It's the Economy Stupids
This post is not about the horse race or who "won" the debate. This post is about the greatest problem facing America today, a greater problem than we have faced in many years. This post is about the economy. I'm sorry to say that neither of the candidates took the opportunity to address it in a serious manner.
Let's begin with McCain, the stupider of the two. What's McCain's solution to our economic travails? Reducing earmarks. As Jim Lehrer pressed him on how to address the current crisis, McCain responded with earmark reform and more earmark reform. Earmarks are certainly a problem. We waste a lot of money on local projects that serve not the nation's interest but the interest of reelecting certain congresspeople who have proven their worth by staying in office long enough to head choice committees. Great. Let's cut the earmarks. According to the O.M.B., we spent $16.5B on earmarks in 2008. That's a lot of money to you and me, but to the Federal Government, it's chump change. The total Federal Budget in 2008 was almost 3 trillion dollars, of which earmarks make up one half of one percent. Let's say McCain were to be elected President and, against all odds, succeed in banning earmarks completely. The Federal Budget would still be 3 trillion dollars. What does shaving 0.5% (at most) from the Federal budget have to do with stabilizing the economy?
But it's worse than that. Ever since Keynes, it's been widely accepted that governments should spend money during recessions in order to stimulate the economy. Whatever limited value earmarks have for the nation, they at least pump money into the economy. So McCain's solution to the recession is to cut Federal spending which would accomplish the exact opposite. 2009 is the worst moment in recent history to cut earmarks. McCain's solution not only offers minimal benefit to our economy; it's actually counterproductive. Did I say stupid?
Obama's turn. Obama, to his credit, spent a minute or two discussing the bailout plan, which is more than McCain was able to muster. But the bailout is a stopgap measure meant to stave off a massive collapse. It's the first step in what must be a comprehensive plan to rebuild the economy. So what else did Obama have to say about the economy? Tax cuts for the middle class. Everyone who makes less than $250K will receive some kind of tax cut. Rolling back the Bush tax cut for the rich will cover the cost. Income distribution and the shrinking middle class are major problems which need to be addressed, and I'm very glad that Obama intends to address them. But those plans do not address the economy in the near term. The tax cuts do not constitute a stimulus package. Obama's plan simply that shifts the current tax burden to wealthier Americans. It does not provide any solution to our immediate economic malaise.
The correct answer to Lehrer's question about what we need to cut would have been to say that now is not the time to reduce the deficit. What we need right now are stimulus packages for the top, the bottom, and the middle. We need to inject capital into the economy and restore confidence. We need a plan to protect the country from a long, deep, painful recession. Neither candidate has offered even the glimmer of such a plan.
Let's begin with McCain, the stupider of the two. What's McCain's solution to our economic travails? Reducing earmarks. As Jim Lehrer pressed him on how to address the current crisis, McCain responded with earmark reform and more earmark reform. Earmarks are certainly a problem. We waste a lot of money on local projects that serve not the nation's interest but the interest of reelecting certain congresspeople who have proven their worth by staying in office long enough to head choice committees. Great. Let's cut the earmarks. According to the O.M.B., we spent $16.5B on earmarks in 2008. That's a lot of money to you and me, but to the Federal Government, it's chump change. The total Federal Budget in 2008 was almost 3 trillion dollars, of which earmarks make up one half of one percent. Let's say McCain were to be elected President and, against all odds, succeed in banning earmarks completely. The Federal Budget would still be 3 trillion dollars. What does shaving 0.5% (at most) from the Federal budget have to do with stabilizing the economy?
But it's worse than that. Ever since Keynes, it's been widely accepted that governments should spend money during recessions in order to stimulate the economy. Whatever limited value earmarks have for the nation, they at least pump money into the economy. So McCain's solution to the recession is to cut Federal spending which would accomplish the exact opposite. 2009 is the worst moment in recent history to cut earmarks. McCain's solution not only offers minimal benefit to our economy; it's actually counterproductive. Did I say stupid?
Obama's turn. Obama, to his credit, spent a minute or two discussing the bailout plan, which is more than McCain was able to muster. But the bailout is a stopgap measure meant to stave off a massive collapse. It's the first step in what must be a comprehensive plan to rebuild the economy. So what else did Obama have to say about the economy? Tax cuts for the middle class. Everyone who makes less than $250K will receive some kind of tax cut. Rolling back the Bush tax cut for the rich will cover the cost. Income distribution and the shrinking middle class are major problems which need to be addressed, and I'm very glad that Obama intends to address them. But those plans do not address the economy in the near term. The tax cuts do not constitute a stimulus package. Obama's plan simply that shifts the current tax burden to wealthier Americans. It does not provide any solution to our immediate economic malaise.
