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Thursday, July 29, 2010

For Republicans, Anything Less Than Instant, Complete Success is Total Failure

Test dummy and airbagTwo weeks ago, Ana Campoverde was driving through St. Louis with her mother when a text-messaging driver blew through a stop sign and hit her. "We spun. The car spun," she told local TV station KSDK. "All of a sudden I can see all these airbags around me. I think I lost consciousness... Then I couldn't move. I go, 'My gosh this wasn't in our plans.'"

Campoverde credits the airbags with saving her life. But she did suffer a broken arm, so by Republican standards, the airbag was a failure. If it didn't protect her from any injury, then it didn't protect her at all. Period. End of story.

At least, that's what we're forced to assume from their talk about the stimulus. Searching for the exact term "failed stimulus" returns 122,000 results, with 177 on GOP.com alone. When Republicans aren't taking credit for the economic stimulus, they're attacking it.





RNC Chair Michael Steele, Daily Caller:

Over a year ago, the American people placed an enormous amount of trust in President Obama to make good on his promises of renewed responsibility and a new era of political bipartisanship. However, when faced with an extreme economic downturn he used the crisis as a means to his liberal ends and with the help of his Congressional allies forced his failed $862 billion stimulus package on America.

Today marks the one-year anniversary of this failed stimulus package, something the president still claims as one of his signature achievements and which he proclaimed would "create or save" 3.5 million jobs and keep unemployment below 8 percent. Since those early heady days of the Obama administration the American people have seen behind the curtain of rhetoric and watched as millions of jobs were lost and unemployment rose into the double digits.


So Obama's airbag left us alive, but with a broken arm. A total failure...

A more realistic view of the effect of the economic stimulus comes from two economists who actually bothered to look at the facts objectively.

Kansas City Star:

The Great Recession wasn't a depression, thanks to federal stimulus efforts.

That conclusion flows from the first major, independent analysis of recent fiscal and monetary policies — such as the bank bailouts, the home-buyers tax credit and Cash for Clunkers stimulus program.

"The stimulus has done what it was supposed to do: end the Great Recession and spur recovery," wrote Alan Blinder, a professor of economics at Princeton University, and Mark Zandi, chief economist for Moody’s Analytics.


Blinder and Zandi note that "almost every one of these policy initiatives remains controversial to this day, with critics calling them misguided, ineffective, or both."

Washington Post's Ezra Klein interviewed Zandi and asked if the stimulus was "basically, if not totally, successful."

"Any individual aspect could've been a failure, or not very effective," he answered. "But the totality was successful. It ended the recession much sooner than otherwise would've been the case and it forestalled a much larger decline in our output. And at the end of the day, it saved taxpayers money. it would've cost us a lot more if we had not responded." It left us with a broken arm, instead of a broken neck. And people like Paul Krugman argue that our arm would be OK if we'd put in a bigger airbag. The Nobel Prize-winning economist has argued that the stimulus was too small since day one.

But here's the thing; Republicans aren't arguing that the airbag should've been bigger, they're arguing that -- other than another round of tax cuts -- there shouldn't have been any airbags at all. This ignores both history and common sense. "The link between the demand and supply side runs through prices and wages and other costs," Zandi told Klein. "If demand falls relative to the economy's potential, you have rising unemployment and lower utilization. Fiscal and monetary policy plays a key role in trying to mitigate recessions. I've gone back to every recession and depression and looked at the policy efforts to address the downturn and try to at least capture the different ways in which policymakers have tried to generate a recovery. And what we've done in the Great Recession, some of it is unique, but most of it has been done many times before. Tax cuts, emergency unemployment benefits, aid to state government, these are things we've done every single time."

But Republicans like to live in a world without history. If direct Keynesian stimulus has worked every time in the past, it won't work this time. Why? Who knows? All we know is that they say they have a better idea -- cut taxes and reduce the deficit. Never mind that those two goals are contradictory, reality is no roadblock to the dedicated supply-sider. In fact, we've tried this all before too -- and it didn't work. Bush's tax cuts have increased the deficit. And even if they could hit that imaginary sweet spot they seem to believe exists where tax cuts increase revenues, balancing the budget was one of the first things Herbert Hoover did in response to the Great Depression -- the long story short on that one is that it didn't help any. Turns out the market doesn't give much of a crap about the deficit, it's all about supply and demand and we're really short on demand right now. Government spending doesn't just spur demand; it is demand, by definition. When you get into talk about sending messages and the emotional well-being of investors, you're just making things way more complicated than they need to be. When there isn't enough demand, you increase demand -- the end.

Republicans are trying to sell you a car without any airbags, because airbags still allow you to be injured -- so, by their reasoning, they don't work at all. Personally, I don't think that's a very good deal.

-Wisco


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