Harkin Fears "Trickle-Down" Stimulus
Democratic senators are still emerging from their closed-door briefing with Obama economic adviser Larry Summers ... but a senior Democratic senator, Iowa progressive Tom Harkin, just gave me a dire buzzword: trickle-down.
"There's only one thing we've got to do in this stimulus, and that's create jobs," Harkin told me. "I'm a little concerned by the way Mr. Summers and others are going on this ... it still looks a little more to me like trickle-down."
Likening Barack Obama's economic recovery plan to the failed supply-side excesses of the Reagan and Bush years is a bit of a Cassandra moment. But Harkin didn't back down. "What I'm hearing from Mr. Summers is that they've got a different approach -- tax breaks, and this and that," he said. Harkin warned that, much like the outcome of George Bush's $600 stimulus package last year, recipients of quick tax cuts "are going to be salting it away, not spending it."
When I asked if he felt his concerns were heard during the meeting, he looked to the floor and slowly shook his head. It was almost forlorn.
Tom Harkin is one of the last true blue liberals. He was a great friend of Paul Wellstone. He'd don wonderful work for the disabled. I hear you Tom! It's hard to tell we elected a Democrat!
January 8, 2009 5:53 PM | Reply | Permalink
No, looking at the hundreds of billions in proposed infrastructure spending, it's pretty easy to tell we elected a Democrat. I disagree with the tax cut suggestions, but this kind of hyperbole is silly. If you want to see what Republicans would do in Obama's place, go look at what they're proposing.
January 8, 2009 6:03 PM | Reply | Permalink
That Faux Democrat had been shouting tax cuts for months prior to getting elected - did you vote for him? If so, why?
January 8, 2009 6:06 PM | Reply | Permalink
Sarah drove me over the edge. I have no other excuse. After his FISA vote, I knew what we were getting. But as long as we live in a one party state, what can you do?
January 8, 2009 6:11 PM | Reply | Permalink
Weren't there other candidates on the ballot in your state? What about a write-in? Genuine questions by the way.
January 8, 2009 6:14 PM | Reply | Permalink
I did want to write in Feingold but I decided not to make a big deal out of it. But all you have to do is look at the Republicans holding up the certification of Franken to know that they're not going to go along to get along anyway. We should be backing them into a corner not announcing what pushovers we're going to be.
January 8, 2009 6:48 PM | Reply | Permalink
>>I did want to write in Feingold but I decided not to make a big deal out of it.>>
So, in other words, you're all talk without an ounce of conviction, huh? You're vehemently opposed to Obama but didn't have the cajones to do a write-in ballot? What a joke!
The next time I see one of your posts raking Obama and others over the coals for caving or giving in, I'll remember who's talking.
January 8, 2009 6:55 PM | Reply | Permalink
write-in votes, like 'third party' votes, would do nothing. duverger's law is in effect so we must act accordingly. in a general election the winner will be a candidate from one of the two parties. therefore, voting against one of those two candidates or voting for one of those two candidates are the only effective uses of your vote in that election.
and voting against mccain/palin in no way limits anyone's ability to gripe about obama/biden.
January 9, 2009 7:12 AM | Reply | Permalink
BS. Bluebell is the biggest "purist" who constantly derides everyone else for lacking convictions or courage to follow the one true path. Yet, he completely caved and voted for someone he felt is not a "true democrat." What a hypocritical pussy.
January 9, 2009 8:13 AM | Reply | Permalink
Sarah drove you over the edge? Funny. I seem to recall that you say you stood in the cold to caucus for Obama in the primaries. Didn't know Sarah was anywhere around then . . .
January 8, 2009 6:37 PM | Reply | Permalink
Just because you see the world as "me then everyone else" doesn't mean we live in a one-party state.
January 8, 2009 6:37 PM | Reply | Permalink
I sure am glad someone gets to define who is and who isn't a Democrat! And, hell, it may as well be you, eh? ....
January 8, 2009 6:46 PM | Reply | Permalink
excuse me! When did I define what a dem is or isn't? Bluebell said it was hard to believe we elected a dem - I took that to mean he/she didn't think Obama wasn't really one - hence my term Faux Democrat. Don't start with me!
January 8, 2009 6:55 PM | Reply | Permalink
I believe it was you who called him a "Faux Democrat". I am not too happy with how most any of the nationally elected Dems are behaving, but apart from the most blue of the blue dogs (and Lieberman who is just a twisted dog and not even a DINO), I hesitate to call any of them "Faux Dems".
