A Tale of Two Stimuli
Sen. Tom Harkin (D-IA) had few good things to say about the emerging Obama economic stimulus plan this evening, but the Senate's Democratic chairman, Chuck Schumer (NY), followed Bing Crosby's advice and accentuated the positive.
"What people are debating is the balance" between the parts of the package already outlined by Obama, he said, pointing to widespread Senate support for adding more tax benefits for sustainable and alternative energy. "But I think the basic outline the president-elect put forward is meeting with favor."
Schumer said he plans to try to add a $4,000 tax credit for college tuition payments to the recovery plan, one of a flood of amendments expected to be unleashed upon the stimulus once it is fully drafted.
The Democratic leader, also a member of the finance committee that will get the first crack at changing the stimulus, seemed to anticipate that bum-rush to impose congressional will on the plan. "You'd have each individual say, 'I'd like to add this or that big idea,'" Schumer said of today's meeting -- but he was confident that the Presidents' Day deadline for passage would stay intact.
Minutes earlier, his finance committee colleague Sen. John Kerry (D-MA) expressed a different breed of certainty. "I'm very confident about some adjustments being made" to the plan, Kerry said before he ducked into a senators-only elevator and flew down to the basement.
Late Update: Senate Majority Leader Harry Reid (D-NV) addressed the TV cameras after the Summers meeting, and his assessment sounded somewhere in between Harkin's and Schumer's. "This is a work in progress, as it should be ... there's nothing that's written in stone," Reid said. "Barack Obama has never said he will give us this bill and that's what you take."
But should Obama have at least given details more quickly?
I think we are watching sausage being made right now. The Obama plan put forward with %40 of the package being tax cuts may be totally DIFFERENT once the stimulus package is created.
I agree with everybody that the package should be primarily spending to create or save jobs but the tax cuts are really popular with the public.
http://www.gallup.com/poll/113701/Majority-Americans-Favor-775-Billion-Economic-Stimulus.aspx
January 8, 2009 6:06 PM | Reply | Permalink
Maritza: Yes, it'll have even more tax cuts.
January 8, 2009 8:21 PM | Reply | Permalink
One gets the sense that at least some of the tax cuts in Obama's stimulus plan are going to be jettisoned. Since that's the part that the plan can afford to lose, and that some economists even argue should be done away with, I don't really have a problem with it. As long as the infrastructure money stays in, the tax cut portion can be sacrificed.
January 8, 2009 6:07 PM | Reply | Permalink
I hope you mean the business tax cuts should be jettisoned because he's not going back on the middle class tax cuts - he better not.
January 8, 2009 6:09 PM | Reply | Permalink
Well if we're going to keep only some of the tax cuts, I would strongly suggest they be the middle class tax cuts, which are better anyway because they're cuts to the payroll tax rather than just checks mailed out to citizens.
Quite frankly, I'd be happy with $775 billion of pure public works. We could use that money to rebuild our electric grid, for one, which is a necessary expense and is going to cost gobs of money.
January 8, 2009 6:12 PM | Reply | Permalink
I read Paul Krugman's blog the other day where he states that an all public works stimulus is not fast enough. He would like one, but it is not shovel ready and sees why Obama would propose these cuts in addition to public works. I don't believe for one second that the entire stimulus will cost less than $800 billion dollars, it will get higher and increase the percentage that goes to public works. Notice what Obama said on CNBC about the cost range and the legislative process? I think he knows who is dealing with on both sides of the fence.
January 8, 2009 6:37 PM | Reply | Permalink
I disagree. People hear "business tax cuts" and automatically think of megacorporations. As I look around I see an awful lot of smaller business going under and a lot more on the brink. That $3000 tax credit might be just enough to allow them to survive.
However, the devil is always in the details, and it does have to be targeted. Obviously, no tax incentive is going to get a company that can't sell its products to hire more workers to make more stuff it can't sell. But then, they're not going to get the credit. If the credit goes only to businesses that hire new workers, how is that a bad thing?
January 8, 2009 6:32 PM | Reply | Permalink
I hear you. I do believe that when people (well, the people here) hear tax cuts for businesses, they think GM or Citi , not a small business like my former employer. I do think small businesses deserve a break. I was just choosing between the choices the other commenter provided.
