The jobs bill is going to happen. The House will likely pass a bill in December, and the Senate will match in January or February after the health care bill is done. Rather than "if" it will happen, the major questions for the jobs bill are how large it will be, what will be in the bill, and how the bill will be funded.
Relating to the latter, I recently had a chance to ask Representative Alan Grayson if there was any legal barrier to using the remaining Wall Street bailout money to fund the bill. He did not believe there was any such legal barrier, and indicated that political barriers would be more significant.
The lack of legal barriers is virtually self-evident. TARP funds have already been used for a variety of non-Wall Street related projects, including the auto bailout and assistance for struggling homeowners. Further, the Obama administration has said it is interested in using some of the funds to pay down the debt, and using others to increase lending to small businesses. Clearly, there is a lot of flexibility in how the money can be used.
The economic stimulus package has tackled some of the most pressing job-related issues facing our communities. However, with national unemployment at over 10% for the first time since the early 1980s, we have to make sure recovery monies are spent in communities who need help the most. We have a better chance of achieving success in these areas if we come together to ensure that our most vulnerable communities, including communities of color, immigrants, and the poor, can participate in and contribute to our economic growth.
Over the next few months, The Opportunity Agenda will be highlighting the progress that a number of community groups have had in dealing with the economic recovery. Specifically, we will be highlighting the successes and challenges that these groups have had in accessing stimulus funds, how those funds have been used to increase job opportunities and ensure economic security, and what the economic recovery package has meant for poor communities and communities of color.
As an organization working to ensure equal opportunity in the economic recovery, we have begun interviewing local and state-level groups to gain a better understanding of how our country is faring during this critical period. Today’s post centers on the our interview with Sondra Youdelman and Henry Serrano, focusing on their work with Community Voices Heard (CVH), a membership organization working to build power for low-income families in the state of New York. Sondra is the Executive Director of CVH, and Henry is their Senior Organizer/Voter Engagement Project Coordinator.
During these trying economic times, CVH has been lucky enough to achieve success by taking advantage of stimulus funding opportunities and grassroots activism. Recently, CVH won $25 million in new resources for subsidized employment, partly through regular Temporary Assistance for Needy Families (TANF) contingency money. In addition, CVH has been extremely proactive in assuring proper oversight and monitoring of public housing capital funds, specifically in the enforcement of Section 3 provisions of the 1968 Housing and Urban Development Act. The Opportunity Agenda interviewed Sondra and Henry together on October 21, 2009. Here are some portions of that interview:
We strive to be, if anything, a participatory space around here, and I've had a question come to my inbox that is very much deserving of our attention.
To make a long story short, our questioner wants to know why, on the one hand, despite the passage of the American Recovery and Reinvestment Act of 2009 (ARRA, also known as the "stimulus"), unemployment in the construction industry continues to increase, and, on the other hand, why there is such a giant disparity, on a state-by-state basis, in the cost of saving a job?
They're great questions, and, having done a bit of research, I think I have some cogent answers.
As posted last night in Quick Hits by Daniel de Groot, the Obama administration want to use leftover TARP funds to pay down the debt. I guess the idea is that China's economy needs more stimulating than our own:
The Obama administration, under pressure to show it is serious about tackling the budget deficit, is seizing on an unusual target to showcase fiscal responsibility: the $700 billion financial rescue.(...)
The Treasury Department said about $210 billion in TARP funds remains unspent, including about $70 billion returned from financial institutions. A further $50 billion is expected to be repaid in the next 12 to 18 months.
This is a terrible, terrible idea. There are times when paying down the debt is prudent--like the early part of this decade--but right now we need that money to create jobs. Immediately.
Paying down the debt now would just send the $210 billion left in the TARP funds to China and other countries to who we owe money. A much better use would be for it fund a $200 billion jobs package that Congress is looking to move over the next one to three months.