January 8, 2009 7:46 PM | Reply | Permalink
Listen or Read Slowly: It was a response to bluebell's disbelief that Obama is really a democrat. I am not saying that Obama is a Faux Democrat I am saying that Bluebell thought so. O Kay? Bye Bye! And if you have read my comments before you would see that I am 100% behind Obama and would never call him a fake anything.
January 9, 2009 1:34 AM | Reply | Permalink
Generally, when people use a term in the way that you say you are using "Faux Dem" in your first post, they put it in scare quotes or some such to indicate that they are not using it in the normal usage; e.g., there is a difference between "anew08 is a Faux Democrat" and "anew08 is a 'Faux Democrat'", where the second usage indicates something like "a so-called Faux Democrat".
Sorry, but I have this thing about writing being reasonably clear in its own right without someone having to go into another's history to figure out what s/he means. With that, I am done.
January 9, 2009 1:05 PM | Reply | Permalink
Harkin ditched his good friend Wellstone in 1996 when they were both up for re-election. Wellstone was the ONLY senator running for re-election who had the stones to vote against that Welfare bill, saying "if the people Minnesota want a senator who will vote for that, they can elect one because I won't."
Harkin folded like a Wal-Mart pup tent. Very disappointing.
January 8, 2009 6:46 PM | Reply | Permalink
You know, it's great to see Dems speaking up. I'm not someone who thinks they should fall in line just because we've finally elected a Democratic President.
But where the heck have they been for the last 8 years??
January 8, 2009 5:57 PM | Reply | Permalink
I'm all for speaking up, but I'm wondering again why they've gotten so good at standing up to their own guy and while remaining utterly inept at standing up to the other side.
Obama's been President for -11 days, but the liberal blogosphere has already proclaimed his first term a disappointment (or, in some cases, a disaster). What a surprise. On the other hand, if they're as accurate with their predictions as they were about the presidential campaign, we should be in good shape.
In the meantime, I'm going to wait a little longer before I throw myself off a bridge because I can't stand the horror of targeted tax cuts or Surgeon General Sanjay Gupta. It's not that I won't remain vigilant - far from it. It's just that the guy has to be President before we can start whining about his Presidency.
January 8, 2009 6:08 PM | Reply | Permalink
Exactly. It's possible, I suppose, that Dems were speaking up before, but the MSM didn't deem it newsworthy to report until they spoke up against a fellow Dem.
But boy, it sure seems like the Dems have spent the last 8 years rolling over and asking to have their bellies scratched.
January 8, 2009 6:44 PM | Reply | Permalink
PJM, take that common sense and get the hell out of here. Obama sucks, he's hopeless; we're doomed. Anyone can see that. It's already Jan. 9, 2009. We're sick of waiting for results ...
January 8, 2009 8:08 PM | Reply | Permalink
This misses the definition of trickle down economics. Trickle down economics is the idea that if the rich have more money, they will create jobs and everyone else will be better off.
The idea that if the middle class has more money, they will spend it as consumers and the economy will expand is NOT trickle down economics.
January 8, 2009 5:58 PM | Reply | Permalink
That's what I thought. It boggles me why people keep saying that.
January 8, 2009 6:04 PM | Reply | Permalink
Well said.
Obama campaigned on middle class tax cuts and McCain and Palin accused him of lying since Democrats "Always Raise Taxes". Now it sounds like Harkin is disappointed he isn't doing what the Republicans said he would. Rather, he is actually doing what he campaigned on. Maybe Tom needs to look at who won his state in the election and follow what the majority of his constituency obviously supports.
January 8, 2009 6:09 PM | Reply | Permalink
"Maybe Tom needs to look at who won his state in the election and follow what the majority of his constituency obviously supports."
Well, Harkin won re-election in November with 63% of the vote. Obama won 54% of the vote in Iowa. I'd say Iowan's support for Harkin is stronger than their support for Obama.
While this quote isn't clear, I expect the part of the stimulus package to which Harkin was referring was the one giving companies up to $100 billion in tax cuts.
Criticisms from the left are actually helpful to Obama. It makes it clear he's not the wacky socialist the R's like to portray him as being.
