states were engaging in reverse stimulus policies, slashing spending and increasing taxes. The administration knew its stimulus was not nearly up to the job.

    Even so, the initial spending inflamed conservative critics who claimed that it unnecessarily enlarged the federal deficit. And its subsequent apparent failure to reduce unemployment has only added more fuel to the fire. This pattern—big enough to energize adversaries but not enough to tangibly benefit most people or to gain the enthusiastic support of independent voters and the Democratic base—has come to haunt almost every major initiative.

    The Troubled Asset Relief Program (TARP) was a clear financial success: It brought Wall Street back from the brink of collapse and in the end will likely cost taxpayers well under $100 billion. Yet in a larger sense, TARP also failed.

    The bailout of Wall Street had been sold to the American people, by the Bush and then by the Obama administrations, as a way to revive Main Street and protect homeowners and jobs. But it didn't accomplish these broader goals. Small businesses have had difficulty getting loans. Few homeowners—according to a recent report by the special inspector general for TARP, only 340,000 of the estimated three to four million borrowers who were supposed to receive assistance—have had their mortgage terms permanently modified.

    As Wall Street profits rebounded, TARP increasingly looked to many Americans like a giant political payoff. In a poll taken by Hart Associates in September 2009, more than 60% of respondents felt that "large banks" had been helped "a lot" or "a fair amount" by government economic policies, but only 13% felt that the "average working person" had been. TARP has fueled tea party anger on the right, disillusionment on the left, and cynicism on Main Street.

    The recently enacted financial regulatory legislation offers another example. Although the legislation has riled Wall Street and fueled Republican opposition, it lacks many of the large-scale changes reformers were seeking. For example, it neither limits the size of big banks nor explicitly ties banker compensation to long-term performance. And despite Paul Volcker's entreaties, many risky trades will continue to be subsidized by protections the government accords to commercial banking. (oh, but it's the banks fault lol) In short, the financial reforms do not rule out more bank bailouts down the road—a specter critics are already exploiting.

    The health-care law, too, is big enough to have unleashed fierce attacks about a "takeover" of the health-care sector. But it's not nearly large or bold enough to assure most people truly affordable care in the future. By leaving the system in the hands of private for-profit health insurers rather than building on Social Security and Medicare, the law continues to subject most Americans to escalating costs. Yes, people with pre-existing conditions will gain coverage, and those who become seriously diseased can't be dropped. But most Americans will have to contract with insurers that already have or will be able to gain significant market power.

    Reasonable people disagree about whether these initiatives should have been more or less ambitious, but almost everyone falls into one of these camps. And that's precisely the political problem Democrats now face.

    A stimulus too small to significantly reduce unemployment, a TARP that didn't trickle down to Main Street, financial reform that doesn't fundamentally restructure Wall Street, and health-care reforms that don't promise to bring down health-care costs have all created an enthusiasm gap. They've fired up the right, demoralized the left, and generated unease among the general population.

    This leaves the Democrats in a difficult position. They have to prove a negative proposition—that although these initiatives cost lots of money or require many new regulations, conditions would be or will be a lot worse without them.

    The administration deserves enormous credit. It accomplished as much as it possibly could with a fragile 60 votes in the Senate, a skittish Democratic majority in the House, and a highly-disciplined Republican opposition in both chambers. Yet Bismarck's dictum about politics as the art of the possible is not altogether correct.

    The real choice is between achieving what's possible within the limits of politics as given, or changing that politics to extend those limits and thereby more assuredly achieve intended goals. The latter course is riskier but its consequences can be more enduring and its mandate more powerful, as both Lyndon Johnson and Ronald Reagan demonstrated.

    So far, Barack Obama has chosen the former course. Despite the remarkable capacities he displayed during the 2008 campaign to inspire and rally Americans behind him, as president he has for the most part opted for an inside game.

    Perhaps he didn't want to risk what he could achieve through inside deals. Maybe by temperament or inclination he is more comfortable with compromise than conflict. It's possible he implicitly traded a more ambitious domestic agenda for Republican support on foreign policy. Or perhaps he has sensed the increasing polarization of the electorate and didn't want to further exacerbate it.