Unfortunately, the administration's idea of using the remaining bailout money to pay down the debt is already catching on with Blue Dogs and Republicans. Anti-health care, pro-coathanger, Representative Larry Kissell has introduced, and is gathering cosponsors for, a bill in Congress to match the Obama administration's plans. Here is a Dear Colleague letter he is circulating in the House right now, trying to gather more co-sponsors on top of the four Republicans, four Blue Dogs, and freshman Ann Kirkpatrick who have already joined up:
(The letter Kissell is sending to other House members can be found in the extended entry.)
In the next one to three months, Congress will go forward with a $100-$200 billion "jobs bill." In short order, it will become the biggest political story in the country, as well as an enormous political opportunity for progressives.
The reason it is such a big opportunity is because the plan is completely unformed. In a conversation last night with a source on Capitol Hill, I learned the following:
Right along with Harry Reid in the Senate, the Democratic leadership in the House is also pursuing this idea. So, its going to happen.
The Democratic leadership does not currently know what we will be in the bill, and are actively soliciting suggestions of almost any sort from the caucus membership. So really, start making suggestions.
It could range in size from $100 to $200 billion, which is a wide range. Again, we can play a role in determining how big it becomes.
Some members of Congress, including the leadership, are open to using TARP bailout money (still $317 billion of it left) as the primary funding mechanism. This would make the bill a huge political winner, as the bailout is directed away from Wall Street and toward Second Street (which is actually the most common street name in the United States).
It will happen quickly. In the House, it might even happen before the month long, December-January holiday break, as members look to tell their constituents they have passed a jobs bill as quickly as possible.
On Friday, we learned that the U.S. unemployment rate officially broke 10% for the first time since the early Reagan years. This is about as bad as it gets for a modern, developed economy. No economic force takes a heavier toll on a society than rampant joblessness, and few personal setbacks take a deeper psychological toll than being out of a job for months on end. If Congress and President Obama don't do something to create jobs fast, both are going to pay a hefty political price when next year's mid-term elections roll around.
So how bad is it? In October, the economy shed 190,000 jobs and the unemployment rate jumped from 9.8% to 10.2%. That percentage is the most optimistic reading of the labor market in Friday's report. If you take people who want full-time jobs but are settling for part-time work, then add those who have simply given up on finding a job, the rate is a massive 17.5%.
The problem is not that either Obama or Congress have failed to act on the problem, but rather that they have not done enough. When Congress was moving on Obama's $787 billion economic stimulus package back in February, we were shedding upwards of 700,000 jobs a month. So the stimulus package has worked-it's probably helped keep unemployment from jumping to 12% or 13%. But this is cold comfort to the nation's 15.7 million unemployed, 5.6 million of whom have been out of a job for more than six months.
As Robert Reich notes for Salon, Obama's economic advisers dramatically underestimated how bad things would get when they crafted the stimulus package. As a result, the package was too small and unemployment has remained high. Obama needs to go back to Congress and demand more economic relief funding. Republicans will continue to whine about government spending to excuse their obstructionism, of course, and conservative Democrats will probably start sweating, too-Sen. Ben Nelson (D-NE) helped cut back the original stimulus bill in February to help boost his "centrist" credentials. This of course had nothing to do with economics or policy. Government spending is what saves the economy in a recession. In a downturn as severe as this one, it takes a lot of spending to turn things around.
But as Reich notes, Nelson and his cohorts will have a lot more to worry about in the 2010 elections if the economy doesn't actually improve over the next year. And few economists think it will. The Congressional Budget Office, which is run by a conservative economist named Douglas Elmendorf, projects an average unemployment rate of over 10% in 2010. That's worse than this year. Democrats from swing districts need to support economic relief packages. Continued economic malaise will severely hurt them at the polls.
Congress finally took some action on joblessness on Thursday, voting to extend unemployment benefits for an additional 14 weeks. If we want the economy to recover, we need people to spend money, but if people aren't working, they don't have any money to spend. So the government cuts people checks to help them get by and stimulate a demand for goods and services. Even most conservative economists thinks this is a good idea.