January 9, 2009 11:33 AM | Reply | Permalink
I don't know if you realize this, but if you lose your job, tax breaks won't do you much good. Giving every one in the middle class (who still has a job) an extra $50 to spend a month might help the economy in the medium term, but it does nothing to help people who have lost their jobs right away.
And infrastructure projects are nice but it doesn't help with all the white collar people who have been laid off recently.
I just don't understand how people can engage in all this screwing around without making a serious effort to actually help people who have already lost jobs.
January 8, 2009 7:01 PM | Reply | Permalink
Infrastructure jobs don't just employ blue collar workers. These jobs don't begin and end with the guy running the cement truck.
January 8, 2009 7:08 PM | Reply | Permalink
No kidding.
As an engineer (still employed for now), I'm wondering how they are even going to find enough qualified engineers, draftmen, surveyors, IT folks, etc... to design, implement and support these infrastructure projects.
January 8, 2009 7:12 PM | Reply | Permalink
The theory is that the rich get money and it trickles down from them. The reality is that the rich get richer and the only trickling is when they piss on everyone below them.
January 8, 2009 11:03 PM | Reply | Permalink
That's why it's actually called "tinkle-down economics". ;-)
January 8, 2009 11:52 PM | Reply | Permalink
You are correct, as long as you're talking about the $150B or so he's proposing in middle-class (and lower) tax cuts. But he's also proposing a roughly equal amount in business tax cuts, which can be much more fairly called "trickle-down."
I'm all for the middle class cuts. After all, that's what he campaigned for. But the business tax cuts are not only contrary to the campaign message, according to nearly all the economists I've read they won't do much to help the economy. In particular this idea of giving businesses refunds for past-year taxes paid to offset current-year losses seems like a clear case of a non-incentive transfer...any money the government gives up for that will be completely wasted.
I think they should stick with the $150B in middle-class cuts, axe the business cuts, and provide jobs with the rest of the stimulus. Also, fixing/building infrastructure should just be the start; we need to aggressively promote new industry.
And while I'm at it, unfortunately the price tag needs to be much higher...most economists peg the effect of this size stimulus at around a 2% reduction in unemployment, which by the end of this year won't even get us back to where we are now. Swapping the business cuts for another $150B in job-creation would help, but probably not by a tremendous amount. If we wanted to target say 6% unemployment (still not full, but probably good enough to avoid the danger of a 2010 right-wing chorus of "See? Spending doesn't work!" which is very real with a stimulus the size Obama's proposing) we'd need a total stimulus (including 150B in tax cuts) of maybe $1.2T.
That's an awfully big number, I know. We could probably pay for some of it by repealing the Bush tax cuts, which contrary to the squeals from the right probably won't actually further damage the economy. We could also reduce defense spending, although that does cost jobs so we'd need to replace it with even more stimulus. However, that's not zero-sum...the defense spending doesn't produce future economic benefits, whereas the stimulus jobs we'd replace it with would (or at least they better), so ultimately this trade would allow us to pay off the stimulus debt sooner.
In any case, I agree with the general assessment around here that Obama is not going nearly far enough to the left on this bill, at this point. I'm not ready to count him out...and certainly he's doing better than a Republican would, but it makes me nervous.
January 9, 2009 2:19 PM | Reply | Permalink
Dems wont fall in line, so media will go with story line that Dems are infighting and Obama is struggling. What will happen? Democratic congressmen and congresswomen will be hammered in 2010. Great plan. Keep it up.
January 8, 2009 6:02 PM | Reply | Permalink
Media obsession with "infighting." Hmm. Reminds me of the campaign of someone I caucused for.
I thought the whole point of democracy was everyone having a voice, taking the different voices into account, and reaching a consensus. It's not one guy at the top saying this is how it's going to be and everyone falling in line to kiss his ass. That's what the Repos did with their guy, which is what got us into this mess in the first place.
January 8, 2009 11:09 PM | Reply | Permalink
Well put. I'm actually very pleased that the congressional dems are balking here. Maybe the best part is that Obama doesn't seem displeased either. In fact he basically said he expects the plan to grow in congress. Maybe that's why he's starting out with this proposal the way it is.