January 8, 2009 6:44 PM | Reply | Permalink
If any business (big or small) is going to hire a worker, you get him off unemployment and onto the taxPAYER rolls. The net gain is a lot more than $3000. If any business wants to hire workers right now, I'm more than happy to give him a $3000 credit.
January 8, 2009 6:52 PM | Reply | Permalink
Again, I hear you. I get it.
January 8, 2009 7:26 PM | Reply | Permalink
This matches Rasmussen's findings.
(Rasmussen found tax cuts more popular than infrastructure, Gallup finds opposite)
January 8, 2009 6:13 PM | Reply | Permalink
Infrastructure is never popular. It's quite boring to repair bridges or lay cable and people rarely see the benefits overtly. No one's going to say "I'm glad they made that sewer line bigger when that new house went in."
But when the unimproved line backs up, then they'll actually notice something. Then they can ask, "was that tax cut I got worth the the smell in the basement?"
January 8, 2009 7:30 PM | Reply | Permalink
Wow. Its pretty clear Obama will not be able to get Republicans and Democrats to both come on board.
January 8, 2009 6:15 PM | Reply | Permalink
Sounds like the Senate not Obama will have some explaining to do with the voters. But the Senators concerns are legit. I mean, Obama's priority should be to repeal Bush's tax cuts for the rich, first, before he propose additional tax cuts.
January 8, 2009 6:20 PM | Reply | Permalink
Disagree. No one, including hardcore lefties like Krugman, thinks it's a good idea to raise taxes on ANYBODY in a recession. And this is bordering on a depression. Repealing those tax cuts now would be stupid and just create a hassle.
Historians believe that the depression would have ended sooner if FDR had not tried to balance the budget.
January 8, 2009 6:35 PM | Reply | Permalink
I wouldn't be so sure. The deficit is currently over $1 trillion which is more than 7% of GDP. Adding a few hundred billion per year for this package will push the deficit well over 10% of GDP. At some point the deficit becomes so large that you have difficulty financing it and are forced to raise interest rates to attract capital. I don't pretend to know what that point is, but I fear it's possible to dig yourself a hole so deep you can't get out of it.
This is not to say I'm opposed to a stimulus package - I don't think there's a choice. It's just that I wouldn't be quite so sanguine about adding on more and more debt.
January 8, 2009 6:49 PM | Reply | Permalink
Only the most right-wing Republicans will get away with opposing Obama. The rest of 'em will get their asses handed to them from constituents if they don't engage in this work over the next three weeks.
The Big O is not even president yet and he is using his mandate to pressure the new Congress to get this work done. It's good that he didn't provide details. He's giving Congress enough room to work on this; get their finger prints all over it.
They'll be working hard behind the scenes to put together a package that moderate Republicans and Democrats can publicly support. This is going to work well.
January 8, 2009 6:26 PM | Reply | Permalink
Besides, he needs some vocal pressure from the left to give him an excuse not to compromise with the right.
January 8, 2009 6:28 PM | Reply | Permalink
"But should Obama have at least given details more quickly?"
What difference does it make today and why is this type of second guessing on the timing such a pet issue?
January 8, 2009 6:28 PM | Reply | Permalink
If I'm Democrats, I yank the business tax cuts (they aren't going to do anything to create new jobs) on the auspices of making the bill cheaper. I seem to recall Republicans balking at the price tag and since Obama said he'd only consider items that created or saved jobs, getting rid of this portion of the bill is a piece of cake. That same argument will forestall any efforts to add capital gains tax relief (or any other tax relief targeted at the wealthy) as well.
Nice when the POTUS outlines the criteria by which new measures will be added to the bill. Makes it real easy for the public to understand.
January 8, 2009 6:30 PM | Reply | Permalink
What's been absent from this debate are specifics. Obama DID NOT provide any details about his stimulus package this morning.
January 8, 2009 6:34 PM | Reply | Permalink
I think the specifics may have been addressed behind closed doors and the Senate Dems will hash it out and create a bill.
January 8, 2009 6:38 PM | Reply | Permalink
I'm pretty sure NO ONE would have paid attention if he just read proposed legislation today instead of giving the broad outlines of what he's looking to include in the bill. Speeches are not legislation.
January 8, 2009 6:47 PM | Reply | Permalink
His speech was not meant for policy wonks or the pundits. He was telling the American people that he's making moves and telling Congress that the bill needs to pass NOW, save the partisan bickering and bull shit bills for later.