The correct answer to Lehrer's question about what we need to cut would have been to say that now is not the time to reduce the deficit. What we need right now are stimulus packages for the top, the bottom, and the middle. We need to inject capital into the economy and restore confidence. We need a plan to protect the country from a long, deep, painful recession. Neither candidate has offered even the glimmer of such a plan.
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Genghis,
This debate wasn't for you. You've been won over.
It was for the middle American, many of whom (a) don't see a lot of difference between Obama and McCain and/or (b) don't know much about either candidate.
Many of these in the middle will wait for some crystallizing idea that will allow them to get beyond the tipping point. Nothing in what you propose will get people there -- without possibly offending others.
This is not a policy debate. You have no idea what polling data the candidates are looking at -- although the answers are sometimes an indication of it.
In any event, this is a campaign stop -- and the point of a campaign stop is to win over voters.
You've been won over. That's why you want more depth to the answers. But as I said, this debate wasn't meant for you.
September 27, 2008 3:41 AM | Reply | Permalink
PS I'm including this PS so as not to put too many points in a single comment:
I don't even agree with your plan issues. The economy runs on cheap energy which allows us to expect a growth rate of 2-3% annually. This is all about to come to a crashing halt.
You assume that things can "go back to where they were" -- but they can't, because we are in a peak oil situation. So the real fundamental issue isn't the economy -- because it's about to hit a wall from yet another source -- it's energy.
You will note that there has not been a single serious suggestion as to regards to the dire energy situation in this country. (Plans about alternative fuels, etc. are all based on the faulty notion that "life can go back to where it was before".) I claim that *ENERGY* is the central issue -- the 3rd rail that no one can talk about. (Much like no one wanted to talk about the junk tranches sold for years -- when all knew they were junk.)
Again, no serious motion on this issue can be expected -- because if someone were even to claim the boat is in danger of capsizing, they would be tossed overboard long before the election.
I'm not sure if this is the first political process you've watched closely or not -- but many of your recent comments concerning how Obama is running his campaign suggest you need to take a longer, wider view.
You may find Robert Caro's book MASTER OF THE SENATE revealing in how it describes, in great detail, the good, the bad, and especially the ugly of American politics. I was tickled that Obama was seen with a copy under his arm early in the primary season. It's not just a book about LBJ and it's not just a book about the Senate.
September 27, 2008 3:50 AM | Reply | Permalink
I'm not going to try to put my head into the mind of the average voter. As I wrote, this post is not about the horse race. I wish journalists would spend less time discussing who earned the most points and more time discussing who has policies that will address the most important issues facing us. The candidates' grades on this issue are poor. McCain has no strategy whatsoever to deal with the recession, and in that context his talk of earmark reform is a joke. I don't apologize for saying that it's a joke, and I think more people need to step up and say that it's a joke. At the same time, Obama doesn't have much of a plan either, and despite my support for Obama, I don't plan to hold him to a lesser standard.
September 27, 2008 6:03 PM | Reply | Permalink
A couple of C-clamps might make it fit.
The American Presidential Debates are marketing theater, just like the rest of our campaigns. It's an asinine way to choose a leader but that's what we have. An intellectual who is reluctant to make any statements that will be hung around his neck forever is vilified as an elitist who can't relate to working-class voters, or an empty suit spouting platitudes. The electorate is looking for a mediocre achiever with a below average IQ to solve the most complicated problems ever faced in history. We've effectively dumbed ourselves into an irreversible decline. We will never again be what we were even 10 years ago. Dinosaurs on Noah's Ark and the hastening of the Rapture have replaced the race to put the first man on the moon. The Stupids think they should be ruling, due to their great numbers.
September 28, 2008 1:02 AM | Reply | Permalink
Bullshit. We are better than that.
September 28, 2008 2:12 AM | Reply | Permalink
For what it's worth, you've exhibited an uncharacteristic degree of frustration with the politics of this campaign over the past several days.
The race is long and belongs to the patient.
Obama is not going to change the world as president and he's going to do much less than that as merely a candidate for president.
September 28, 2008 2:42 AM | Reply | Permalink
I've been disappointed by the way both candidates have addressed the financial crisis, and I've been frustrated by the way the Cafe community has reacted to it. It's not just that people don't seem to be worried about it. It's that most people here really don't understand it, haven't tried to understand it, and don't listen to the people who do understand it.
