Paul Krugman Analyses What "Centrist" Cuts in Stimulus Package Will Mean to the U.S. Economy. The News Is Not Good

In today's New YorkTimes, Krugman puts a job-loss number to cuts in the Obama Stimulus Package. He estimates that at least 600,000 American jobs will be lost over the next two years if the "centrists" are allowed to dictate terms of a "compromise" bill.

Now the centrists have shaved off $86 billion in spending — much of it among the most effective and most needed parts of the plan. In particular, aid to state governments, which are in desperate straits, is both fast — because it prevents spending cuts rather than having to start up new projects — and effective, because it would in fact be spent; plus state and local governments are cutting back on essentials, so the social value of this spending would be high. But in the name of mighty centrism, $40 billion of that aid has been cut out.

Jane Hamsher in the Washington Post discuss some background to the present attempt to make Nancy Pelosi and the Congressional Democrats who put together the original package, look bad. Rahm Throws Pelosi Under the Bus to Save Stimulus Bill.

Except that it's not true.  The Obama transition team has been working on the substance of the bill from day one.  Their first step was to go to the Association of Mayors, the National Governors' Associations and other non-congressional groups and say "give us all your shovel-ready projects."  That and other provisions written by the Obama team became the spine of the bill.  It went through only three committee markups, and moved through the House at lightening speed in a way that made many House chairs unhappy, with the notable exception of Dave Obey (now also under attack) who helped push it through quickly. 

The House bill is notable not only for its size but also because it had no earmarks, which are the lifeblood of House members, the way they show their constituents what they're doing for them.  As one person knowledgable about the writing of the bill says, "if you're in the House why would you write a bill without earmarks unless you didn't write the bill?"

Frank Rich also has a Op Ed in today's New York Times. He takes on the growing anger in the population and says that this was expressed in the groundswell that forced Tom Daschle to resign. Rich points out that the anger against Washington expressed by Obama supporters will be surfacing again and was manifest in the uproar about Daschle.

The tsunami of populist rage coursing through America is bigger than Daschle’s overdue tax bill, bigger than John Thain’s trash can, bigger than any bailed-out C.E.O.’s bonus. It’s even bigger than the Obama phenomenon itself. It could maim the president’s best-laid plans and what remains of our economy if he doesn’t get in front of the mounting public anger

... snip ...

In reality, Daschle’s tax shortfall, an apparently honest mistake, was only a red flag for the larger syndrome that much of Washington still doesn’t get. It was the source, not the amount, of his unreported income that did him in. The car and driver advertised his post-Senate immersion in the greedy bipartisan culture of entitlement and crony capitalism that both helped create our economic meltdown (on Wall Street) and failed to police it (in Washington). Daschle might well have been the best choice to lead health-care reform. But his honorable public record was instantly vaporized by tales of his cozy, lucrative relationships with the very companies he’d have to adjudicate as health czar.

... snip ...

As with Daschle, the political problems caused by Geithner’s tax infraction are secondary to the larger questions raised by his past interaction with the corporations now under his purview. To his credit, Geithner, like Obama, has devoted his career to public service, not buckraking. But he still has not satisfactorily explained why, as president of the New York Fed, he failed in his oversight of the teetering Wall Street institutions. Nor has he told us why, in his first major move in his new job, he secured a waiver from Obama to hire a Goldman Sachs lobbyist as his chief of staff.

... snip ... [bold my emphasis]

The neo-Hoover Republicans in Congress, who think government can put Americans back to work with corporate tax cuts but without any “spending,” are tone deaf to this rage. Obama is not. It’s a good thing he’s getting out of Washington this week to barnstorm the country about the crisis at hand. Once back home, he’s got to make certain that the insiders in his own White House know who’s the boss.

 

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They tell us what what we want to hear to get elected and do what they want to do once they are in office.  It doesn't make any difference which party they claim to belong to, they belong to one big party inside the beltway and those of us outside the beltway just get stuck with the bill.  Unfortunately, our entire economy is now at stake and they just don't seem to truly understand the enormity of what we are facing here. 

I drank the Koolaid. Well I wasn't exactly a cheerleader and I do think that the McCain/Palin ticket could have drawn us into another world war, whether or not that was their intention. But the first weeks of the Obama administration are dismal and his appointments to key postions seem to be speaking volumes.

carol

of Obama's web.org. Wanting us to call in to support the stimulus plan.  Which plan is that exactly ... the one that will save Main Street, or the one that will continue to bail out Wall Street?

Obama administration team to Americans: "No worries, its busines as usuall inside the Beltway".

Wow! I feel so much better now.

I looked at the list that came out and couldn't believe these lamebrain reps did some of the cutting they did, it's mind boggling, especially with the rhetoric coming from them!!

 

I'm trying to get my head together, not an easy task, to write something up about many of these and Why They Should Be Quickly Re-Added.

 

One thing I will say is Tax Cuts, None, are not what are needed, it's Long past time the American People Actually Sacrificed after their overwelming support for the invasion of Iraq and Silence as the repugs rubber stamped no-bid contracts, and Huge Spending of Billions, that's partially what caused the bubble bursting's now, they were coming anyway, but loosing and blowing up money caused the collapse earlier!

 

"The wise man points to the stars and the fool sees only the finger - and discusses it 24/7 on cable."

Moral issues aside, the truth is many Americans relied on increases in their home values in order to survive. They would ring up credit card debt and then pay it off from lower-interest equity lines. Now they are faced with usorious increases in credit card rates as well as (for many) sharp increases in their mortgage payments as ARMS revalue, etc.

carol

He has failed every single test since he became majority leader and he continues to fail. He has his public pitch down to the point of predictability. He's oh so sorry that the Senate does what he actually wants and he just can't figure it out.

Well, Bush in no longer in office. He needs to serve his president and party but he only thinks of the insiders. Recall Reid had serious ethics problems with nepotism.

There should be no cuts, no modifications. Obama should meet with the Senate Democrats and take them to the wood shed in the most serious way. The "centrists" are truly reprehensible, bought and sold Mandarins for the corporate interests. The only difference between them and Lindsay Graham is a quieter tone and a less obnoxious public presence.

Obama's stimulus package is remarkable in the way it changes government and also in the focus on energy efficiency programs. It is also a program that allows delay.

The key mistake here is the absence of anything that helps people stay in their homes. The presence of that would have made this program sail through.

With 58 Senators Democrats (or so),huge support for Obama, and the need for action clearly recognized, any changes in this program occurs only because the leadership wants the change. Reid etc. are doing a double deal, a back stabbing deal that betrays the purpose of the legislation.

"Furthest from him is best, whom reason hath equaled, force hath made supreme above his equals." Milton

Remember Bush's "nuclear option"  -- to vote to suspend the filibuster role. The threat to do that is  how we got Chief Justice Roberts.

carol