Chump Change

What to make of empty theater? Discussing something dead before arrival?*

Politically, the Boy King never looked so small, so pedestrian, so marginal. He’s just another cable marketer, flogging a cobbled together package of half measures and flinches. More Goldilocks Syndrome. If this was Obama’s idea of “going big” he’s obviously never even said ‘Supersize’ at McDonalds. And his small ball is already flat. So what was the point?

* (see Comment explaining Boehner and Cantor’s public posture of reasonableness)

It’s a mercy this all is going nowhere, left to fester in various committees. If the Republicans were truly cruel they would pass it all and reveal the sham as the economy remains moribund. Obama apparently doesn’t know what we all here do: this is not a turn of the business cycle, however severe. Nothing Obama said addressed the structural, fundamental dysfunction in an American economy unable to re-inflate itself by fabricating more bubbles. Tellingly, this Summer’s brief flirtation with launching another tech IPO reprise floundered.

This prism must be used to analyze Obama’s dead on arrival ‘plan’. Citing data from earlier recessions as if they are comparable, apples to apples, misses the magnitude of our crisis.

Obama To America: We Are All Supply Siders Now

Obama refuses to see the data of his own first three years. Many warned in 2009 during the first stimulus it was both too small and too loaded with non-stimulative tax cuts. Empirically, tax cuts are the least effective accelerator of economic activity. Naturally, the Obama Administration prematurely caved and embraced the tax cuts and received nothing in return.

So here stands the Boy King presenting a ‘plan’ that is 65% tax cuts and 35% actual stimulus. It’s simply craven. Various talking heads will try and spin various portions as immediately stimulative and ‘targeted’, such as the tax cuts for hiring new workers. Or adding to the existing payroll cut. The smart economists carefully preface their comments as ‘of all tax cuts’ they are stimulative. The honest ones concede the cuts are not going to be stimulative but retentive – i.e., help companies unsure to decide against further layoffs, etc.

Re cuts for new hires, if you’ve ever hired anyone yourself, you know that the actual long term overhead of an employee easily can be 40-45% (if not more) above their base salary. Corporate America sitting on $2 trillion in cash isn’t impressed and not the target. To the small business community? We wager only marginal, negligible impact on the overall hire decision. Assuming it gets out of Congress. We’re confident a year from passage the data will bear that out.

We emphatically disagree with gushing young media personas praising the ‘plan’. True, their first crush was Gwen Stefani and they still can remember the name of their Econ 101 professor. Although tout le monde seeks their economic expertise, it’s been proven a precarious thing before. Enthusiasm is fine. We prefer data.

Forget that Obama has accomplished the trick of moving the political conversation to fighting for Movement memes on Movement territory. When thinking of these tax cuts and the 2009 stimulus? Money is still essentially free. In fact, if done correctly, the U.S. will pay *you* to borrow. Bernanke has nothing left and his silence lately telling. Pushing on a rope, anyone?

Some ‘plan’ details are interesting small ball stuff. Infrastructure investments? An infrastructure bank? Go for it. Still, recall 2009-2010. Disbursement, procurement and actual start of construction is protracted. Sometimes with an 18 month or more lead time. Still worth doing. Hiring teachers? A nice sop to a base he’s ignored and kicked in the face. Parts of Obama’s proposal may even make it through the House. Everyone is up for election, after all.

Any one of the small ideas are sensible. Justify the Boy King wading into the Mekong on the Hill with a cut-and-paste ‘plan’? Perhaps.

But we ask you this: if Obama declares “let me be clear” and serves up a plan with Medicare/Medicaid cuts on the table and 65%-35% tax cuts to actual stimulus at the outset, where does he end up when he declares bi-partisan agreement? Seriously. Where?

In your heart of hearts, you know you’re afraid of that answer.

Comments

  1. James N says

    Much as I appreciated Sullivan’s stance on Guantanamo during the Bush years, he has a really horrid need to hero-worship.

    Obama has asserted the unilaterial right to spy upon, imprison, and kill any of us, without due process. (He or any of his predecessors could do those things at any time, of course, but I think it takes a little something special to assert it as a legal power.) One would think this is inconsistent with Burke, Oakeshott, et al. But meep meep to all that.

    Even if you take Sullivan’s central thesis about Obama seriously–Obama’s goal is to somehow transform political culture in Washington by transcending partisan politics–it’s self-evidently absurd:

    1. Obama himself is not Dave Bowman inhabiting some Rococo French Bedroom orbiting Jupiter. He’s the functional head of the Democratic Party. Everything he does is unavoidably a partisan act.

    2. To “transcend” partisan politics, the only concession Obama can make is to repeatedly sell out his own base as a show of maturity and good faith to the other side.

    3. Yet because electoral politics is a zero-sum game, and Obama (as a product of that game) has to be partisan, the opposition party has absolutely no incentive to see him succeed. So they will oppose him no matter what kind of good faith concessions he makes, because their political lives depend on it.

    As a result, little of consequence is accomplished, and from a left-wing standpoint it’s actually worse than nothing. Obama has evidently calculated that there’s more votes to be gained through ineffectual centrist moaning, and maybe he’s right. But it’s a strategy at least as cynical and cult-like as anything on the Right.

