Packaging a Stimulus

The Peanut Gallery is buried under 8 inches of snow and ice this morning so it is a perfect time to do some posting. The Courier-Journal reported earlier this week that the Kentucky unemployment rate is at a 20 year high. Indeed, there the rate stands at 7.8%. One can debate the possibility of ever achieving full employment, but these numbers speak loudly and clearly that we have a job problem in Kentucky. Without explaining the deeper merits of economics (mostly because I am a novice at economics) more people unemployed means less money that we as a general public have to spend on products. Smaller spending on products means that many companies will cut jobs to meet the lower demand and lower profit margins. Then we have more jobless Americans starting the cycle over again. No amount of tax cuts will increase spending if the person who gets the cut has no job. A tax cut in income tax will not increase jobs and even a tax cut on small business will not improve demand, which is what drives production. Simply put: tax cuts put money in pockets in the short run but do not, in the long or short run, create jobs.
Enter the GOP. They are claiming that demand side economics does not work. Although there is a preponderance of evidence that it does (see the New Deal). They want less spending in the stimulus on infrastructure. They want less government spending, period. They do want tax cuts for Americans of most all tax brackets. I understand the principle. The Republican Party has long ties to Federalists, which want to limit the scope and spending of the Federal Government. I am sympathetic to this way of thinking. The problem is, Republicans on the state level want to do the same to the state budget. The slash and burn principle the Republicans of our era seem to love won’t provide essential services. I am completely fine with states individually providing the services in competition with one another. We can reduce the Federal government if states will do so. The problem is Republicans in Kentucky want to cut our budget as well, thereby reducing government on both the state and national level. This is not currently possible nor is it logical.
What is really puzzling is that Mitch McConnell can stand in front of a camera and advocate for a stimulus package he knows won’t work. It won’t employ more Kentuckians. The evidence is ample. Still, he wants to mainly cut taxes and reduce spending. That kind of rhetoric earns you point with some Americans, but it is a dereliction of duty as a Senator for people who are out of work. What Mitch ought to do is cut the rhetoric and pass this stimulus package. Give it a chance to work so that all Kentuckians might be able to work. Anything less is failure and obstruction for ideals that aren’t practical at this moment in history.
Tomorrow I will be blogging about Right to Work laws and Labor unions.

Obama pulls a Jeb Bartlett

I am referencing here the real life President doing today what President Jeb Bartlett did on West Wing.  President Obama went to the Hill today to attempt to attract more Republicans to his stimulus package that will soon come up for a vote.  Several political bloggers and television commentators have asked what Obama has to gain from this move.  Many believe that he has the votes to pass the package today.  That may be true in the House, but Obama does need the Blue Dog Dems in order to pass his stimulus bill.  The Senate is tight, but the Dems have a majority there and would probably pick up a few Republicans.  Basically, I think Obama has the votes.  So why is he meeting with the Republicans and giving them an opportunity to paint the Congressional Dems as partisan and bitter?

I assume that Obama is not a fool.  He has long stated that he wants to cut the partisan rancor in Congress.  He was clear today that he knows there will be a time for partisan politics according to emails from inside the meeting, and he joked about the criticism coming on Fox News.  It is clear that Obama knows there is going to be a fight.  It is clear he will win.  The question for OBama is, how much will I listen to the Republicans?  

This meeting on the Hill and the courting of Republicans is the keeping of a campaign promise to be more bipartisan.  Make no mistake, this spirit of listening and bipartisan friendliness will not stop Obama and the Dems from passing this package as is.  Obama will turn around and say, "I listened, I offered tax cuts and the Republicans wouldn't budge.  I care more about the people of the United States, than I do about being friendly.  This stimulus is the right thing to do, and we are going to do it."  

The real question here is what do the Republicans hope to gain from this?  So few of them are fiscal conservatives.  They give money away, Bush style, every year.  They are great tax-cut and spend conservatives.  Our deficit ballooned under a Republican President, not under Clinton.  When it didn't balloon it was due to a bipartisan aim and balancing the budget.  The best strategy for the Republicans is to go along with this, maximize the tax cut, and claim some responsibility for the good the stimulus does.  That is a gamble that will help restore public confidence in the party of McCain and Bush.  Of course, they are too "principled" for that kind of thing.  Funny, they weren't so principled when they were voting to send money to Iraq.  There are no more cowboys in the Republican party, save Tom Coburn.  They ought to give it a rest.

Blog Exchange

My brother Zac posts over at Those Crazy Liberals and Conservatives.  Starting in the next few days he and I will be having a blog post conversation.  He and I will cross post in response to one another.  Although we are not total ideological opposites, our conversation should result in some good growth and sharper thinking.  Stay tuned.

Aversion to Competition?

Yesterday, Oklahoma Senator James Inhofe said that Obama's decision to allow states to 14 states to regulate their emissions standards with more stringent regulations than the federal government was "political thuggery".  He argued that this move would hurt the automobile industry and require more bailout money.  There are at least a couple of problems with his statement.

The first being that the auto industry will be on the Hill in March or April asking for more money.  Once again, they will hold the proverbial gun of thousands of workers without jobs to the Congressional head.  The forthcoming bailout requests will have nothing to do with future state based regulations which will not come into effect for at least a year and would, as many of these regulations are, be phased in.  While I am not aware of the severity of the regulations, the time frame for their overall effect on the auto industry is up for debate.

Second, there is no question that reducing emissions is a good move for humanity and our environment.  There is no debate that in major metro areas, like Louisville where I live, emissions from cars have caused severe respiratory stress for adults and children.  Additionally, climate change is happening and it is being contributed to be the release of carbon through the burning of fossil fuels.  I am certainly not an advocate for ending all fossil fuel use as of this year.  That is a silly proposition considering most of our energy is produced using these fuels and we need this energy to survive.  However, taking a long view and beginning to change our energy habits is wise and forward thinking.

Perhaps the most contradictory part of Inhofe's trouble with this change is his Party's commitment to the Federal system.  I am generally accused of being a liberal, but in truth, I favor a system that extends states more ability to regulate their territory except in cases where the Constitution allows regulation.  Areas of interstate trade, treasury, and national defense.  Because I consider the use of energy a national defense matter as well as a major interstate economic matter, the Federal government does have the right to regulate it.  However, if states desire more stringent regulations, so be it.  Competition among the states ought to demonstrate whether or not these regulations will improve the lives of the citizens of those states or cause them to deteriorate.  Shouldn't the party of "state's rights" and federalism advocate for this?  This is exactly the kind of short-sighted politics that appears to be special interest related.  I do not presume to know Senator Inhofe, but whether or not he believes in climate change is not the issue.  The issue is, whether or not he believes states have a right to regulate their own emissions controls.  It is a small victory in allowing states regulation control, but an important one.

More on this later when I review Article One, Section Two, and Rule 2.  I think it may bring something to bear to this argument.