Obama’s New Stimulus Proposal: What’s the Point?

The field of battle for the mid-term elections has long since been determined. Every candidate, right or left, will be spending the 56 days between Labor Day and election day talking about the economy. Republican’s, of course, will be reminding the public of the 9.6% unemployment rate – all the while hoping that voters forget the last 2 years of nihilistic GOP opposition to any policies which may alleviate that suffering. And what will the Democratic message be? On Monday President Obama began to lay out that vision at a Labor Day rally in Milwaukee,

Mr. Obama’s plan would call for investment over six years, the White House says it would be front-loaded with an initial investment of $50 billion in taxpayer money, to help create jobs in as early as next year. The administration says it would work with Congress to find ways to pay for the plan, so that it would not add to the nation’s rising deficit. One possibility would be to cut existing subsidies for oil and gas exploration and production. Historically, transportation projects have been paid for largely with dedicated taxes such as those on gasoline.

White House officials said Mr. Obama wanted to rebuild 15,000 miles of roads, construct and maintain 4,000 miles of railway – enough track to span the continent — and rehabilitate or reconstruct 150 miles of airport runways while putting in place a system that would reduce travel time and airport delays.

The president will also call for what the White House is describing as an “infrastructure bank” that would focus on paying for national and regional transportation projects.

The rest of the plan, which focuses on business tax cuts, will be unveiled on Wednesday in Cleveland.

You’ll have to forgive me for being torn between reacting with a an outburst of applause or with a defeated shrug. The infrastructure spending is exactly the sort of action that liberals like myself have been calling for since the fall of 2008 when the economy collapsed. Keynesian stimulus, in the face of rampant public skepticism, needed a forceful and popular advocate and Obama is the only national figure (political or otherwise) with enough credibility to carry that message forward. The fact that the President has come around on the issue and is willing to step into the nation’s leadership vacuum to advocate for not just liberal policies but also the correct policies should be a moment of policy triumph for those of us on the economic left.

But in reality this is all too little, too late. Any investment package will be met with bi-partisan opposition. Republican’s will uniformly oppose any measure proposed by this President (it’s a strategy that has worked so far) and the lemmings in the Democratic Blue Dog caucus will fling themselves right off that policy cliff. Even if a package were somehow passed by Congress, it is already a week into September, the election is just 8 weeks from today. It is far too late for the package to have any impact on the economy until 2011, much less by election day. Obama certainly knows this as well and that’s why the gesture seems so futile.

Liberals will no doubt notice too that the President is proposing twice as much money in business tax cuts than in spending – even a nominal philosophical victory is really more capitulation.

I am trying to stay positive, I remind myself that having public debate on these issues is a positive step. Shifting the window of acceptable public discourse on the economy from the sphere of Milton Friedman, Ronald Reagan and Augusto Pinochet is, in and of itself, a good thing. Thanks to Monday’s proposal we will be debating the merits of deficit spending, government investment for the next 8 weeks. In some sense this is the debate that liberals wanted to have during health care reform. “Yes, we know you can’t pass the public option but so what? Propose it and let’s fight about it.” There’s even a name for this political theory, the Overton Window.

Such is the life of the American liberal in 2010, applauding the philosophical debate while shrugging our shoulders over its practical futility. The days of “Fired up, Ready to Go!” seem like a distant memory at this point.

Photo by jurvetson