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Bipartisanship and stimulus

February 13, 2009 |  3:42 pm

bipartisanship, stimulus package, John Maynard Keynes, Keynesian economics, Milton Friedman The conference report on the $787 billion stimulus package easily passed the House before struggling to get the 60 votes needed to prevail in the Senate, with only three Republicans in either chamber voting in favor of the measure. (All three were senators, and the voting there is on hold until four absent lawmakers return.) Many in the GOP argue that the legislative process for this bill demonstrated how little interest President Obama had in bipartisanship, but I wonder how anyone could have bridged the philosophical gap between Obama and the Republicans.

The issue wasn’t that top Democratic lawmakers didn’t listen to Republicans (although they probably didn't break a sweat trying); it’s that few Republicans were willing to support the bill's central premise, to wit, boosting government programs and subsidies to counteract the contraction in consumer spending. Such a Keynesian view of economics was an explicit part of Obama’s campaign last year, especially as the economy worsened in the run-up to the election. In fact, some backers of the legislation argue that it doesn't really matter what the government does with the money as long as it's spent. Take this anonymous comment offered on the editorial we ran today complaining about waste in the stimulus bill:

Are kidding me? Spending is stimulus. Somebody has to build the bridges, roads and rail. Somebody will be making the computers, installing the computers, etc. That is what stimulus is. Tax cuts get a stimulus of $.30 per dollar spent, where as infrastructure gets a stimulus of $1.70 per dollar spent. You want to complain about this stimulus package? Complain that it doesn't have a use it or lose it tax for companies hoarding capital to make up for the nearly 300 billion in tax cuts.

Although Republicans often focused on provisions that seem wasteful, that wasn't the heart of their argument. Many in the GOP wanted to go in the opposite direction from Keynes, pulling government out of the economy ("deregulate to stimulate," in the words of the conservative Competitive Enterprise Institute) or cutting taxes broadly and permanently. They contended that the bill’s orgy of deficit spending would actually hurt the economy by discouraging investment and making it harder for private industry to obtain credit. I'm sympathetic to such concerns, and to the argument that the bill would transfer a massive amount of wealth from future generations to the current one. (Snarky aside 1: Where were all these GOP deficit hawks during the last administration, when hundreds of billions of dollars of stimulative spending on the war in Iraq was done under the guise of "emergency appropriations," with no attempt to offset it with cuts?) Underlying their stance was the contention that a Keynesian solution was a step toward big government, and that was anathema to their worldview. (Snarky aside 2: Except, of course, when they're in control of the purse strings.)

That's why I don't see any middle ground between most congressional Republicans and the folks who, like Obama's economic advisers, argue that the deep slide in the economy can't be arrested without a very, very large increase in spending or subsidizing (through temporary tax cuts). When Sen. Jeff Sessions (R-Ala.) spoke about the bill today, he didn't say he was voting against waste or inefficiency. He was voting against a philosophy of governing: "I don't know I can hold hands and walk down the road to socialism.... This endangers our heritage. It is not an itty bitty matter." Ironically, the three GOP senators who did accept the bill’s premise — Arlen Spector of Pennsylvania and Olympia Snowe and Susan Collins of Maine — wielded more power in the negotiations than seemingly anyone else on Capitol Hill. Together, they pulled a bill that was headed toward $1 trillion back down below $800 billion. Naturally, the cuts led some liberals to gripe that the package was too small to be effective.

Photo: House Democratic leaders applaud themselves after their chamber approves the stimulus package. Credit: Chip Somodevilla/Getty Images

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