"No Nothing, Nada, Zilch, Zip"

Robert Reich explains why there isn't going to be any Bush economic policy from here on:

Hank's Make-Work Job, by Robert Reich: My old college classmate Hank Paulson has been making the media rounds, seeking to assure all watchers and listeners he's no Paul O'Neill or John Snow because he has Bush's ear and personal assurance he'll be a key player on economic policy. Hank may be a key player but his real problem is there isn't going to be any Bush economic policy from here on -- no trade rounds (Doha is dead), no entitlement reform (Social Security privatization is dead), no tax reform (dead, dead), no major extensions of Bush tax cuts for the wealthy (even if Republicans keep the House after November, they have no stomach for more of this), no major cuts in non-military discretionary spending (all the low-lying fruit has been picked). No nothing, nada, zilch, zip.

Despite his boilerplate babble about maintaining a strong dollar, Paulson won't be able to stop the dollar from falling because the nation is so deep in debt. Despite his China ties, he won't be able to get the Chinese to revalue because tens of millions of peasants are coming off the land and wanting jobs, and the export sector is the only readily-available job bank for them. Despite Hank's avowed concern about widening inequality and sluggish wages, he won't be able to do a thing about them because there's not a soul in the administration who has a single idea what to do, or, with the possible exception of Paulson, cares.

He met today with Ben Bernanke, apparently. Says they'll be meeting monthly. That's just as well. Bernanke is the only Bush economic appointee with any power to do anything from here on. But given the dire combination of price inflation with a slowing economy, not even Bernanke will be able to [do] much.

A hidden cost of recent policy is that, should a downturn occur, it will be difficult to use fiscal policy to stabilize the economy. Because monetary policy isn't generally as effective as fiscal policy at kick-starting a lagging economy, this can lead to a longer and more severe downturn.