Saturday, January 26, 2008
Stimulus Deal: the Bane of Bipartisanship
By Robert Borosage
January 25th, 2008
Barbara Ehrenreich memorably called the talk about the stimulus "clitoral economics." And that was before we got screwed.
The stimulus deal just announced is being praised more for its existence than its content. Much lamented partisan bickering was overcome; bipartisan cooperation that got it done. With Wall Street bankers in panic, better something than nothing. So the parties came together and split the difference and created an agreement (which still has to survive the minefield called the U.S. Senate).
It's worth taking a look under the hood. Despite approval ratings rivaling those of Idi Amin, President Bush set the terms: Tax cuts only. No spending on public works (that is, nothing for stuff we need that actually puts people to work). No increase in food stamps. No strengthening of our tattered unemployment system. (That is, no money to those who we know will spend it on basic needs). Must include a big package of business tax breaks (tax write-offs for investments that would be made anyway, according to any reputable economic study). No money for states that are about to be forced to cut billions to balance their budgets, largely by cutting education and Medicaid spending and deferring basic infrastructure spending. (Remember the bridge that collapsed in Minneapolis or the sewage valve that shut down lower Manhattan?)
Democrats, despite having the majority in both Houses, accepted those terms. They demanded, sensibly enough, that the tax cuts include 45 million in low-income families that the president would have excluded. They demanded the president take extending his tax cuts beyond 2010 off the table. They got some help for imperiled homeowners through the Federal Housing Authority and Fannie Mae.
So only $40 billion of the $150 billion package gets squandered on business tax boondoggles. The rebates — what Jesse Jackson calls Wal-Mart gift certificates — will get handed out by August at best. It might help a bit, although if the economy is still in bad shape in August, people are more likely to be paying down credit-card debt than buying a new TV made in China.