Hopefully the business cuts are just a PR move, and once the Republicans say they're still walking out Obama can say "OK, we tried to do this bipartisan with 80 votes, but they're stonewalling, so now we're going to do it our way with 59, and if you want to filibuster then you'd better have your diapers on" and pass a $1.3T stimulus with only the tax cuts he promised in the campaign, plus a repeal of Bush's cuts, and with EFCA tacked on as an amendment just for good measure. OK, maybe that last bit is over the top...but it's about time we start walking on these clowns like they walked on us. Heck, if it were Bush in this position he'd just do it with an executive order!
January 9, 2009 2:30 PM | Reply | Permalink
If Congress doesn't shut up and start passing a stimulus bill, then Obama will simply use his e-mail list. I'm quite willing to tongue-lash the Missouri contingents in WDC to get cracking.
January 8, 2009 6:05 PM | Reply | Permalink
And what, do you suppose, the mighty Obama will do with his vaunted e-mail list? Enlist people to support tax cuts? Enlist people to support a stimulus bill that doesn't do much stimulating just to get the tepid support of a handful of Republican Senators? What?
January 9, 2009 1:23 AM | Reply | Permalink
"This misses the definition of trickle down economics. Trickle down economics is the idea that if the rich have more money, they will create jobs and everyone else will be better off. "
I agree. The tax cuts proposed in the stimulus are geared at the middle class and small businesses. A far cry from "trickle down" theory. In fact, the republicans are calling the tax cuts welfare.
January 8, 2009 6:05 PM | Reply | Permalink
I heard Larry Kudlow praising Larry Summers for his economic 'centrism' on CNBC last night. Yikes. Summers is way too DLC-ish for my taste.
January 8, 2009 6:05 PM | Reply | Permalink
Once tax cuts are in place they are difficult to reverse. Obama backed off on removing the Paris Hilton-Bush Family tax cuts for the super-millionaires enacted two years ago by GWB for this reason. So we are passing more tax cuts, further swelling the enormous deficit, and pretending it doesn't matter. It does. Obama is right on with spending on repairing infrastructure, the energy grid and the like. Stick with that and make corporations, hedge funds and the top 1% pay their fair share. That's the winning combination. No appeasement, he can't satisfy everyone and by trying to do so he appears weak.
January 8, 2009 6:09 PM | Reply | Permalink
Did no one listen to the campaign when Obama promised middle class tax cuts? He even put a cute little calculator on his website to prove that if you made less that $250,000 you'd not have taxes increads and for 90% of Americans would see a tax break.
Did I dream that?
January 8, 2009 6:12 PM | Reply | Permalink
I don't understand this:
Indeed. If one backs away from reversing tax cuts then tax cuts will, by definition, not be reversible.
I'm not disagreeing with you--I just don't understand the point you were trying to make?
January 8, 2009 6:13 PM | Reply | Permalink
CT Voter:
Tax cuts are difficult to repeal because of this scenario. GWB gives billions in tax breaks to the super-rich (like his family) and a few pennies to you and me. Then two years later, Obama tries to repeal the cuts to the super-rich. Republicans go on the offensive and yell, "He's raising taxes!" The MSM repeats this garbage verbatim, and the non-education types in the South feel that Obama is raising their taxes. So Obama might feel he's wasting energy on this and decides, "screw it, I'll just leave it alone." That's how the Right Wing bullies the Democrats and get away with it.
January 8, 2009 6:20 PM | Reply | Permalink
Got it.
January 8, 2009 6:23 PM | Reply | Permalink
I dunno. I just had to send a comment to traiterjoe. Now you are the fourth pic that I will burst out laughing at. The pig with shoes and Teddy R are right up there with you.
At any rate I agree with your comment.
January 8, 2009 11:28 PM | Reply | Permalink
What is this: Congressional Democrats attack Obama day?
January 8, 2009 6:09 PM | Reply | Permalink
Rest assure the idiots in the MSM will drum up a fake outrage, however, Obama's democrats colleagues concerns are legitimate.
$500/$1000 tax cuts will do nothing to stimulate the economy.
500/1000 amounts to roughly $ 20-50 extra on a paycheck. Obama should repeal Bush's disastrous tax cuts then propose tax cut at a later date.
January 8, 2009 6:11 PM | Reply | Permalink
Which sounds like not very much. However, 50 extra in a paycheck would make a difference in my spending habits--. I'm not sure that this amount is truly as puny as many appear to think that it is.