January 8, 2009 6:50 PM | Reply | Permalink
I think the FINAL BILL will have tax cuts for the middle class (as part of Obama's campaign plan) but the business tax cuts will be REMOVED.
I am NOT worried about the final bill. Senate Dems will NOT put out a bill that they don't feel will actually stimulate the economy because their jobs are on the line.
January 8, 2009 6:34 PM | Reply | Permalink
$500/$1000 Tax cuts.
The Huffingtonpost is reporting there is growing opposition to Obama's pick for Surgeon General.
Rick Warren.
I'll be honest. Obama is not making a good impression. He's making careless mistakes that are avoidable.
January 8, 2009 6:52 PM | Reply | Permalink
The surgeon general is NO BIG DEAL.
January 8, 2009 6:56 PM | Reply | Permalink
Yes. Its not a big deal, however, there are far more qualified candidates for the job than Sanjay Gupta.
January 8, 2009 7:17 PM | Reply | Permalink
Oh yeah. Telegenic brain surgeons (of Indian/Pakistani descent) are loitering on the sidewalks all over the country.
The guy is perfect for the job.
January 8, 2009 7:57 PM | Reply | Permalink
Yes. I heard his approval rating is still around the high 70's. Terrible impression indeed.
January 8, 2009 7:02 PM | Reply | Permalink
>>I'll be honest. Obama is not making a good impression. He's making careless mistakes that are avoidable.>>
Just because you disagree with him doesn't mean it's a mistake.
Warren will give the invocation. Sanjay will be SG and Obama will get the bulk of his stimulus plan. Then full speed ahead to the next non-troversy.
January 8, 2009 7:03 PM | Reply | Permalink
There isnt "growing opposition" to O's pick to Surgeon General, there is one Congressman (who doesnt get to vote on confirmation) causing trouble.
January 8, 2009 6:53 PM | Reply | Permalink
Exactly. Conyers press release was also replete with errors, including misspelling Gupta's name and getting the name of Krugman's Nobel prize wrong!
Yeah, Obama really need to take marching orders from this guy.
January 8, 2009 7:20 PM | Reply | Permalink
FreeRider, you are correct. "Non-troversy" is excellent. And Conyers? Please. I swear the proclivity of Democrats to rip their own President like lions on a zebra carcass never ceases to amaze me. Then we get Josh and his minions today -- every single story is a rip on Obama of one sort or the next. IT'S JAN. 9 BY MY CALENDAR. Can we see what the man actually does when, you know, he is the President?
January 8, 2009 8:22 PM | Reply | Permalink
Has anyone asked Michael Moore? I think he should at least get the first SG interview.
January 9, 2009 1:24 AM | Reply | Permalink
But should Obama have at least given details more quickly?
Trick question?
Of course not. The longer for the prima donnas to take pot shots
As I said getting something passed quickly is at least as important as what is passed provided too that Willie Brown's Maxim is scrupulously adhered to
Without maxims there can be no politics
(without maxim there is no politics)
January 8, 2009 7:18 PM | Reply | Permalink
Not the college tuition tax credit! Ugh! Similar to cutting the gas tax, the college tuition tax credit just causes universities to jack up their prices. Increasing the maximum Pell Grant is so much more effective than the college tuition tax credit.
January 8, 2009 8:13 PM | Reply | Permalink
Am I (and, apparently Joe Klein, of all people) the only one who remembers that thesetax cuts everyone is acting all surprised and indignant about now are the exact same tax cuts that were in every version of his stump speech that he gave every day for about two years? Middle class tax cuts? Tax cuts for companies that keep jobs in America instead of for those that export them? Ringing any bells? Helo? Anybody?
January 8, 2009 11:23 PM | Reply | Permalink
Nope! I posted a comment asking the same question. I really believe that these people thought Obama was just talking smack.
January 9, 2009 1:24 AM | Reply | Permalink
The probability that you in fact are is rapidly approaching 1.
January 9, 2009 5:07 AM | Reply | Permalink
"I think we are watching sausage being made right now." --Maritza
I think you've got it.
January 9, 2009 12:17 AM | Reply | Permalink
Tax credits for hiring are obviously and mind-numbingly stupid. No business will hire a worker it can't profitably employ just because of a tax break; this is just a giveaway to business that were going to hire anyway.
January 9, 2009 8:32 AM | Reply | Permalink