White House Discovers the Case for More Stimulus
Welcome to Business Breakfast.
Tonight, the Senate votes on a $26 billion lifeline to ailing states that would help them with Medicaid expenses and prevent teacher layoffs. The bill would not add to the deficit, as it is offset by combination of foreign tax credit provisions and cuts to food stamps. Aid that doesn't add to the debt: what could be the problem?
If Republicans balk, it will be the tax offsets. During the last mini-stimulus debate, Republicans rejected a larger bill from Sen. Max Baucus on account of its tax increases. The GOP's position on stimulus is either painfully obstructionist or painfully simple depending on where you're sitting: no additional spending, unless it's offset by other spending cuts.
Politico calls the White House's push for this bill "late-breaking." I would have gone with "too late." The Obama administration has had months to make a more public case to rescue states that are wallowing in budget cuts and tax increases. Neither Geithner nor Rahm Emanuel mentioned state aid in their long conversations with reporters last week, and the White House reportedly threatened to veto the measure if Democrats tried tying it to the Afghanistan war bill.
The administration is navigating a narrow course between the deficit and the recession. One sympathizes, but they're making it harder on themselves with these measured, "late-breaking" endorsements of stimulus that should have been declared critical months ago. Republican leadership picked a message -- no tax increases, period -- and stuck with it. That's their choice. The White House needs to pick a economic message and stand behind it. That's their job.
Here are the stories of the morning:
White House Pushing for State Aid: With a Senate vote slated for Monday evening, the White House shows signs of a late-breaking push behind a $26.1 billion aid package to help state and local governments cope with revenue shortfalls due to the continuing housing crisis and slow economic recovery. [Politico]
The Legacy of Peter Orszag: Committees: The idea that members of Congress would prefer to incur the political costs involved in balancing the budget or cutting Medicare themselves rather than farming these decisions out to an independent commission is, in my view, dubious. (Not surprisingly, Bai doesn't actually quote a single member of Congress lamenting the creation of the debt commission or payment advisory board!) The commissions are created because of the political risks likely to accrue to any elected officials who make the hard choices associated with bringing down the deficit. [Presidential Power Blog]
To Save the Budget, Kill the Bush Tax Cuts: The simple facts are these: All of the Bush tax cuts were unaffordable. They were an irresponsible act of hubris enacted during an economic boom. Conservatives thought they would force us to shrink the government. But with Republicans controlling the White House and both houses of Congress, did reduced taxes cause reduced spending? No. They led to ever-increasing borrowing and a ballooning deficit. [WaPo]
Irony: Mad Men Can't Sell Advertising:
"Mad Men" took in only $1.98 million in ad revenue in 2009, according to Kantar Media. In 2008, the show nabbed just less than $2.8 million, and in 2007, approximately $2.25 million. An equally buzzy program such as "24" on Fox cost between $200,000 and $280,000 as the show, off its peak, headed into its final season. [AdAge]
Big Brother Works for Online Marketers [WSJ]