January 8, 2009 6:15 PM | Reply | Permalink
CT Voter,
I'm from suburban NYC and i assume your from Connecticut. We both know $50 means nothing. Fifty dollars is gone in a day for me.
January 8, 2009 6:24 PM | Reply | Permalink
I am from CT, but I must respectfully disagree. $50 would mean something to me--I don't live in the rich portions of CT--but I can see your point about NYC.
I actually think it's more likely that people would spend that extra 25 - 50 dollars than they would spend a relatively big chunk of change (those wonderful $600 rebates, for instance) because the bigger chunk would be used to pay down debt.
$50? Not so much.
January 8, 2009 6:30 PM | Reply | Permalink
I agree. My $300 stimulus went straight to my savings account. An extra $50 on a paycheck would go to buying some of the luxuries I gave up because of inflation. It'll buy you a very nice dinner for two and a movie in Iowa.
January 8, 2009 11:27 PM | Reply | Permalink
Well, you guys just aren't patriotic! I burned my stimulus check immediately on a fancy iphone, following direct orders from Bush! And the Steve.
Wait...I did everything right...isn't the economy supposed to be better now?
January 9, 2009 2:37 PM | Reply | Permalink
I'm glad you have that luxury to consider $50-80/month chump change. For some people this might mean the ability to pay for a prescription, or a new pair of shoes, enough to now qualify for a car payment.
January 8, 2009 6:34 PM | Reply | Permalink
But the tax cuts are not the only part of the plan. Obama is not relying on tax cuts ALONE to get the economy going. And please be reminded that the stimulus won't address all that is wrong with the economy. There will be other proposals aimed at easing the burden on Americans over the long haul.
January 8, 2009 6:23 PM | Reply | Permalink
$20.00 sounds small - but that's a one week unlimited metrocard pass - at least most of it (in NYC). And that $50.00 - Gas money or groceries or that gas bill that you're short on. Again, small amounts, but don't underestimate how far a broke person can stretch $20-$50 a week.
January 8, 2009 7:02 PM | Reply | Permalink
I suspect you are referring to the tax cuts for the rich, and not the tax cuts impacting the middle class. Right?
January 8, 2009 6:14 PM | Reply | Permalink
Yes, yes...lol
January 8, 2009 6:16 PM | Reply | Permalink
If I may expand on my earlier post: what Obama is proposing via his middle class tax cuts is actually more like trickle up economics than tricle down economics. Make sure the middle class base of America is strong, and they will spend more. Companies will have to compete for that middle class spending money and the economy will expand. As goes the middle class so goes the economy and the nation.
For Harkin to call this trickle down economics is either careless or ignorant.
January 8, 2009 6:22 PM | Reply | Permalink
I am livid about these Tax Cuts...
Anyway, can anyone point me to some good research on the effects of Sen. Harkin's proposed Bill S. 3714, The Derivatives Trading Integrity Act of 2008 (Proposed on November 20, 2008)?
I'd like to read as much as possible about it. I assume some journals and DC insiders have been kicking around whether this is effective legislation or not. (I've tried "the google", but I'm not getting to the really knowledgable discussions on the matter. The "nut meat", as Colbert would say...)
Any tips/links would be greatly appreciated.
January 8, 2009 6:28 PM | Reply | Permalink
Middle class tax cuts are extremely popular with the public right now.
I say get rid of the business tax cuts cuz they won't work and keep the middle tax cuts for that was Obama's campaign promise.
I am sure a compromise will be worked out with the Obama team and the Congress.
http://www.gallup.com/poll/113701/Majority-Americans-Favor-775-Billion-Economic-Stimulus.aspx
January 8, 2009 6:40 PM | Reply | Permalink
Everyone wants a tax cut. Always. How is that news or a good argument in favor of this pathetic Dem tax-cut concession from hell?
Also, a majority of Americans favored TARP. How'd that work out? $hitty, that's how...
I'm livid about corporate tax cuts and other "trickle down" tricks (of course I want everyone making under $100,000 to get a tax break... Relief is needed.). But how can Obama work on a "compromise" if he's already given the GOP even more tax cuts after 8 years of giveaways?
In sum:
1. Corp. Tax Cuts are not a stimulus. They're incentives that have to be found through legal research and accounting methods. Who gets stimulated with this corp tax cut? Wall St, Law Firms, and Accounting Firms.
