Barbara Ehrenreich memorably called the talk about the stimulus "clitoral economics." And that was before we got screwed.
The stimulus deal just announced is being praised more for its existence than its content. Much lamented partisan bickering was overcome; bipartisan cooperation that got it done. WIth Wall Street bankers in panic, better something than nothing. So the parties came together and split the difference and created an agreement (which still has to survive the minefield called the US Senate).
It's worth taking a look under the hood. Despite approval ratings rivaling those of Idi Amin, President Bush set the terms: Tax cuts only. No spending on public works (that is nothing for stuff we need that actually puts people to work). No increase in food stamps. No strengthening of our tattered unemployment system. (That is no money to those who we know most need it) Must include a big package of business tax breaks (that is tax write-offs for investments that would be made anyway, according to any reputable economic study). No money for states that are about to be forced to cut billions to balance their budgets, largely by cutting education and Medicaid spending and deferring basic infrastructure spending (remember the bridge that collapsed in Minneapolis or the sewage valve that shut down lower Manhattan?).
Democrats, despite having the majority in both Houses, accepted those terms. They demanded, sensibly enough, that the tax cuts include 45 million people in low income families that the president would have excluded. They demanded the president take extending his top end tax cuts beyond 2010 off the table. They got some help for imperiled homeowners through the Federal Housing Authority and Fannie Mae.
So only $40 billion of the $150 billion package gets squandered on business tax boondoggles. The rebates -- what Jesse Jackson calls Wal-Mart gift certificates -- will get handed out by August at best. It might help a bit, although if the economy is still in bad shape in August, people are more likely to be paying down credit card debt than buying a new TV made in China.
But $40 billion isn't the largest cost. The real price is the continued misdirection of the economy and miseducation of the country. We need what the stimulus package excludes. We need long term investment in rebuilding America -- spending money on mass transit, on basic sewers and water disposal, on the electric grid, on renewable energy, on a green rebuilding of our urban areas, on schools and teachers, pre-K and affordable college. We need to stop squandering money abroad in misbegotten wars -- now approaching $1 trillion spent on Iraq. We need to revive progressive taxation so at the very least hedge fund billionaires stop enjoying a lower rate than their secretaries. We need to develop a national strategy for the global economy, ending our addiction to oil, curbing the casino speculation that will eventually bring down the house, and balancing our trade with the mercantilist nations while capturing the new green industries of the future.
None of this, needless to say, is in the stimulus package. Instead we're taught the wrong lessons: tax cuts are good, particularly business tax breaks; lower interest rates are a free lunch, the "fundamentals" as the president constantly says, "are good."
In fact, the foundation in crumbling. A fundamental change of economic strategy and priorities is vital. And the economic titillation of this bipartisan "stimulus" package will benefit the politicians with their press far more than the economy with its perils.
Robert L. Borosage is the president of the Institute for America's Future and co-director of its sister organization, the Campaign for America's Future.
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