The great economic stimulus package just agreed to by the administration and Democratic leaders of the House is being hailed, predictably, as a shining example of bipartisan cooperation. It seems to me the Democrats allowed themselves to get co-opted yet again.
Despite the despicable Rahm Emmanuel's analysis that this was a "progressive" deal, Pelosi in fact tumbled on some of the most progressive -- and most necessary -- aspects of a stimulus package. Namely, extending unemployment benefits and food stamps, and social investments in infrastructure.
How the Dems could fold their hand on increasing unemployment benefits and food stamps is just mind-boggling. First and foremost, shifting money in that direction would help the people who need help the most. Secondly, the entire emphasis has been on rapidly getting money into the economy. The Congressional Budget Office and leading economists all agree that increases in these benefits would make their way into the broader economy much, much faster than the fixes being proposed:
At a Senate hearing on Thursday, Peter R. Orszag, director of the Congressional Budget Office, testified that increases in food stamps and unemployment benefits would have more immediate economic effects than rebates.
“Food stamp and unemployment benefits can affect spending in two months,” Mr. Orszag said. “Rebates would affect spending at the end of 2008.” (NY Times, 1/25/08, Bush and House in Accord for $150 Billion Stimulus)
Government investments in infrastructure repairs and upgrades -- things like fixing bridges and repaving roads -- are nowhere to be found in the "bipartisan" bill. This White House is not interested in compromising on social investments. They'll have none of that, thank you. And Pelosi seems uninterested in standing her ground on such a key issue.
The Times article says, "the deal came together because each side could walk away claiming victory." I don't know about victory, but Pelosi certainly walked away.
(Paul Krugman has weighed in on the stimulus package in his usual insightful and explanatory way. I'm sure he'll have more to say in the coming days and weeks. He is, after all, an economist. Be sure to check out today's piece, Stimulus Gone Bad.)
Oh, and by the way, the check is not in the mail: In a small article hidden away in the Times, it is revealed that the IRS computers simply aren't up to the task of getting a bunch of checks in the mail to so many people. So much for speed in a critical situation. We're all going to be economic Katrina victims, waiting for a rowboat out of town that won't arrive until the financial floodwaters are in the attic. Strains on the I.R.S. Could Delay Rebate Checks for Months (NY Times, 1/25/08)
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