July 9, 2009
It’s a subject that many people are talking about, but not many politicians want to discuss. It appears as though a second economic stimulus package will be necessary to save our sinking economy and get people back to work. Because of the huge deficits already incurred in responding to the financial meltdown, along with the $787 billion price tag for the first stimulus package and because of the President’s promise to get healthcare reform enacted, there aren’t many in Congress who are willing to touch this subject right now, although some are. A July 7 report by Shamim Adam for Bloomberg News quoted Laura Tyson, an economic advisor to President Obama, as stating that last February’s $787 billion economic stimulus package was “a bit too small”. Ms. Tyson gave this explanation:
“The economy is worse than we forecast on which the stimulus program was based,” Tyson, who is a member of Obama’s Economic Recovery Advisory board, told the Nomura Equity Forum. “We probably have already 2.5 million more job losses than anticipated.”
As Victoria McGrane reported for Politico, other Democrats are a bit uncomfortable with this subject:
Democrats are all over the map on the stimulus and the possibility of a sequel, and it’s not hard to see why: When it comes to a second stimulus, they may be damned if they do and damned if they don’t.
Kevin Hall and David Lightman reported for the McLatchy Newspapers that at least one high-ranking Democrat was keeping an open mind about the subject:
“I think we need to be open to whether we need additional action,” House Majority Leader Steny Hoyer, D-Md., said Tuesday. “We need to continue to focus on bringing the economy back to a place where we’re not losing jobs.”
An informative article by Theo Francis and Elise Craig, in the July 7 issue of Business Week, explained the real-world difficulties in putting the original stimulus to work:
Dispensing billions of dollars, it turns out, simply takes time, particularly given government contracting rules and the fact that much of federal spending is funneled through the states. Moreover, some spending was intentionally spread out over several years, and other projects are fundamentally more long-term in nature. “There are real constraints — physical, legal, and then just the process of how fast you can commit funds,” says George Guess, co-director of the Center for Public Finance Research at American University’s School of Public Affairs. “It’s the way it works in a decentralized democracy, and that’s what we’re stuck with.”
Nevertheless, from the very beginning, when the stimulus was first proposed and through last spring, many economists and other commentators voiced their criticism that the $787 billion stimulus package was simply inadequate to deal with the disaster it was meant to address. Back on December 28, Nobel laureate Paul Krugman explained on Face The Nation, that a stimulus package in the $675-775 billion range would fall short:
So you do the math and you say, you know, even these enormous numbers we’re hearing about are probably enough to mitigate but by no means to reverse the slump we’re heading into.
On July 5, Professor Krugman emphasized the need for a second stimulus:
The problem, in other words, is not that the stimulus is working more slowly than expected; it was never expected to do very much this soon. The problem, instead, is that the hole the stimulus needs to fill is much bigger than predicted. That — coupled with the fact that yes, stimulus takes time to work — is the reason for a second round, ASAP.
Another Nobel laureate, Joseph Stiglitz, pointed out for Bloomberg TV back on January 8, that the President-elect’s proposed stimulus would be inadequate to heal the ailing economy:
“It will boost it,” Stiglitz said. “The real question is — is it large enough and is it designed to address all the problems. The answer is almost surely it is not enough, particularly as he’s had to compromise with the Republicans.”
On February 26, Economics Professor James Galbarith pointed out in an interview that the stimulus plan was inadequate.
On January 19, financier George Soros contended that even an $850 billion stimulus would not be enough:
“The economies of the world are falling off a cliff. This is a situation that is comparable to the 1930s. And once you recognize it, you have to recognize the size of the problem is much bigger,” he said.
Despite all these warnings, as well as a Bloomberg survey conducted in early February, revealing the opinions of economists that the stimulus would be inadequate to avert a two-percent economic contraction in 2009, the President stuck with the $787 billion plan. He is now in the uncomfortable position of figuring out how and when he can roll out a second stimulus proposal.
President Obama should have done it right the first time. His penchant for compromise — simply for the sake of compromise itself — is bound to bite him in the ass on this issue, as it surely will on health care reform — should he abandon the “public option”. The new President made the mistake of assuming that if he established a reputation for being flexible, his opposition would be flexible in return. The voting public will perceive this as weak leadership. As a result, President Obama will need to re-invent this aspect of his public image before he can even consider presenting a second economic stimulus proposal.
Senator Cantwell Stands Tough
February 8, 2010
Back in June of 2008, when it became obvious that Hillary Clinton would not win the nomination as the Democratic Party’s Presidential candidate, Clinton’s despondent female supporters lamented that they would never see a woman elected President within their own lifetimes. At that point, I wrote a piece entitled, “Women To Watch”, reminding readers that “there are a number of women presently in the Senate, who got there without having been married to a former President (whose surname could be relied upon for recognition purposes).” One of those women, whom I discussed in that essay, was Senator Maria Cantwell of Washington. Since that time, Senator Cantwell has proven herself as a defender of her constituents and an opponent of Wall Street. Her bold criticism of the Obama administration’s handling of the economic crisis as well as her vocal opposition to the influence of lobbyists, motivated me to write a second piece about Senator Cantwell in November of 2009. More recently, she voted against the confirmation of Ben Bernanke’s nomination to a second term as Federal Reserve chair and on February 2, Reuters reported that she was taking a stand against loopholes in proposed financial reform legislation.
On February 7, Les Blumenthal of the McLatchy Newspapers saw fit to highlight Senator Cantwell’s efforts at backing-up with real action, her tough stand against Wall Street:
Her criticism of the financial regulatory reform bill passed by the House — as being “riddled with loopholes” — was reminiscent of the widespread reaction to the disappointing failure of the Democrats to pass any significant healthcare reform legislation:
At a time when her peers are busy selling out to lobbyists, Senator Cantwell is continuing to reinforce her image as a reformer. Her February 4 exchange with “Turbo” Tim Geithner, during his appearance before the Senate Finance Committee, was an example of the type of challenge that other Democrats are afraid to publicly vocalize when addressing members of the administration. Cantwell emphasized that the President has the authority to act on his own (by issuing an Executive Order) to make $30 billion available to community banks, rather than waiting for Congress to pass legislation for such a rescue. Her home state’s Lake Stevens Journal discussed that moment:
Maria Cantwell continues to exhibit a (sadly) unique toughness in standing up to those forces bent on preserving the destructive status quo. As disgruntled supporters of Hillary Clinton wonder whether her intention to step down as Secretary of State in 2012 could signal another opportunity to elect America’s first female President — they would be well-advised to consider Senator Cantwell as their best hope for reaching that historic milestone.