2. Individual tax cuts aren't a stimulus either anymore. Know why? B/c Big Finance has everyone in debt already, so any $1000 tax break in everyone's pocket will go right towards "paying down debt".
Whoopie...
January 8, 2009 7:03 PM | Reply | Permalink
Don't forget to point one important fact..... The Stimulus Is NOT Made Up Entirely of Tax Cuts. And one more....All Businesses Are NOT like the Corporations That Caused Problems For The Economy. We have a lot of small businesses that need help.
January 8, 2009 7:13 PM | Reply | Permalink
I don't forget that b/c I actually do the books for (and have a personal stake in) a small family business with gross revenues under $200,000/yr, and I'm not seeing relief.
If anyone has any tips where a Sole Proprietor with no health insurance, and zero emergency cushion, zero 401k, and is about to lose his house in April, please let me know. I'm all ears.
In the meantime, let's not be wussy Democrats anymore. There's not a reason in the world we shouldn't have brought the hammer down on Mitch McConnell on day one. And let HIM compromise with US.
January 8, 2009 7:36 PM | Reply | Permalink
Tom Harkin and Kent Conrad are right. To the extent that a portion of these tax cuts go to people who won't spend them, they're just an irresponsible addition to our national debt.
Keep in mind that Obama's proposed $500 payroll tax cuts apply to all workers...whether earning $10,000 year or $10 million per year. Such a tax cut for the former will benefit all of us because that money is likely to go right back into the economy. Such a tax cut for the latter is like throwing money in the sewer. We'll never see it again.
The same applies to the supply-side/trickle-down notion of giving tax cuts to employers to create jobs. Since employers only pay taxes when they make a profit (and usually not even then), employers don't actually need tax cuts; they need customers. Again, like throwing money in the sewer.
We need to extend unemployment benefits, extend eligibility for food stamps and other low-income assistance programs, expand the Earned Income Tax Credit, and limit any new tax cuts to those at and near the bottom of the income scale who are more likely to spend the gain, thereby growing the economy and helping us all.
January 8, 2009 6:58 PM | Reply | Permalink
But if you are at the bottom of the income scale wouldn't you spend that money on bills, bills, bills or save it? I am and I would and I have. Wouldn't the middle class (with more income and savings - not much- but more) be more likely to spend on wants/so-called luxury items? Please fill me in because I must be missing something.
January 8, 2009 7:25 PM | Reply | Permalink
I believe this is incorrect, there will be a ceiling.
January 8, 2009 7:56 PM | Reply | Permalink
Well, you're both half right. Yes, there's a ceiling...$102,000 this year IIRC. But up to that ceiling, everyone gets the payroll tax cut. So, someone who makes $10M this year will pay payroll taxes on the first $102k of that...and if the rate is cut he will pay less of them.
(Just an aside: the fact that there's a ceiling on payroll taxes makes the tax regressive, and therefore evil. It should either be abolished or reformed into a progressive tax.)
January 9, 2009 2:45 PM | Reply | Permalink
Obama will propose loose plans. It's up to you to move Congress to tighten them up "your way".
Harkin needs your support to do the right thing!
January 8, 2009 7:41 PM | Reply | Permalink
Tax cuts for the rich or for the middle class aren't going to do much to stimulate the economy at this point because with the economy in the shape it's in, most of these people are going to save it or pay off their credit cards. A tax credit for the poor might help stipulate the economy in the short run because they will spend it. What concerns me about Obama's plan is that very little of these tax cuts will go to the poor, while at the same time, he's talking about cutting Social Security. That IS trickle-down economics.
I don't think Obama understands that the real underlying problem with the economy is in the inequality of income. That is the source of stock market and real estate bubbles, and people who can't buy a house or pay their mortgage. He seems to agree with McCain, that "the underlying fundamentals of the economy are sound." That all he has to do is put more money in the hands of the relatively affluent with income tax cuts, and the economy will right itself. But that's how we got where we are. It's more of the same.
January 8, 2009 7:43 PM | Reply | Permalink
/s/ Co-Signed & Seconded
This is "MORE OF THE SAME" to quote of aft repeated phrase over the last 11 months.
What's Krugman saying about this? He must have had a coronary. We can't ride bubbles anymore. The Debt Economy must be shaken down, stomped on, and rebuilt from scratch without this obsession with debting.
To paraphrase Berkeley's Brad DeLong: "Raze the Debt Economy to the ground. Plough it under. Scatter salt in the furrows so it can never grow back."
