The Future Of The Stimulus

Just 15 years ago, President Clinton's $16.3 billion economic stimulus package was backlogged in the Senate because moderate Republicans and Democrats refused to go along with roughly $12 billion in new spending. Like Obama, President Clinton sold the plan as something different than the conventional prescription for growing the economy: he called it a "down payment" on longer-term investment. Then, as now, critics regarded the spending as a "sop" -- the words are from Democrat Bob Kerrey -- to special interest groups. (In their effort to court Kerrey, who famously ruminated over the decision at Washington's Union Station movie theatre, press secretary Dee Dee Myers joked that the White House briefing room had become the "Bob Kerrey Briefing Room.")  Clinton tried a different tack; the plan was necessary -- critical even, to forestall an economy that was sputtering.  Critics wondered what about the funding for a performing arts center was so crucial. 

Comparing 1992 to 2009 is analytical malpractice, of course. The economy isn't just in a crisis today; it's nearing a depression. The credit markets weren't frozen in 1992. . The size of the stimulus is larger by several orders of magnitude. But the political parallels, along with the trajectory of the legislation, are eerily similar: troubles from the transition distract the White House;  the White House defers to Congress and lets them write the stimulus bill in the President's name;  House passes a bill that built, in essence, a 4 mile bridge over a three mile gap. Senate Republicans begin to complain, en masse, about the spending, and eventually, so do Senate Democrats. A Republican filibuster defeated the bill.  Clinton later complained that his economic advisers made him do it, as if he didn't have much of a choice in the matter. Something about the bond market and interest rates.

 

Did the Obama White House err in deferring to Congress?  That's the argument that many Democratic strategists are chewing on. A case can be made, however, that giving the House latitude to pass a wild bill was the only way to ensure that the Senate passed a responsible one.  The theory here is that the Senate could be played off against the House. Let the House lard up the bill with items having little to do with stimulus and a lot to do with interest group priorities.  (According to a well-connected Democrat who is in touch with the administration, "They're not objecting when people say that this is Pelosi's stimulus package.")

Then, let the Senate's natural prerogatives go to work. Pass a bill that retains the core elements of Obama's original plans, but without a lot of the marginalia that proved politically perilous in the House.  Without the House's bill as foil, the Senate wouldn't have had a guide, a temporal guide, a political lesson, objective correlatives, whatever -- to react against. 

 

Republicans won a PR battle by imputing a tiny objectionable fraction of the House legislation to the entire bill, which is disingenous and effective. More legitimate objections are the tax cut v. spending mix, although it's a bit curious: the classic idea of stimulus is to have the government spend money.