The fact that our wise Democratic leaders felt that they needed to engage in this argument at all---which is to say, an argument over the wisdom of unilateral disarmament before the battle has even started---only proves that some of Washington's best and brightest minds aren't really all that bright:
Obama was told that, regardless of his policies, the deficits would likely be blamed on him in the long run. The forecasts were frightening, and jeopardized his ambitious domestic agenda, which had been based on unrealistic assumptions made during the campaign. “Since January 2007 the medium-term budget deficit has deteriorated by about $250 billion annually,” the memo said. “If your campaign promises were enacted then, based on accurate scoring, the deficit would rise by another $100 billion annually. The consequence would be the largest run-up in the debt since World War II.”
There was an obvious tension between the warning about the extent of the financial crisis, which would require large-scale spending, and the warning about the looming federal budget deficits, which would require fiscal restraint. The tension reflected the competing concerns of two of Obama’s advisers. Christina Romer, the incoming chairman of the Council of Economic Advisers, drafted the stimulus material. A Berkeley economist, she was new to government. She believed that she had persuaded Summers to raise the stimulus recommendation above the initial estimate, six hundred billion dollars, to something closer to eight hundred billion dollars, but she was frustrated that she wasn’t allowed to present an even larger option. When she had done so in earlier meetings, the incoming chief of staff, Rahm Emanuel, asked her, “What are you smoking?” She was warned that her credibility as an adviser would be damaged if she pushed beyond the consensus recommendation.
Peter Orszag, the incoming budget director, was a relentless advocate of fiscal restraint. He was well known in Washington policy circles as a deficit hawk. Orszag insisted that there were mechanical limits to how much money the government could spend effectively in two years. In the Summers memo, he contributed sections about historic deficits and the need to scale back campaign promises.
If there ever was a time when you wished that some of our political leaders had a little more experience working in the private sector---not Mitt Romney's private sector, but the brick-and-mortar version that the rest of us labor in---this would have been it. Because anyone who has worked more than ten minutes in the real private sector knows that cost-cutting never creates any jobs. In fact, companies usually engage in cost-cutting with the expressed aim of eliminating or consolidating jobs.
The other amazing thing about this depressing essay is this: nobody at any time seems to have thought that a good way to find the money to help pay for the stimulus would be to, you know, raise taxes on rich people.
On February 1st, a day before Obama was scheduled to meet with congressional leaders from both parties to make his case for the stimulus, his advisers wrote him a memo recommending that he keep the stimulus package from growing: “We believe that it is critical to draw a sharp line not to exceed $900 billion, so that the size of the package does not spiral out of control.” Senators would likely amend the bill to add about forty billion dollars in personal projects—some worthy, some wasteful. At the same time, Obama hadn’t abandoned his dream of a moon-shot project. He had replaced the smart grid with a request for twenty billion dollars in funding for high-speed trains. But including that request was risky. “Critics may argue that such a proposal is not appropriate for a recovery bill because the funding we are proposing is likely to be spent over 10+ years,” the advisers wrote.
To find the extra money—forty billion to satisfy the senators and twenty billion for Obama—the President needed to cut sixty billion dollars from the bill. He was given two options: he could demand that Congress remove a seventy-billion-dollar tax provision that was worthless as a stimulus but was important to the House leadership, or he could cut sixty billion dollars of highly stimulative spending. He decided on the latter.
Obama's gut instincts were right. He should have held out for the moon shot as well as aid to states, and informed all of his advisers that they were free to resign if they disagreed with him. It only goes to confirm, I think, the biggest problem we've had in Washington the last three years: Not a lack of vision, nor of resources, but a lack of political will to get shit done that needs to get done.
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