But as Kevin Drum notes for Mother Jones, the soundness of the policy did nothing to prevent Republicans from fighting the effort to extend benefits tooth-and-nail. The bill had to overcome three-that's right, three-filibusters in the Senate from Republicans, who held up the bill for weeks for no apparent reason. In a blog post for The Washington Monthly, Steve Benen explains the economic cost of this obstructionism: In the weeks of delay, 200,000 people looking for work stopped receiving benefits.
But extending unemployment benefits will not solve our economic woes. The total program is just $2.4 billion, a drop in the bucket compared to the trillions of dollars the government put up to salvage Wall Street. $2.4 billion is not enough to reverse the unemployment trend. Cutting the checks certainly helps, but as Matthew Rothschild emphasizes for The Progressive, we need an economic policy that actually puts people back to work. We've known for months that the stimulus was too small and watched the labor market continue to deteriorate. We need more than tweaks at the economic margins, we need a robust job creation plan.
As Stephen Franklin notes for Working In These Times, we already know that the recession has created a significant jump in the nation's poverty rate. According to official government statistics, the rate climbed from 12.5% to 13.2% in 2008, the largest increase since 1991. But the National Academy of Science thinks the government statistics are misleading, as they account for rising costs associated with medical care, transportation, child care and different regional living standards, as Franklin notes. Taking these factors into account, the National Academy of Sciences calculates the actual poverty rate to be 15.8%. That's an additional 7 million people living in poverty, for a total of over 47 million. That's more than the entire population of the New York, Los Angeles, Chicago, and Philadelphia metropolitan areas combined. What's worse, we don't have poverty statistics for this year, when the most severe economic damage was been dealt.
Workers are facing tough economic prospects around the world. Writing for The Nation, Kristina Rizga details Latvia's economic turmoil. Just like the US, overexcited bankers in Latvia inflated a massive real estate bubble that took down the entire economy when it burst. But with the bubble burst, much of the country is now out of a job and stuck with a mortgage worth far less than what they paid for it. It's almost exactly the same story we've seen at home.
No domestic economic problem is more pressing than our epic levels of unemployment. We need another round of stimulus to get people working again. If not, we'll see the same public unrest here as in Eastern Europe.
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A report from the TARP's official watchdog estimated that there is $317 billion left in the program, a sum that includes funds paid back to the government by some banks.
Couldn't the Obama administration just keep using TARP money for stimulus related programs, such as the ones described above, and effectively make it a second stimulus package that does not require Congressional approval?
On April 8, 1935, the United States Congress passed the Emergency Relief Appropriation Act. The Emergency Relief Appropriation Act was part of President Franklin Delano Roosevelt's New Deal. Roosevelt hoped that his New Deal would allow Americans to cope with the Great Depression, would help end the current economic downturn, and would help prevent another depression from occurring in the future.
We know at this point that the stimulus needed another $600 billion in spending to combat the effects of the recession. Smart pundits like Paul Krugman, Matthew Yglesias and the Center on Budget and Policy Priorities keep talking about the need for a new WPA, a new Civilian Conservation Corps, and more grants to state and local governments to plug their budget gaps. Can't the Obama administration just use the remaining TARP money to just start programs like these, immediately?
Over the next few years, the TARP fund should grow by at least another $200 billion, as banks, automakers, homeowners and small businesses continue to pay back their loans. So, not only do we have short-term funding to start up a new WPA and / or a new CCC, there is long-term funding to keep them operational, too.
This would not only help alleviate the increasingly dire unemployment situation, but diverting Wall Street bailout money directly into jobs for main street would be a huge, huge political winner. Not to mention that a program for young people, like a new CCC, might be exactly what is needed not only to help the demographic hardest hit by the recession, but also to get Democratic-leaning young voters back to the polls in 2010.
