Warthen: Worrying about the stimulus

Editorial Page EditorFebruary 8, 2009 

“This is your bill; it needs to be America’s bill.”

— Sen. Lindsey Graham, addressing Senate Democrats

What worries me, after all the rhetoric, exhortation, accusations, counter-accusations, fault-finding and blame-laying, is that the stimulus bill that spent the week staggering its way through the U.S. Senate might not work anyway.

There was always that very good chance. Several weeks back, Paul Krugman — who as a Princeton economist is a Nobel Prize-winner, but as a political columnist is a partisan automaton — said as much. He said it wouldn’t be enough to give the economy the jolt it needs to overcome the lack of activity in the private sector. He made a persuasive case.

Then, last week, Mr. Krugman wrote that this bill just had to pass, that those blasted Republicans opposing it were “putting the nation’s future at risk.” Obama’s mistake, he now said, was trying “to transcend partisanship” and work with the Republicans at all.

I believe the exact opposite to be true. I believe the chances of the bill doing any good declined with each step into the thicket of partisanship.

I never won so much as a Cracker Jack prize for economics, much less a Nobel, but there’s one thing I think I understand: Whatever Washington does in the way of stimulus — and it needs to do something (with the private sector in paralysis, this is a job for the Keynesians) — it won’t work unless America can believe in it.

Just as Mr. Krugman is right about some things, so is Phil Gramm. Remember how indignant the Democrats got when the McCain adviser said, in mid-campaign, that we were experiencing a “mental recession”? Well, he had a point. While it doesn’t make the real-life pain any less, the mechanisms that get us into a predicament like this have an awful lot to do with what’s going on in our heads.

When businesses think they have a chance to grow, they invest and create jobs. When they’re scared, they freeze up. When buyers and sellers believe home values will keep appreciating, the real estate market is hot. When they start to doubt values, buying and selling stop. When everyone believes a stock’s value will keep rising, it does keep rising; when they don’t, it crashes. When you think the lousy economy is threatening your job, you stop spending and stuff your earnings, literally or figuratively, into a mattress, and the workers who depended on you to buy what they produce lose their jobs, which of course increases everyone’s pessimism.

No, it’s not all in our heads. At some point, certain things have real value. But we’re not going to start buying and selling and hiring and investing and taking risks at the levels needed to pull ourselves out of this tail-spin until we reach a consensus that things are getting better, or about to get better.

You can argue about the specific provisions in the stimulus all you want, and Democrats and Republicans have been doing so enthusiastically. But I don’t think I’ve seen a specific idea yet that couldn’t be argued both ways. Even the worst idea pumps some juice into the economy; even the best one is no silver bullet.

With private sector leadership — especially on Wall Street — having failed us so spectacularly, we need something intangible from our political leadership every bit as much as we need infrastructure spending and/or tax cuts: We need to look at what Washington is producing and believe that it actually is for the good of the country, and not for the good of the Democrats or the Republicans or this or that politician.

As he entered office, I thought Barack Obama had what it took to lead us in that direction — to pull us together and help us believe that we can solve our problems. To persuade us, as FDR did, that we had nothing to fear, that we were going to get through this, together.

I still think he can. But last week, I saw him stumble. I’m not talking about the Tom Daschle business. As the stimulus package faltered, he reverted to campaign mode, blaming Republicans who wanted to cling to those failed policies of the past eight years we heard so much about in 2008.

Helping him in this counterproductive effort were such Republicans as our own Jim DeMint, who most certainly was clinging to the ideologies that have failed his party and the nation — such as the stubborn idea that tax cuts are the only kind of stimulus anyone needs.

A far more sensible position was taken by our other senator late Thursday. Lindsey Graham grabbed headlines by saying “this bill stinks,” but he had smarter things to say than that:

You know, my problem is that I think we need a stimulus bill. I think we need to do more than cut taxes. But the process has been terrible. The House passed this bill without one Republican vote, lost 11 Democrats. Nancy Pelosi said, We won, we write the bill.... (W)e’re not being smart and we’re not working together, and people want us to be smart and work together, and this has been a miserable failure on both fronts.

As I wrote this column, much remained unsettled. By the time you read it, something may have passed. But as I wrote, I was sure of this: If the Congress gave the president a bill that was pleasing only to the Harry Reids and Nancy Pelosis, it wouldn’t help the president inspire the kind of confidence that the whole nation needs to recover. (The same would be true if Jim DeMint got all he wanted, but there was no danger of that.)

But if the president has a bill that Lindsey Graham and John McCain and Ben Nelson of Nebraska and Susan Collins of Maine all voted for, the nation would have a chance of moving forward together. And together is the only way we can recover.

For more, please go to thestate.com/bradsblog/.

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