  2. says

    Some here may have followed Andrew Sullivan’s defense of Obama contra various strawmen arguments he demolished (and no stunt doubles, he did his own jumps and dives). AS over the years has said friendly things to the Stiftung about the blog, particularly during the early days, so we do appreciate that generosity of spirit.

    Nonetheless, all we can say is if this blog has meant anything since 2007, its corpus is an emphatic rejection of AS’ various contentions and assertions. Moreover, nor are we entirely convinced that knowingly re-electing the Boy King necessarily the lesser of two evils given the inevitable political resolution about societal form and function, especially within the Movement itself. Even a medium-term structural approach raises profound questions.

    The comments above are, of course, separate from immediate talking-point-blather policy preferences and short term obvious outcome determinative results. We say this confident that this qualifier will be lost in the noise as well.

  3. Comment says

    The President is very much influenced by hedge fund types – people he thinks are centrist and smart etc – That’s why he doesn’t seem to know that an economy with little aggregate demand cannot grow. Reagan’s growth was demand side post-’82 – But the poison of false memes is shot thru the consensusphere.

  4. anxiousmodernman says

    I am fearful about all of this, honestly.

    When the first payroll tax cut manifested itself as an extra $80 in my paycheck every other week, I shrugged. I’m for a more progressive, simpler tax code, and cuts to payroll taxes are a good thing insofar as they’re regressive. But they’re not economic stimulus. That extra $80 is going to pay down debt I will incur. Or I’ll save it. Neither of those things are stimulative.

    Excellent point about the hiring incentives. For any decent job, one with benefits, $4,000 dollars in tax breaks is not going to tip the hand of too many corporations. And, while I’m no expert, doesn’t this just make tax time more complicated for businesses and government? The enforcement and oversight of tax expenditures is surely more complicated than filling out just another form.

    (In my more drunken moments I espouse a conspiracy theory: the complex US tax-code is actually a back-door white collar jobs program for lawyers and accountants.)

    +1 for infrastructure spending, and a bank to oversee it.

    Overall, it’s not that I’m against the plan, per se. Extend unemployment insurance and tax the rich a bit more. It’s hard for me to be against these things. But this is the kind of thing that should have been put on the table over a year ago. Since then we’ve extended the Bush tax cuts, seen exactly no movement on our foreign occupations, given up our manned spaceflight aspirations (the last vestige of Cold War Greatness), and endured an absolutely toxic summer of stagnation and manufactured ‘crisis’ re: the debt-ceiling thing. That was a total sham.

    We’re always so dour around here. We have reason to be, but let’s not forget that we believe in democracy and pluralism. Speak to your neighbor earnestly. Cynicism is too easy. What’s more, cynicism is what our lazy oligarchs expect. So take democracy seriously. You’ll get a funny look around the water cooler, but it will be difficult to reproach you. Cheers.

  5. jwb says

    @Dr Leo Strauss
    Before my time. It has appeared elsewhere; big brouhaha on the Twitter machine yesterday because one of our fine talking heads used it. As a term, it still doesn’t work, because it focuses on elements that are not descriptive of Obama’s weaknesses as a leader in opposition to the movement. Your analysis of the speech and the jobs plan point precisely at those weaknesses. They do not concern his youth or regal bearing. The term focuses the fight on a problem that for once doesn’t exist. The movement is happy.

  6. jwb says

    Odd to see you pushing the peculiar boy king meme, which is wrong in both descriptors. Whatever Obama’s faults as a leader, they do not flow from youth or regal bearing.

    • Dr Leo Strauss says

      Pushing? Dare say we invented that here is in 2007 or 2008. There was a brief flirtation with Crowned Prince — alll mocking his blind, idiotic kool aid drinking followers. Since 2009 we kept it because he governed as we predicted. It’s always explicitly mocked his inexperience.

      All the Rightist and other attempts to hijack the label usually carrying racist or other tones. Those who know the Stiftung in real life can assure all readers beyond our own words that we’re resolutely committed to tolerance, justice and opportunity – and have have the track record to show it.

      Anyone here who reads into this writing those overtones brings that baggage with them.

  7. Cabbie@69th_Street_Bridge says

    Caught between a laugh and a tear that so many consider college drop out AM radio jocks as infallible experts and (willfully?) ignore what the creators of supply side/Reaganomics have to say about those systems. We’re 30 years into the cult of “Tax Cuts = Prosperity for All” and a debt laden & dwindling middle class is all we have to show for it. That such a belief can exist in the face of so much empirical evidence is another sign of the national character in Amerikuh as you say.

  8. DrLeoStrauss says

    Morning Joe and Den Mother Mika in particular disagree with our take, calling Obama, strong, powerful, etc. ‘Obama threw a strong punch.” Who knew?

    In our economy, the $157 billion in actual *proposed* spending is a piffle. Pesky details. One can only imagine young progressives today excitedly drawing supply side curves on each others’ Starbucks napkins . . .

  9. Dr Leo Strauss says

    Interesting to see Boehner and Cantor both say they can work with parts of the ‘plan’. Smart politics given congressional disapproval levels. We doubt it changes the major political tectonics. More for optics.

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