Are there any legal restrictions preventing this? Is the Obama administration just sitting on funds that could be used for a second, more effective stimulus package? There might be internal opposition within the administration, but right now I am just looking for legal problems. If anyone can think of any legal barriers to using TARP funds to create new jobs programs that harken back to the days of FDR, please say so in the comments. Otherwise, this is a campaign we need to start ASAP.
Update: To clarify, what we need to do is figure out the legal limits of what this money can be spent on. Any advice on that front is greatly appreciated.
Today, the public will get a look at how funds distributed through the American Recovery and Reinvestment Act of 2009 are being spent when the reports from agencies receiving these stimulus funds are released.
While many questions will surround the release of this information, it's likely that a critical part of this story will be lost unless we ask the right questions about this spending. Namely, is this stimulus really creating a recovery for everyone?
This is an important consideration given that many groups of Americans have consistently been left behind in ways that hard work and personal achievement alone cannot address. This was true even before the economic downturn began to affect everyone else, and it's likely that the crisis has further worsened gaps in income and assets that existed already.
To get an idea of what some Americans faced before the crisis, just look at 2007, the year before the crisis began affecting everyone:
Americans are still pessimistic about employment and the economy, according to several recent polls. A majority agree that young people will not achieve the same standard of living as the previous generation or that it is more likely that families will suffer "economic reversals" in the next 5 to 10 years. Support for the stimulus bill has dropped and opinion is now deadlocked on the bill, though some aspects, such as spending on infrastructure and public works, remain popular among a majority. A majority of Americans think that some of the recent federal measures should be lasting, while fewer Americans – although still a majority – feel that President Obama's policies will help in these tough economic times.
Jobs A nationwide poll conducted in October by Gallup, consisting of 1,013 telephone interviews with adults age 18 and older, found that a small share of Americans believe now is a good time to find a quality job (10%). This percentage has been wavering between 9% and 11% since February 2009, and has dropped dramatically since January 2008 (33%). Findings from an October nationwide Pew Research Center survey of 1,500 adults are consistent with this trend: 84% of Americans say that today good jobs were difficult to find, up from 73% in July 2008 acording to another Pew survey.
I have been opposed to the $700 billion Wall Street bailout for the past year. My objections to it have primarily rested on two grounds:
We gave large financial institutions the money without first securing guarantees of new regulations to protect consumers, reduce executive pay, and prevent reckless speculation in the future. Really, we should have gotten the guarantees first, and given the money second.
Fortunately, and surprisingly, new developments suggest that both of these objections can be at least partially put to rest. This is because today, the Obama administration has announced both a re-direction of bailout funds away from Wall Street, and also steep cuts in executive compensation for firms receiving bailout money.
More on these positive developments in the extended entry.
A report issued by the White House and the Education Department on Monday showed that the federal economic stimulus package (the American Recovery and Reinvestment Act) has so far created or saved 250,000 education jobs. The report is the first hard evidence of the Recovery Act’s contribution to the nation’s economic health, and previews more extensive data that will be released October 30.
The report is good news for at least two reasons. First, it documents how public investment is helping to pull the nation back from the brink of a devastating economic depression. And, second, it includes crucial information that should inform the ongoing investment of stimulus funds to achieve a full recovery—especially when it comes to job creation. In analyzing the full October data, however, it is important to ask not only how many jobs were created and what infrastructure was built, but also whether we are investing in a lasting economic recovery that will include our entire nation.
Because stimulus funds are flowing largely through traditional state and local channels, particular attention is needed to ensure that they reach the communities and populations that need them most, that distribution is fair and transparent, and that progress is measured in terms of greater and more equal opportunity for all Americans.
Last month, the U.S. unemployment rate surged to 9.8% as 260,000 people lost their jobs. Although the stock market and corporate profits appear to be recovering from last year's financial catastrophe, work is harder to find. President Barack Obama and Congress need to act now to get people working again and help soften epic unemployment in years to come.
Congressman Sestak is / was on Rachel Maddow tonight talking about veterans. You can still catch it, depending on where you live and if you watch the second airing.