January 8, 2009 7:49 PM | Reply | Permalink
You have repeatedly stated this over and over in your posts today and I have yet to see you cite any proof to back it up. I certainly hope you have more to offer than a misleading NY Times headline:
http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=01&year=2009&base_name=does_obama_want_to_cut_social
January 8, 2009 8:47 PM | Reply | Permalink
The whole nature of a credit crisis is that liquidity is frozen. It doesn't trickle anywhere. If you cut taxes in this environment, people save the money. Smaller businesses collapse, because, (just as in Paulson's idiotic bailout) big businesses have no incentive to spend or loan. On the other hand, if you create jobs or even give away foodstamps, the people with those jobs or stamps spend every cent they've got just to keep going. It gets pumped back in the market, and gets liquidity moving.
This should make sense to Republicans. It's the same argument they use about bureaucracy. A lot of money in the hands of the rich few just doesn't get the economy working as efficiently as minimum wage to the multitudes, plus the free market, plus time. (And as a bonus, you get infrastructure for the future.)
Tax cuts to big business are just going to end up in MMFs and maybe a merger or two.
January 8, 2009 7:50 PM | Reply | Permalink
Way to explain it AKDUDE. I recently read that for every $1.00 spent in foodstamps, creates $1.34 (+/-) in real economic activity (b/c of the principal of money creation).
Tax cuts to help Ed McMahon stay in his Beverly Hills home do not help in this regard...
January 8, 2009 8:10 PM | Reply | Permalink
The mention of food stamps actually brings up an interesting possibility; I wonder if it would be practical at all to issue stimulus "coupons" rather than checks, which have a cash value, but must be spent somewhere in order to be cashed in from the government?
January 9, 2009 2:54 PM | Reply | Permalink
Of course liberal dems are gonna raise hell. During the negotiations with republicans the admin and congressional leaders have got to be able to credibly argue that they can go so far and no farther or they start losing members of their own caucus. The realities of a deteriorating economy make mid Feb a pretty hard deadline and any appearances of negotiating in bad faith will be deadly. Obama seems to be setting parameters and then letting congressional dems & republicans duke it out while he referees. Course that's bullshit but I think the public will buy it.
January 8, 2009 8:23 PM | Reply | Permalink
Wow, this is the first time I actually realized that the stimulus might not work as well as I thought it would. To say that is like trickle-down....I mean you REALLY have to put a statement like that into perspective. That is LITERALLY saying that this stimulus is on a path that is proven to be a failure.
January 8, 2009 8:25 PM | Reply | Permalink
yes, this is supply side. we don't need tax credits for jobs "saved." we need actual government spending on energy, transit, housing, highways. that's it. supply siders have had it for the last thirty years. change we can believe in means actual change we can believe in. Period.
January 8, 2009 8:32 PM | Reply | Permalink
Take two shots of ethanol and call us in the morning
January 8, 2009 8:37 PM | Reply | Permalink
I think the Obama team got the message. Apparently Larry Summers and the other Obama team economists will meet again with the Senate Democrats on Sunday (wow over the weekend) to have a Q&A over it. Also, apparently from the meeding Larry Summers said he heard everybody's concern loud and clear.
I expect that the final package will be closer to what the Dem governors proposed which is about 1 trillion with only $150 billion towards tax cuts to the middle class and the rest spending and money to the states for medicare, etc.
Again this is like watching sausage being made.
January 8, 2009 8:41 PM | Reply | Permalink
That's basically how it should be.150 to 200 for tax cuts and incentives for small businesses to keep jobs. The MAJOR chunk should be towards infrastructure, energy, medicare et. all. Eh, what do I know though.
January 8, 2009 9:07 PM | Reply | Permalink
And where did u hear that news?
January 8, 2009 9:15 PM | Reply | Permalink
NYT
http://www.nytimes.com/2009/01/09/us/politics/09obama.html?hp
"Senator Kent Conrad, Democrat of North Dakota and chairman of the Budget Committee, said lawmakers and the incoming administration had differences over how to focus the huge federal spending in a recovery bill. “Investment, investment, investment has got to be the central focus: energy, roads, bridges, waterways, housing,” he said. “Job creation is Job One.”