September 28, 2008 8:55 AM | Reply | Permalink
i'm still not convinced the economy is the greatest problem we are facing today. still gotta go with climate change/global warming/enhanced greenhouse effect. pick your favorite name. in fact, a massive global economic collapse might be just what the doctor ordered to slow our consumption of fossil fuels. then again, i suppose it could accelerate that consumption. who can say for sure? the future is so hard to pin down. but either way, there are many, many correct answers all mixed up in a shitpile of wrong ones. digging out just the one you need, just when you need it is the trick. look around. how we doing so far?
September 27, 2008 4:19 AM | Reply | Permalink
Clarification: The greatest immediate problem. I agree that there are bigger long term problems.
September 27, 2008 5:40 PM | Reply | Permalink
Rec.
As you say. It's one of the parts of his plan I don't like.
September 27, 2008 10:00 AM | Reply | Permalink
WHO ARE YOU CALLING AN ECONOMY??!?!
September 27, 2008 1:43 PM | Reply | Permalink
Consider that it may not be possible to stop a recession at this point. Obama doesn't want to come out with some five-point plan, before his first term begins, that promises to prevent a recession. That would severely hurt him in the '12 campaign.
Personally, I would like to see him lay this more forcefully at the door of the GOP. The data are in. Democratic administrations are good for the economy, Republican administrations are bad. This argument can be made very forcefully, now more than ever.
Especially at a debate, where no one is really looking for policy details, this would be a very simple frame. GOP rule means massive deficits, S&L crisis, out of control spending and whatever the hell they'll end up calling what's happening right now. It can all be put very plainly in McCain's lap.
September 27, 2008 1:47 PM | Reply | Permalink
I don't expect him to promise to prevent a recession (or rather, pull us out of one). I would like him to present a plan to limit the damage.
September 27, 2008 5:44 PM | Reply | Permalink
Genghis, I have to point out that you have a much deeper understanding of the causes and fixes here than does the "average" voter. That's why you didn't hear anything from Obama that would satisfy you.
I think Barack stayed focused on his specific objectives last night, which were (1) meeting McCain "on his turf" -- debating national security -- and demonstrating that there's nothing to support McCain's assertions that Obama is dangerously naive and unprepared to be a commander-in-chief; and (2) that he has the calm, reasoned, sensible approach to protecting the nation that, after Bush's disasterous foreign policy, Americans are looking for. Barack Obama solidly accomplished his goal of meeting those objectives last night.
Had he chosen last night to specifically tackle McCain's predictable conservative posturing that it's simply corruption and fiscal irresponsibility that ails us -- irresponsibility that has dramatically increased our national debt -- Obama would've likely risked giving the Republicans ammo to bolster their claim that Obama is just another "tax and spend librul." It probably was not the right time to openly propose that deficit spending (admittedly on programs that invest in Americans and our nation) is actually the best course. For what it's worth, I think Obama did emphasize his position that we need to invest in new economic initiatives, infrastructure, and in American citizens themselves because these are wise investments that will bring a return, as opposed to the hundreds of billions spent in Iraq, which has not had the result of making us safer. It's just my humble opinion, but I think Obama was successful in projecting a vision that will be seen as more relevant and directly helpful to average middle-class Americans than McCain's single focus on "wasteful spending." His phony outrage over the $3 million spent on studying bear DNA is probably sounding silly (a teardrop in the ocean) to voters who are hearing the President talk about passing a $700 billion "rescue" package for the financial sector. Obama talks about programs that will provide specific relief to middle-class Americans, whose thoughts are probably more like this: "How do government budget cuts, lower corp tax rates, and deregulation help me... make ends meet?... pay tuition?... keep up with mortgage payments?... keep the line of credit I need to run my small business?..." etc. In addition, Obama continues to point out that active government direction in green-sector business growth will open doors to the potential for a new economic boom -- in a much more convincing way than McCain's tired (and increasingly discredited) Republican tax-cuts-and-deregulation mantra.
September 27, 2008 4:15 PM | Reply | Permalink
Thanks, Laura. I think that the concern about Obama opening himself to charges of tax-and-spend is a good rejoinder. But I'm not convinced that there isn't a way to argue for a stimulus package without that risk. Americans get upset about what they perceive to be unnecessary programs and giveaways. Stimulus proposals that are specifically tied to stabilizing the economy aren't quite the same thing. I agree that "investment" a very good way to present it, I would like to see Obama go continue with that.
