Tuesday, February 03, 2009

Pandering to Conservatives Could Prove Fatal to Obama's Stimulus Plan

He should have stuck with "I won."

That, reportedly, was President Obama's response to Republican Congressional leaders on Capitol Hill January 23rd, when they greeted his outreach for support of his economic stimulus package with a chorus of gripes--mostly to the effect that their pet theories about the economy, disgraced before the election and overwhelmingly defeated during it, weren't being considered.

"I won" was precisely the right response: the conservatives have done more than enough for the economy, and the nation needs no more of their failed 'solutions.'

And yet, despite the House Republicans' zero vote for his stimulus bill, the president continues to give bipartisan support for it higher priority than enacting a bill that will counter the conservative delusions that got the economy where it is today.

Several columnists who support Obama are expressing grave concern that continuing to pander to the conservatives will doom the stimulus to fail.

In yesterday's Washington Post, columnist E. J. Dionne Jr. asks "Bipartisanship at What Price?"

Dionne acknowledges that Obama's outreach is politically popular "because a streak of anti-partisanship has run through the American soul since the founding of the republic." On the economy in particular, he also salutes Obama's emphasis that "Americans will have more confidence in the future if they see the nation's politicians cooperating to resolve the crisis."

But the emphasis needs to be on inviting the Republicans to bipartisanship and inviting American wrath if they decline, not encouraging them to use the stimulus package to reassert ideas and approaches that have already proved useless and the electorate rejects. Otherwise, Obama squanders what he won and concedes the political high-ground pointlessly. Dionne argues:

"If achieving bipartisanship takes priority over the actual content of policy, then the Republicans are handed a powerful weapon. In theory, they can keep moving the bar indefinitely. And each concession to their sensibilities threatens solidarity in the president's own camp."

For, as Dionne points out, the so-called 'partisan' bill the Republicans accused Speaker Pelosi and her lieutenants of pushing was based hugely on the administration's own proposals. Following Rahm Emanuel's dictum "You never want a serious crisis to go to waste," Obama wants to use the stimulus bill not only to promote job-creation, consumer spending, freer credit and the like, but also to begin movement toward some of his larger objectives--especially, reforming our health care and education systems. Obama should not allow these objectives to be delayed "in pursuit of a nebulous cross-party comity."

Also pointless pandering to conservatives is making continuing private ownership of failed banks a higher priority than getting a return on the billions of taxpayer dollars already invested in those banks. Indulging in this fiction is just as self-defeating.

Paul Krugman, New York Times columnist and winner of the 2008 Nobel Prize for economics, says "We can't afford to squander money giving huge windfalls to banks and their executives, merely to preserve the illusion of private ownership." He argues that "Pumping in enough taxpayer money to make the banks sound would, in effect, turn them into publicly owned enterprises."

In his latest weekly address, Obama called Wall Street bankers who gave themselves nearly $20 billion in bonuses from Bush bailout funds shameful and irresponsible.

But as Krugman and Pulitzer Prize-winner Maureen Dowd both point out, Tim Geithner at Treasury and Barney Frank in Congress are reluctant to make tight restrictions on executive pay a condition for getting government aid, because it could keep some firms from seeking it. Yet this leaves Obama's outrage so much bluster, with no consequences for the bank executives and no program to ensure that additional bailout billions won't become more undue executive rewards.

Krugman is correct: the point of giving the banks taxpayer money is not to enrich the executives or the stockholders. The point is for taxpayers to own the banks and return them to solvency until new private buyers can be found. Otherwise, we simply pump billions down a hole.

Dowd is correct: "Anyone who gave bonuses after accepting federal aid should be fired, and that money should be disgorged to the Treasury."

Will that keep some businesses from seeking aid? Perhaps. But it won't be deserving businesses who agree to play by the rules. The only losers will be those who deserve to lose: those who will not join the rest of us in making the patriotic sacrifices required to get the economy off public life-support.

Do they wish us well? Hell, no. Why should we give a damn about them?

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