Mr. Conrad, who described the meeting as extremely positive, said Mr. Summers ended it by telling the senators, “Message received, loud and clear.” "
January 8, 2009 10:57 PM | Reply | Permalink
The important point is this: Obama is important. For sure, he is important. But, he is a critically important player in the big scheme of things. I hardly think he is like Bush or like most Republicans. So, it seems to me that we can address his tax cut proposals in separate legislation. The stimulus is just that: an economic stimulus designed to create jobs. And, we know that government expenditures are likely to create jobs. So, by having the government spend money on things like roads, bridges, energy, transit, housing -- these types of domestic programs -- we're likely to create jobs.
By giving people $500 or giving businesses a few thousand, we're likely to see people pocket the money (especially as they see their neighbors or colleagues lose their jobs).
January 8, 2009 10:16 PM | Reply | Permalink
Good for Sen. Harkin. Obama is misguided to think that he needs to propose trickle down stimulus to pass a bill. This looks like a concession to Republicans in an endeavor to get 80 voter for his stimulus bill.
January 9, 2009 1:18 AM | Reply | Permalink
You got Larry Summers pushing the Old Chicago school economics. Obama ignores the warnings about listening to this man. Tax cuts do not help those making too little to pay payroll and income taxes. Certainly doesn't help them pay their property and sales tax.
Penalize those outsourcing jobs and bring back tariffs for goods our companies are producing outside the country and then importing back in to sell. The sooner Obama rolls back the Reagan and Bush tax cuts on the very wealthy the sooner we have money to create jobs and support social services and national healthcare for the millions of "not wealthy" people who are and will be suffering most from this republican great depression. Freeze the holdings and salaries of those financial institutions and their CEOs who brought us this disaster.
WHY ARE WE EVEN TALKING THIS SHIT WHEN REID IS SUPPORTING ISRAEL'S TERRORISM TRYING TO MAKE IT SEEM LIKE WE ALL DO. ACTING IN SECRET THEY ARE NOT ALLOWING ANYONE TO SEE ALL THE CHILDREN AND WOMEN THEY HAVE SLAUGHTERED. AMERICA HAS JOINED WITH THE TERRORIST STATE OF ISRAEL IN KILLING THE RESIDENTS OF THEIR PRISON CAMP. WTF JOSH. WHERE IS YOUR SON TONIGHT? BARLEY A MENTION WHILE HIS FUTURE SLAUGHTER IS BEING JUSTIFIED RIGHT NOW BY ISRAEL'S ACTIONS. HAVE THEY BEGUN BURNING THE CHILDREN'S BODIES YET. GIVEN HALF A CHANCE, THEY ARE ACTING JUST LIKE THE GERMAN'S IN THEIR TREATMENT OF WHAT THEY THINK ARE THE INFERIOR RACES. WHERE IS THE "REID" SUMMARY DEMANDING HE STFU AND HIS PATHETIC HISTORY OF COWARDLY AND IGNORANT LEADERSHIP. HE REPRESENTS ONLY SCUM LIKE HIS PETTY SELF. NAME ONE THING REID HAS DONE OR EVEN SAID THAT WAS FOR THE GOOD OF THE PEOPLE THAT HE DIDN'T COWER AWAY FROM WHEN CHALLENGED. I'M STARTING TO SENSE TPM FLUFF AND "OH MY" JOURNALISM. BUT WHO LISTENS EVEN WHEN YOU SCREAM...NOW back to Coleman coverage...
January 9, 2009 2:49 AM | Reply | Permalink
Did any of you actually, you know, read the proposal?
January 9, 2009 5:00 AM | Reply | Permalink
When I asked if he felt his concerns were heard during the meeting, he looked to the floor and slowly shook his head. It was almost forlorn.
Sounds like the Larry Summers touch.
I wish Obama would stop surrendering to Republicans!
January 9, 2009 8:38 AM | Reply | Permalink
I do believe Harkin has finally met The Devil.
That forlorn look is the one we all wear these days, as we watch the book-cookers who mismanaged us into this mess cover their own arses first and stick the middle class and the poor with the tab.
They've spent the past 40 years, since Watergate, buying up our media, and have ALWAYS owned our candidates (since the very birth of political influence, I would guess), so they could perform their economic double-twisting somersaults.
Looks great on paper, too bad the water is gone in their pool.
They are about to hit bottom, real hard.
January 9, 2009 10:44 AM | Reply | Permalink