When realtor Virginia Barr implored Specter to "to tell Congress to move to the center, please, and make some progress" on the critical issues facing this country, Specter found the perfect foil for his message.
"I don't know where else to move to," Specter said.
"But (a move to the center) is not going to happen until all citizens of America participate" in the political process, Specter said.
So just as lunch rush started today, a fellow Democrat came in and asked if I was going to the Sestak endorsement announcement that was to take place at 2pm in Penn Square which is about 1/2 a block from my Creamery...so naturally I closed at 1:55 and headed on over.
Now I'm back and wanted to write up my impressions while they are still fresh. Pardon me if they seem rambly, that's just my writing style.
Rep. Sestak was in Lancaster today to be endorsed by our Democratic County Commissioner Craig Lehman, a couple of City Council Members and 4 out of 5 of our State Committee Representatives (for the record, the 5th State Committee Person is running a campaign of her own and is not endorsing either Senatorial Candidate during the Primary).
Spedwybabs has lots more from the event--stimulus, Afghanistan, the public option, and single-payer.
And now for some eye candy. A campaign volunteer took 78 pics of Congressman Sestak at Netroots Nation. The pictures are beautifully shot, not to mention chock full of candid moments, backstage moments and shots of me awkwardly stumbling through my first staffing experience. You can view the entire set here. For a more soothing experience, here is a slideshow:
"The agreement we reached was the best one we could under the circumstances. We were able to cut out $100 billion from the package and include 35% in tax relief in the overall bill. My preference would have been John McCain's proposal, which I voted for, to have the stimulus package of $421 billion in tax cuts alone. I voted for the Reagan tax cuts back in 1981 and that would be the best course, but in a legislative body you don't have exactly your own choice.
Maybe they will only build half of the train station in Elizabethtown.
The $2 billion extension of "Cash for Clunkers" passed the Senate this evening. The vote was 60-37, with the following partisan cross-overs:
Six Republicans voted in favor: Alexander (TN), Bond (MO), Collins (ME), Corker (TN), Snowe (ME) and Voinovich (OH).
Four Democrats voted against it: Leahy (VT), McCaskill (MO), Nelson (NE) and Warner (VA).
Three Democrats did not vote: Byrd (WV), Kennedy (MA) and Mikulski (MD).
In my gut, I absolutely love this program. Partly this is because it shows stimulus can be successful. Part of it is because, like all Americans, I now have an ownership stake in a major car company. But mainly, I love it because it has exceeded expectations, and done so by a long way. The program was projected to take something like three months to sell out, but instead it took less than two weeks.
When in the last time anything the federal government has done exceeded expectations, at least in a positive sense? It seems like everything over the past ten years was worse than expected. This even goes for 2009, when the stimulus was smaller than hoped for, the climate change bill was weaker than hoped for, card-check didn't pass, D.C. still doesn't have full representation in the House, cramdown didn't pass, executives at companies receiving bailout money are still getting huge bonuses, and health care reform legislation is struggling. Perhaps my expectations were too high, but I have been frustrated none the less.
I am fully aware of the criticisms some progressives have made of the legislation:
Bad funding source: As A Siegel and Senator Bingaman both note, the funding has been taken from a pool of money previously designated for long-term green jobs. There were lots of other places where the money could have come from (like TARP) that would not have actually hurt the new green economy in the long-run.
Rewarding polluters: This is a sentiment I understand:
More than a dozen years ago, I bought a car. Even way back then, when gas was less than a buck twenty-five a gallon, I cared about how much gasoline I was consuming.
So I bought a car that got quite a bit more than 18 mpg.
Now, I've finally saved up enough money to buy another car.
And I'm getting screwed.
I'm getting shafted because I didn't buy a gas-guzzling pig. Because my car didn't contribute enough to pollution and global warming.
Much like the Wall Street bailout rewarding the same people who destroyed the economy, and much like the climate change bill is handing over tens of billions to the worst polluters in the country, "cash for clunkers" is an example of rewarding people for screwing things up. It really isn't fair that all of the people who were socially responsible in the first place are not eligible for this program, even if they were to purchase new cars with even higher fuel efficiencies.
