One Last Chance for More Government Spending

With Republicans poised to take over the House, the door to stimulus spending seems all but closed. Liberal commentators have tried to press the White House to do more, and Democrats have tried to introduce new legislation on Capitol Hill. But last year's $800 stimulus splash has been followed only by smaller daubs of cash, such as unemployment extensions and targeted payroll tax relief.

But there is still a small chance that even after a dominant GOP sweep, the liberal dream of more stimulus could still have a heart-beat. The savior might even be their mortal enemy: the president appointed deficit-commission.

In early December, a group of electeds and experts led by two former senators, Erskine Bowles and Alan Simpson, will likely report to the president with a bipartisan recommendation for reducing the deficit by 2015 (unless they can't reach a solution).

Even with a GOP win, the deficit commission could still save the cause of more spending

The recommendations will receive an up-or-down vote in Congress without amendments. That means Washington has to either accept the recommendation verbatim, or reject it entirely.

Liberals have mostly slammed the commission as either feckless or dangerous: feckless, because deficit-reduction seems beyond the scope of our hyperpartisanship, and dangerous, because a bipartisan deficit plan will almost certainty trim Social Security and cut spending. But what if the commission shocks the political world and calls for more short-term stimulus to go along with the medium- and long-term cuts?

Conservatives might say, No way, and liberals might respond, Dream on. Indeed, Bowles himself seemed to kill the idea of further state stimulus when he told the National Governors Association, "I don't think we can count on the federal government again. They just do not have the financial resources."

But that was in July, after two healthy quarters of economic growth, and after two great months of job creation buoyed by temporary Census jobs. Things are worse now. The Census workers are falling off federal payrolls while the private sector isn't picking up the slack. We get our second reading of the latest GDP numbers on Friday, and most analysts anticipate between 1 and 1.5 percent growth. What's more, there are other ways to stimulate the economy besides handing money to the states. Bowles' comment does not rule out an infrastructure bank, or another temporary tax cut, perhaps to payroll taxes on the employer or employee side.

Whether or not you think more government spending is good policy (I do), you can also make the case that it's good strategy. The independent commission was created to take deficit reduction away from politics, but ultimately politics will determine whether the final plan turns into law or scrap paper. Without a carrot for liberal and moderate lawmakers, it will go down in flames as "cutting grampa's Social Security during a recession." The public will resist any plan that feels like broad punishment on top of a punishing economy.

The commission has been notably tight-lipped about its inner-workings, and there's no evidence that the final agreement will include, well, anything. Disagreement might spike the commission, or the plan could resemble a predictable mix of tax clean-up and spending cuts. My point isn't that the commission will recommend more stimulus, only that it should. It would be good politics to pair long-term pain with short-term relief, and good policy to put another breath of wind into the economy's sails.

Presented by

Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

The Best 71-Second Animation You'll Watch Today

A rock monster tries to save a village from destruction.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

The Best 71-Second Animation You'll Watch Today

A rock monster tries to save a village from destruction.

Video

The Case for Napping at Work

Most Americans don't get enough sleep. More and more employers are trying to help address that.

Video

A Four-Dimensional Tour of Boston

In this groundbreaking video, time moves at multiple speeds within a single frame.

Video

Who Made Pop Music So Repetitive? You Did.

If pop music is too homogenous, that's because listeners want it that way.

Video

Stunning GoPro Footage of a Wildfire

In the field with America’s elite Native American firefighting crew

More in Business

Just In