    Any or all of these hypotheses may be true, but the undeniable consequence has been to erode the capacity of the president and his party to accomplish much more from here on. Still, it is far too early to write an epitaph for the Age of Obama. He may yet surprise. He is, as he reminds us, a most improbable president.

    Mr. Reich, a former U.S. secretary of labor, is Chancellor's professor of public policy at the Goldman School of Public Policy, University of California, Berkeley. His next book, "Aftershock: The Next Economy and America's Future," will be published in September by Alfred A. Knopf.

  2. #2
    SiriuslyLong is offline
    Guru
    SiriuslyLong's Avatar
    Joined: Jan 2009 Location: Ann Arbor, MI Posts: 3,560
    This article is another indictment of how the recession started.

  3. #3
    Havakasha is offline
    You do understand that Robert Reich is coming at this subject from a position to to the LEFT of Obama? You do know who Robert Reich is right?
    So glad to see you have joined forces with the "socialist" point of view.
    In every case; health care, financial reform, and stimulus he wanted to have Obama go bigger and more progressive. i agree that he should have.
    Robert Reich believes the stimulus should have been bigger and there should have been less tax cuts in it. I agree wholeheartedly. Nice to see you do too.

    "most KNOWLEDGEABLE observers conclude that the stimulus has had a positive effect"
    I quess you aint too knowledgeable huh? LOL.
    Last edited by Havakasha; 08-06-2010 at 01:00 PM.

  4. #4
    SiriuslyLong is offline
    Guru
    SiriuslyLong's Avatar
    Joined: Jan 2009 Location: Ann Arbor, MI Posts: 3,560
    Quote Originally Posted by Havakasha View Post
    You do understand that Robert Reich is coming at this subject from a position to to the LEFT of Obama? You do know who Robert Reich is right?
    So glad to see you have joined forces with the "socialist" point of view.
    In every case; health care, financial reform, and stimulus he wanted to have Obama go bigger and more progressive. i agree that he should have.
    Robert Reich believes the stimulus should have been bigger and there should have been less tax cuts in it. I agree wholeheartedly. Nice to see you do too.

    "most KNOWLEDGEABLE observers conclude that the stimulus has had a positive effect"
    I quess you aint too knowledgeable huh? LOL.
    I read this article several times and perfectly understood what he was saying, but you missed the point again. Obama squandered the opportunity. That's the point of the article.

    I especially like this line.

    "many risky trades will continue to be subsidized by protections the government accords to commercial banking"

    See where I'm coming from? A republican talking point you say?? No, no, it's the banks fault, that and the "failed policies" of the Bush administration LOL LMFAO.

  5. #5
    Havakasha is offline
    Very happy to see you agree with Robert Reich on policy. He is left of Obama.
    S&L you can read it 100 times but Robert Reich stands for everything you have opposed in these threads. He despises the Bush administration.The joke is on you.

    Do you want me to post an article on here in which he blames the Bush administration for bringing this country the 2nd worst recession in our history.
    You know the recession you dont think Bush had anything to do with. Your
    Ignorance is astounding sometimes.

  6. #6
    SiriuslyLong is offline
    Guru
    SiriuslyLong's Avatar
    Joined: Jan 2009 Location: Ann Arbor, MI Posts: 3,560
    Quote Originally Posted by Havakasha View Post
    Very happy to see you agree with Robert Reich on policy. He is left of Obama.
    S&L you can read it 100 times but Robert Reich stands for everything you have opposed in these threads. He despises the Bush administration.The joke is on you.

    Do you want me to post an article on here in which he blames the Bush administration for bringing this country the 2nd worst recession in our history.
    You know the recession you dont think Bush had anything to do with. Your
    Ignorance is astounding sometimes.
    Again, you miss the point. OK the guy is way left, but he is able to identify that banks have protections from the government. Can you say Fannie Mae and Freddie Mac? The two government agencies that enabled the banks to loan away.

