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Saturday, February 7, 2009

Obama, Pragmatist?

Gail Collins offers in the NYT today an apology for Obamaites, attempting I assume to both placate and wisen them up. I'm hardly worried about Obama's presidency this early on, but it is interesting how public support has slipped both for him (from 80s to 60s, though this is typical), and for the stimulus bill which, if not passed, he's declared could lead to economic catastrophy. Wow. What happened?

Here's the problem. Obama won office with promises of change in Washington. Within weeks, Democrats like Nancy Pelosi crafted a spending bill that even the down-and-out Republicans found big holes to poke and big political points to gain. It's not that the Republicans were that brilliant, mind you. The House bill was just that bad. In other words, weeks after Bush exits and change enters, it's more politics as usual. The initial House stimulus bill was so embarrassing that Obama contacted Pelosi, requesting removal of funding for contraceptives and resodding of the White House Mall. Good for him.

Even so, large swaths of proposed spending are still earmarked for goverment and health care sectors, which are suffering about a third of the unemployment that is wreaking steady havoc on manufacturing and construction. It's hard not to recognize the tension with, on the one hand, rhetoric about immediate action to stave off economic catastrophy, and on the other, spending nearly a trillion tax payer dollars in a manner that, so far, has been difficult to defend as straightforward stimulus. If we are headed for catastrophe, why is it still politics as usual?

We're used to hearing by now that political pragmatism is the antidote to partisan bickering and gridlock. It's what the smart politicians do, we're told. Indeed the pragmatist label has adorned Obama's politics since if not his presidential campaign at least his tone while President-Elect, and mostly it still sticks. But the latest poll numbers suggest that "pragmatism" cashed out only as compromise on spending packages that are increasingly viewed with sceptism is politically hazardous. It's also, substantively speaking, inaccurate. Obama will be a pragmatist not because he accepts compromises that assuage political parties but because he adheres to the notion that partisan interests should be subjugated to practical ones in times of crisis. Pushing through flawed legislation by courting votes isn't enough. The truly pragmatic standard is in fact much higher.

Obama must explain how the current 800 billion dollar package will in fact create jobs and help the economy. We need plain language about how the deficit increase will get offset by job creation. (Liberal media mouthpieces like Rachell Maddow have proclaimed recently how it's so obvious that spending just is stimulus. She means that stimulus just is spending. On the latter, not the former, we all agree. Tax cuts are of course spending too. No worries, Rachell.) So, we need our new President to work us through the logic of the bill, or explain what the Hill needs to do to fix it, or scrap it. That's pragmatism. The stimulus package is a tool that we must understand will solve the current problem.

"Ideas are tools" was a slogan of the 19th century American pragmatists. Whatever works, is what ought then to be regarded as True. Generations of thinkers have poked holes in this idea on theoretical grounds, but for our current conundrum, ideas-as-tools is much better than ideas-as-abstractions. This is particularly true with the economy (and especially the complex, global economy), because it's increasingly hard to peer into the future to see how ideology will work in complicated contexts. This is why the Keynesian versus supply side debate seems so stale these days; who knows any more what will work? Pragmatists will start with what we know -- say, the data in the Congressional Budget Office reports -- and work bottom up towards some practical solution, however it looks through the lens of ideology.

But regardless of how we view the larger philosophical issues here, it's clear that political pragmatism understood as simply passing more spending legislation, skewed this way and that to make politicians happy, is hardly confidence inspiring. This is just politics as usual. For 800 billion tax payer dollars, we deserve more.


mijopo said...

The problem with this "is simply to look at the data and to craft from it a solution that represents our best thinking" is that it's not simply a case of taking the data, applying logical laws and getting legislation out of it. Reasonable people disagree about how to read the data and what exactly we're supposed to do on the basis of it. You, for example, continue to argue for tax relief despite data that shows it's much less effective for stimulating the economy and reasonable doubts that it would help much to spur job growth in this climate. According to an article in the WaPo this morning, economists think that we should be more worried about getting some kind of shot in the arm for the economy in place rather than the exact details of how it's done. (http://www.washingtonpost.com/wp-dyn/content/article/2009/02/07/AR2009020702159.html?hpid%3Dtopnews&sub=AR)

Erik said...

True, and I am of course aware of the problem of "looking directly at the data" with no theory lens. But my point is that much of the bill is obviously not pointed at job creation, and so while the two parties bicker they could also be pragmatic in the sense that Pelosi knows, presumably, that some of the goodies she inserted are not optimal for creating jobs, and say Senator Kyle of Arizona should be willing to accept that well-targeted spending projects that have long term salutary benefits for the country ought now to be considered (if not now, when?).

Also, you can of course point to experts that suggest that tax relief won't work, and I'll be happy to fire back article after article from respected economists that say well-targed tax cuts have stimulated quickly and will again. This is what I love about economics,... serious, respected PhDs disagree like we're discussing rival religions.

For my own part, I'm still a little bewildered about what the heck should be done... spend a ton of money to create jobs makes sense, reduce tax burdens on small business and job creators makes sense. The global economy updates faster I think than our understanding.

I will say why I like the idea of tax relief right now, modulo my general puzzlements. The money turned back to consumers should stimulate one way or the other. I mean, unless someone takes dollars saved from tax breaks, lower fuel costs, or what have you and stuffs them in a locked home safe, the dollars will get recirculated into the economy because they're put back into the credit system (banks, credit unions). The dollars saved go back into the system (now the banks need to start lending). This is a fairly common sense observation that demand siders seem resistant to acknowledge. The relevant passage from a recent WSJ article:

But a saved $1 doesn't vanish from the economy, unless it is stuffed into a mattress. It enters the financial system, where it is lent to others; or it is invested in the stock market as capital for businesses; or it is invested in entirely new businesses, which are the real drivers of job creation and prosperity."

But, again, there's really no point trotting out this or that expert to prove that tax breaks don't work, or that Keynesian type spending won't work. Highly credentialed experts from either viewpoint argue this ad nauseum, and will continue to do so. This is why the lawmakers and the rest of us have to inform ourselves of the details of our current economy, and based on our best practical problem solving ask what seems likely to get things moving for us, today.

mijopo said...

Right, I'm not claiming that tax cuts won't stimulate the economy, I'm contending that in this particularly severe and sudden downturn, they're much more likely to have the desired effect. Of course, the money's not completely wasted, just not likely to provide the needed kickstart while still leaving us with the same indebtedness level.

In any event, back to the original point, as we're both noting, reasonable disagree considerably over how exactly to proceed. My observation was that, some are noting that a huge cash injection into the economy quickly is the really important thing that needs to be accomplished, and if that's true, Obama should be worried about getting this thing trough a lot more than he should about trying to spend too much time trying to revise and revamp it. (I'm not sure I endorse this view, to be clear, $800 B is a lot of money and I'm growing a little leery of this new ploy of "omigod we're all going to die, give us obscene amounts of money")

mijopo said...

-Sorry, what I meant to say in the above is that they're much *less* likely to have the desired effect.

Erik said...

I agree that the amount is disturbing, especially after the Republicans ran up the deficit on us for the last few years. (I just wrote about this, actually.) Also, whenever I hear terms like "catastrophe", I start asking tougher questions. Really? I remember Bush telling us about this with regard to TARP, which as far as I can tell has done nothing. And yet everyone has already moved from talking about this.

Remember the "mushroom cloud"...