No means testing. I also agree with Senator Harkin, who wanted to limit the people eligible for the program by income. If income isn't an issue, then aren't rich people with SUVs, good credit ratings and a lot of money in the bank the most likely to take advantage of it? I am honestly guessing on this one, because there are no statistics available to prove or disprove that hypothesis
So yes, there are some problems with the program. However, I am just going to let my emotions dominate on this one. Even if it is only with $3 billion out of $3.55 trillion, it sure is nice to see the federal government exceeding expectations once again.
Paul Krugman makes the case that big government deficits saved the world. He says that our economic problems were actually worse than what we encountered in the 1930's, and the reason we haven't spiraled down the drain was that Obama's stimulus package picked up the slack in demand and kept even more people from being laid off, even more companies from going under, even more financial institutions from collapsing.
Aside from the deficits I can't even imagine where we would be today without FDIC insurance on bank accounts, or unemployment benefits. I think everyone with money in a bank would have lost it. And just imagine how it would be for the unemployed. (Well, actually we're on the edge of finding out about that because unemployment is running out for a lot of people...)
The public is becoming increasingly antsy as they wait for the stimulus to have an impact. The number of people who think it has had no effect on the economy is actually rising as time goes on:
CBS News Poll. July 9-12, 2009. N=944 adults nationwide. MoE ± 3.
"So far, do you think the federal government's stimulus package has made the economy better, made the economy worse, or has it had no impact on the economy so far?"
Date
Worse
Better
No effect
July 12
15%
21%
60%
June 16
15%
32%
48%
As more people think the stimulus has had no impact, the more people think using government spending as a means of stimulating the economy is not worthwhile (from the same CBS poll):
"Which comes closer to your own view? The federal government should spend money to stimulate the national economy, even if it means increasing the budget deficit. OR, The federal government should NOT spend money to stimulate the national economy and should instead focus on reducing the budget deficit."
July 12: Reduce Deficit 61%--33% Stimulate economy
June 16: Reduce Deficit 52%--41% Stimulate economy
No matter what you think of the wording of that question, the trendline is still important. An increasing number of Americans do not believe that the stimulus has had any impact on the economy. As such, an increasing number of Americans are turning away from the idea of using increased government spending as a means toward economic improvement. It is a perfectly rationale response, even if it demonstrates a lack of patience.
All of this underlies a larger point about how, even though the legislation that has been signed into law in 2009 has been, due to a variety of factors, much more moderate that progressive, the success or failure of that policy will still determine the public perception of the efficacy of progressive policies and ideology for a long time to come. Whether or not the Democratic trifecta actually passes progressive legislation, the legislation that is passed and the policies that are followed will still be perceived as progressive. We simply can't avoid that.
For example, right now the stimulus package pretty much equals left-wing economic philosophy in the eyes of the American people. If it doesn't produce results, we are all going to see our ideas become discredited in the eyes of the American public, even if we thought policies of the Democratic trifecta did not go nearly far enough. The country is never going to say "well, that idea didn't work, so let's try a more extreme version of it." People just don't think that way in America.
Many conservatives felt the same way under the Republican trifecta, and are now roundly mocked for arguing that conservatism can't fail, but people can fail conservatism. I imagine that if the economy doesn't turn around, many progressives will sound quite similar in their critiques of the Obama administration. Problem is, we will sound just as silly as they will. Whether we like it or not, progressivism is on the hook for the success or failure of the policies passed under the Obama administration and the Democratic trifecta.
It appears Senator Shelby has shaken down the Obama administration to the tune of $350 million dollars, from the American Recovery & Reivestment Act (IE the stimulus bill)
As state governments across the country grappled this week with painful decisions about tax increases and service cuts to close budget deficits, stimulus watchers raised serious concerns about the deleterious effects that these deficit-closing measures will have on economic recovery. Stephanie Kelton pointed out that "Jobs that are being created (or saved) through the left hand of the Obama stimulus package are disappearing at least as rapidly as the right hand slashes billions from state budgets." Indeed, state and local government purchases declined $78.8 billion in the last six months.