September 27, 2008 5:54 PM | Reply | Permalink
I think Obama will continue to present his ideas as investment spending vs. "wasteful" spending. But he'll probably (of necessity) have to avoid mentioning deficits. I know it doesn't seem logical to propose that voters will consider increased spending without worrying about increasing deficits, but I think maybe it could work -- easily. Voters seem to be capable of tolerating cognitive dissonance. For example, a CBS/Knowledge Networks poll of 500 undecided voters shows that, after last night's debate, "forty-eight percent of these voters think Obama would make the right decisions about Iraq. Fifty-six percent think McCain would." Now, when considering that at least 60% of Americans think our going into Iraq was a mistake and not worth the effort, and at least 60% of Americans favor a timeline for reduction of troops in Iraq, it seems incredible that a majority of Americans STILL believe McCain will "make the right decisions about Iraq." WTF??
Anyway. I think it would be politically suicidal to attempt an intellectually honest discussion/debate about a defecit-spending approach to economic recovery during the six weeks leading up to the general election.
September 27, 2008 6:49 PM | Reply | Permalink
We have reached a very sad state of affairs when telling the truth has become suicidal.
September 28, 2008 2:18 AM | Reply | Permalink
Wait until the next president has to somehow tell the American public that there is simply no way to have the cheap energy to sustain the "American way of life".
I'm betting that will come out as quickly as the truth about tranches of bad loans being sold did.
Telling the truth is always suicidal -- has been for thousands of years. Where do you think the expression "Don't kill the messenger" comes from?
September 28, 2008 2:47 AM | Reply | Permalink
Genghis,
I assume you've checked out this thread:
http://tpmcafe.talkingpointsmemo.com/talk/2008/09/my-8-year-old-sons-debate-anal.php
It touches on some of the points you are fighting against - albeit not intentionally!
September 28, 2008 2:01 AM | Reply | Permalink
CT, in referencing this post, you have reduced this election to the perceptions of an eight-year-old.
September 28, 2008 2:16 AM | Reply | Permalink
Perhaps you should read my comments on that thread, Genghis.
As always, hasty judgements make for foot chomping exercises.
September 28, 2008 2:37 AM | Reply | Permalink
I appreciate your comment at the end. I read the post, not the comments. Consider me the anti-visceral response guy.
September 28, 2008 8:46 AM | Reply | Permalink
I've glad you're speaking more frankly Genghis. Compared to what's needed, Obama gets an F. Full stop. (McCain gets an R-.)
But it's too big. And too early. People are staring at the bank crisis, and they can't even fathom that. They do NOT want to be told the bad news, even when it's just about banks. The denial is huge - its cultural, it's in the gut. Just look around here. And the media, business, the parties - none have an interest in educating and informing anyone, do they?
Obama gets at least some of this, the reality. But if he runs an inch out ahead, McCain will saw him off. Turn him into Jimmy Carter. A doomsayer. Hell, McCain & co. won't even own the mess on the White House table. Obama's people have to be realizing they're gonna have to do this like FDR. Let the shit hit, and as it does, and it sinks in... then come in to help.
Which makes me alternate between despair, and... resignation. Because as they wait, as everyone positions, as the waves of denial keep coming - the inevitability of the economic shit to come grows. And its future duration... extends.
As for me, I don't believe it's going to be a recession. I've studied this shit, and I just see NO sign, no data, that tells me this is like 2000... or 1990... or 1980.... it's worse. On finance, on fiscal issues, on debt, on global trade, on manufacturing. But we'll all go along talking about it - 99% of the time - like it's just a "manageable" economic issue. A "recession." Hell Genghis, people even here - on the LEFT - are denying, downplaying, clenching their eyes shut.... when even a cursory look at the numbers, in any kind of comparative context, would show them.
Which is why I wrote my damn-fool piece tonight - Cake or Pie... 19th Nervous Breakdown. It's about the swirl in people's minds, during times like these. When some of them are big enough that they should be focussing out attention like they were the only thing on Earth. But apparently... the human mind doesn't work that way. Get your money in cash or close to it. Sell extra assets, get the cash. Lock in mortgages now, for as long and as low as possible. This is the real deal.
September 28, 2008 2:20 AM | Reply | Permalink
Should be: "When some of the issues are big enough that people should be focussing their attention on them - like they were the only thing on Earth." Ack.
September 28, 2008 3:10 AM | Reply | Permalink
Ack indeed.
September 28, 2008 9:11 AM | Reply | Permalink