by Deb Cupples | The Washington Post tells us that "banks and businesses that once decried regulation now are
seeking federal capital, grants or tax cuts...."
It wasn't that long ago that many of the folks running banks and big businesses (and massively redistributing shareholder wealth to themselves) would scream and stomp their feet at the mere thought of government action in the so-called "Free Market" -- as though abhorring government intervention were a principled stance.
The stance never was about principles: it was all about not wanting government to impose even sensible burdens that might decrease the amount of shareholder money the folks running banks and big businesses could funnel into their own pockets.
Yes, it really is that simple and has been all along.
If anti-government-intervention had been a truly principled stance, the folks running banks and big businesses (and redistributing shareholder wealth to themselves) would have screamed and stomped their feet when the federal government began handing out strings-free cash to banks and big businesses.
Instead, the folks running banks and big businesses beamed with delight -- while admirably conquering urges to emit teenage-girl squeals -- as they watched BIG GOVERNMENT funnel big money into their pockets.
Some of the same politicians who've screamed against Big Government -- politicians whose traditional function is the vigorous foot licking for the folks running banks and big businesses -- voted for the strings-free cash drop known as TARP (aka, the Wall Street bailouts), despite the plain fact that the bailouts constituted massive government intervention in the so-called "Free Market."
A more accurate version of those folks' "Free Market" tenets would look something like this:
When imposing duties, government should be the size of an insect; when funneling cash to corporations, government should swell to the size of a bull elephant.
The value of the various Wall Street bailouts (including AIG, Fannie, and Freddie) is more than $1 trillion.
Given our nation's recession, the loss of 3.6 million American jobs, and the still-frozen credit markets, President Obama and congressional Democrats figured our nation could use some economic stimulus (though less than the Wall Street bailouts cost) to slow down our economy's terrifying downward spiral.
Economic stimulus makes sense, especially measures that would put money into ordinary consumers' pockets. Why?
- Less $ for consumers means less $ for businesses - Less $ for businesses means more job cuts - More job cuts mean even less $ for consumers - Which means even less $ for businesses - Which means even more job cuts and so on...
That logical chain aside, most House Republicans voted against the economic stimulus bill in January, instead leading cheers for bigger tax breaks for big corporations and wealthy folks who would continue living mega-extravagant lives even without tax breaks.
Many Senate Republicans spent the last week delaying passage of the economic stimulus bill -- despite their having voted for Big Government intervention via the Wall Street bailouts (see roll call vote).
Andrew Sullivan printed a graph showing that American job loss has been worse during this recession than during other recessions. Sullivan comments:
"This graph sure does concentrate the mind and reveals, to my mind, the surrealism of the current GOP. They spent the last eight years spending like FDR in a boom and now they're born again fiscal conservatives?"
Yes, it is surreal -- and most unnerving, given that many economists of various political leanings see the need for economic stimulus sooner, rather than later. The Washington Post continues:
"Many economists say the precise size and shape of the package developing in Congress matter less than the timing, and that any delay is damaging.
"'Most of the things in the package, the big dollar amounts, are things that are pretty quick stimulus and need to be done,' said Alice Rivlin, who was former president Bill Clinton's budget director and who criticized aspects of the proposed stimulus in congressional testimony two weeks ago. 'Is it a perfect package? Of course not. But we're past that. Let's just do it.'
"Economists who initially rejected the need for fiscal stimulus have warmed to the idea, too. Several months ago, Alan Viard, a Bush administration economist now at the American Enterprise Institute, thought the right size for a government spending bill was 'probably zero.' He favored reliance on the Federal Reserve to slash interest rates and existing unemployment benefits to bolster the jobless.
"Now Viard shares the view that a stimulus package is needed, although he would prefer one limited primarily to tax cuts and direct benefits for victims of the recession, such as increased unemployment benefits.
"'Things have gotten so bad so quickly,' Viard said. 'We have now lost 3.6 million jobs, a stunning loss. But what's more horrifying is that half that loss has occurred in the last three months. This is a severe recession. There's no doubt about it.'"
Despite agreement from politically diverse economists about the need for stimulus now, many congressional Republicans insist on striking political poses and obstructing progress.
While Republican politicians play political theater, thousands of Americans are losing jobs and their ability to contribute to our economy by spending money.
Here's what Nobel Prize winning economist Paul Krugman says about Obama's and the Democrats' caving to Republican obstructionism:
"...[T]o appease the centrists, a plan that was already too small and too focused on ineffective tax cuts has been made significantly smaller, and even more focused on tax cuts.
"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.... But in the name of mighty centrism, $40 billion of that aid has been cut out.
"My first cut says that the changes to the Senate bill will ensure that we have at least 600,000 fewer Americans employed over the next two years.
"The real question now is whether Obama will be able to come back for more once it’s clear that the plan is way inadequate. My guess is no. This is really, really bad."
In other words, the new version of the bill would put less money into ordinary consumers' pockets.
What happens when masses of consumers cut way back on spending? Once again, it means less money for businesses, which means more job cuts, which means even less money for consumers, which means even less money for businesses, which means even more job cuts, and so on....
Memeorandum has commentary.
Other Buck Naked Politics Posts:
* Save Jobs by Cutting Executive Pay
* Record-High Job Loss, Yet Republicans Want Tax Cuts for Rich Folks
* Real Bonuses Based on Fake Profits
* Obama's Executive Pay Cuts Don't Address Root Problems
* Richest Got Richer Under Bush and Paid Lower Tax Rates
* Are Bailout Funds Being Misused?
* Cleaning up Political & Corporate Culture Could Help Economy
The hypocrisy of the big banks isn't really surprising. They all subscribe to the notion of "Private profits, public risks."
Posted by: jobseeker | February 08, 2009 at 03:28 PM
I do think the stimulus plan can work, and I'm glad you've explained it in a way many people can understand. nice article!:)
Posted by: Imee | February 09, 2009 at 06:29 AM
HI Imee,
Thanks! I'm not sure that this particular stimulus will work, because I've read that it focuses pretty heavily on tax cuts for corporations and wealthy individuals.
I think that a stimulus package that focuses more on putting money in ordinary consumers' pockets likely would work.
Posted by: Deb | February 10, 2009 at 09:49 PM