These claims are used to argue for additional fiscal assistance for state governments. One popular means of providing this assistance is the now-defunct General Revenue Sharing, a Nixon administration program ended by Reagan that directed federal funds to state and (at that time primarily) local governments with essentially no strings attached. James Galbraith was an early proponent of resurrecting GRS to mitigate the economic downturn.
As much as state fiscal relief does stimulate the economy and as much as a third stimulus might be necessary, GRS has two important flaws that point out a larger problem with the stimulus package: how we can effectively target stimulus funds to the people and institutions that need them most.
First, GRS's allocation formula is problematic. The Wall Street Journalsuggests that so far stimulus aid has been insufficiently targeted to the states with the most need, that is, to those with the highest unemployment rates. An earlier San Francisco Federal Reserve research note elaborated on exactly which portions of the stimulus package are more and less targeted to needy states. The parts of the stimulus that are well-targeted are those with formulas that proxy for "rapid reversals in economic fortunes". This is true of the increased federal matching grant for Medicaid, which uses the rise in the state's unemployment rate as one variable in the formula. The parts that are rather poorly targeted are those with formulas based primarily on population. This is true of the state Fiscal Stabilization Fund, which uses population as its primary variable.
"Why not send my tax check directly to Wall Street execs?" asks Sarah Anderson of the Institute for Policy Studies. "Normally," Anderson insists, she and her husband don't object to paying taxes because "we believe that strategic government investment is the way out of this crisis, and we're happy to contribute our fair share. But this year I cringed as I dropped that check in the mail, thinking about how I might as well have just handed it directly to a Wall Street executive."
Anderson's fears may not be far off base. Economist Jeffrey Sachs succinctly describes the latest iteration of the nation's mammoth financial bailout as a plan to "potentially and unnecessarily transfer hundreds of billions of dollars of wealth from taxpayers to banks." Other prominent economists have reached the same conclusion.
If economists and progressive think tankers were the only ones cringing, I'd be worried about the policy. But in the current national climate, I'm concerned about the politics as well. After all, Anderson may recognize that "strategic government investment is the way out of this crisis." But such clear thinking is not universal. The risk is that the irresponsible financial bailout will jeopardize support for the Obama Administration's more progressive economic agenda. We're seeing it today as a series of highly-orchestrated anti-tax tea parties are held across the country, the fruits of an effort by conservative ideologues to conflate the irresponsible bank bailout with the stimulus bill and other public investment the economy desperately needs.
Media spectacles notwithstanding, there's little evidence that they're gaining broad traction. The latest Gallup poll finds "Americans' views of their federal income taxes about as positive as any point in the last 60 years." No widespread anti-tax revolt is brewing. Still, I'd rather Grover Norquist were not smiling quite so broadly.
I'm on record as optimistic that the President will be able to channel justified populist rage to pursue policies that genuinely strengthen and expand the nation's middle class. Today, I'm feeling a bit less confident. When I pay my taxes, I'd rather be thinking about public libraries, air traffic controllers, municipal parks, Social Security, high-quality schools and public colleges, food inspections, safe streets, kids with health coverage, efficient transit, cutting-edge scientific research and unemployment benefits that are there if I need them. But those costly bank bailouts (and, yes, the mounting burden of our wars in Iraq and Afghanistan) are on my mind as well.
During the bonus scandal last month, many large financial institutions had threatened to not participate in the bailout if they money came with new rules and regulations, such as limits to executive compensation. Now, large telecom companies are threatening to do the same thing with stimulus money. Unless they are granted local monopolies and allowed to destroy Net Neutrality, Verizon and AT&T are threatening not to take our $7.2 billion (more in the extended entry):