    If I haven't made it clear Lloyd, phuck the Bush administration. You keep bringing it up. It's over. Time to deal with today. I suppose "Bush did it" is just another tactic to stall real discussion.

    And yes, I don't agree to more, but the interesting thing is that this socialist noted that what stimulus we did have was misdirected. These are the points I'm making Lloyd. Screw the rest of the article................ If you don't want to address the points, don't post. Let it go.

  7. #7
    Havakasha is offline
    I understand that you want the Bush administration to recede into the background. The point is that the consequences of his 8 years in office are
    being felt today and will be for a very long time to come.
    If you dont understand the cause of the recession you cant even begin to try to fix it.


    So you think the stimulus was misdirected and misquided. Fine. I think it had problems also, only i think it should have been larger, there should have been more directed to infrastructure, and there should have been less tax cuts. I only wish we had a chance to see McCain's ideas in action because i think we would be way worse off right now.
    Was it a perfect stimulus bill? Of course not there is no such thing as a perfect bill. Remember Obama has to get 60 votes for every piece of legislation now that the Republicans have decided that is the way govt should conduct business. He has to compromise with Conservative Democrats and still win over a couple of Republicans as well.

    What do you think Robert Reich thinks of the Bush administration?

    You have said in the past it didnt do anything to save jobs and the CBO demonstrates quite the opposite.

  8. #8
    SiriuslyLong is offline
    Guru
    SiriuslyLong's Avatar
    Joined: Jan 2009 Location: Ann Arbor, MI Posts: 3,560
    Quote Originally Posted by Havakasha View Post
    I understand that you want the Bush administration to recede into the background. The point is that the consequences of his 8 years in office are
    being felt today and will be for a very long time to come.
    If you dont understand the cause of the recession you cant even begin to try to fix it.


    So you think the stimulus was misdirected and misquided. Fine. I think it had problems also, only i think it should have been larger, there should have been more directed to infrastructure, and there should have been less tax cuts. I only wish we had a chance to see McCain's ideas in action because i think we would be way worse off right now.
    Was it a perfect stimulus bill? Of course not there is no such thing as a perfect bill. Remember Obama has to get 60 votes for every piece of legislation now that the Republicans have decided that is the way govt should conduct business. He has to compromise with Conservative Democrats and still win over a couple of Republicans as well.

    What do you think Robert Reich thinks of the Bush administration?

    You have said in the past it didnt do anything to save jobs and the CBO demonstrates quite the opposite.
    All I've said is that my industry and the industries I serve have not seen an impact from the stimulus bill. I am also on record as saying that I have seen plenty of stimulus in the form of road construction - orange barrells and ARRA signs. So yes, I readily admit that the stimulus has worked to some extent. It is questionable if the package wasted as much as it worked. Even the uber liberals question this.

    McCains ideas may have very well put this past us. We'll never know. Again, no need for the the rhetoric. It serves nothing.

  9. #9
    Havakasha is offline
    You are being a little bit disingenuous about what you have said in the past about the lack of job support from the stimulus.
    How about i will stop the "rhetoric" when you stop spewing yours.

    The problems we are facing are long term and structural. When you blame Obama for everything that is happening today with the economy you reveal a simplistic partisanship that is distasteful to say the least. Sorry but thats really how i feel.
    Last edited by Havakasha; 08-08-2010 at 12:04 AM.

  10. #10
    SiriuslyLong is offline
    Guru
    SiriuslyLong's Avatar
    Joined: Jan 2009 Location: Ann Arbor, MI Posts: 3,560
    Quote Originally Posted by Havakasha View Post
    You are being a little bit disingenuous about what you have said in the past about the lack of job support from the stimulus.
    How about i will stop the "rhetoric" when you stop spewing yours.

    The problems we are facing are long term and structural. When you blame Obama for everything that is happening today with the economy you reveal a simplistic partisanship that is distasteful to say the least. Sorry but thats really how i feel.
    All we have control over is today. Now. Not 8 years ago, but MAYBE we can influence 8 years from now. So, I shouldn't be concerned about what is going on TODAY?

Page 1 of 2 12 LastLast

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •