STIMULATING TALK…. The drive for an economic recovery package begins in earnest this week, and we’re starting to get a sense of the particulars. Barack Obama is scheduled to deliver a speech on the subject on Thursday, but in the meantime, there are multiple reports that we’re looking at a package totaling as much as $775 billion, with $300 billion in tax cuts for workers and businesses, including tax incentives for businesses to hire employees and invest in equipment.
We’re also looking at a much slower schedule than previously hoped. There had been some talk that Congress could have a bill waiting for the new president’s signature by the time he took office. The leadership on the Hill is vowing to move “just as quickly as we can,” but given Republican reluctance, it’s likely a bill will move in February, not January.
Taking stock of the landscape, Paul Krugman emphasized how “terrifying” the economy appears: “This looks an awful lot like the beginning of a second Great Depression.” He added that Obama’s political instincts may limit his willingness to be bold enough to prevent a disaster.
News reports say that Democrats hope to pass an economic plan with broad bipartisan support. Good luck with that.
In reality, the political posturing has already started, with Republican leaders setting up roadblocks to stimulus legislation while posing as the champions of careful Congressional deliberation — which is pretty rich considering their party’s behavior over the past eight years.
More broadly, after decades of declaring that government is the problem, not the solution, not to mention reviling both Keynesian economics and the New Deal, most Republicans aren’t going to accept the need for a big-spending, F.D.R.-type solution to the economic crisis. […]
All of this leaves me concerned about the prospects for the Obama plan. I’m sure that Congress will pass a stimulus plan, but I worry that the plan may be delayed and/or downsized. And Mr. Obama is right: We really do need swift, bold action.
Here’s my nightmare scenario: It takes Congress months to pass a stimulus plan, and the legislation that actually emerges is too cautious. As a result, the economy plunges for most of 2009, and when the plan finally starts to kick in, it’s only enough to slow the descent, not stop it. Meanwhile, deflation is setting in, while businesses and consumers start to base their spending plans on the expectation of a permanently depressed economy — well, you can see where this is going.
So this is our moment of truth. Will we in fact do what’s necessary to prevent Great Depression II?
It’s a fair question. Obama’s priority needs to be the effectiveness of the rescue plan, not its ability to pass with huge bipartisan majorities. As Kevin Drum noted, “The American public really doesn’t know or care if this bill passes by one vote or thirty votes. So why waste time on this? It’s just a gold-embossed invitation for Republicans to obstruct and posture endlessly, something they hardly need any encouragement for.”