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Tuesday, January 20, 2009

"Obama's First Choice"

I'm not sure I agree with this:

Obama's First Choice, by Robert Reich: Today, at noon eastern standard time, we have a new president. And after all the pomp and parades and parties are over, President Obama will turn to his first major job, which is ... getting his stimulus package through Congress.

Almost every economist will tell you the stimulus has to be massive in order to have any real impact. Even Marty Feldstein, who headed Ronald Reagan’s Council of Economic Advisors, told Congress it had to be $800 billion. My own view is at least $900 billion. But a price tag like that scares Republicans and so-called “blue-dog” Democrats who worry about government debt.

So here’s our new president's strategic choice. He can flight for the biggest stimulus politically possible – twisting arms and counting noses to get a bare majority in the House and sixty votes in the Senate. That’s how Ronald Reagan and George W. Bush got their huge tax cuts, and how Bill Clinton got his first budget through Congress.

Or Obama can aim to get the backing of a much larger majority than he needs to get the stimulus enacted – including a majority of blue dogs and Republicans. To do this he’d likely have to settle for a smaller stimulus package – one that may not be enough to jump-start the economy.

Why would he ever choose the second strategy? Because his goal is not just to get the biggest stimulus package he can squeeze through Congress. It’s to get a Congress that’s mostly united behind whatever stimulus package emerges. This would ensure that Republicans and blue-dog Democrats take some ownership of the package, and therefore responsibility for making it work.

If they feel ownership and responsibility, Obama could return to them later if more money is needed, and probably get their backing. Just as important, he starts to build bipartisan support for other things that have to be done in the next few months – keeping the U.S. auto industry afloat, reducing mortgage foreclosures, and devising new regulations of Wall Street. And he lays the foundation for a more united Congress capable of tackling a new health-care system, a new system for reducing carbon emissions, and reform of Social Security and Medicare.

It’s not the strategy his predecessors used to get their economic plans enacted. It’s not hardball politics, and it may not be the best move for the economy in the short run. But given the challenges our new president and our nation face over the long run, this may be the smartest politics and smartest economics.

If Republicans are led to believe from the onset that they have veto power over legislation - that nothing will happen without sufficient consent from their side of the aisle - they will gum up and defang everything. Policy will have no real teeth if it gets enacted at all. The key isn't to get Republicans on your side, it's getting the public on your side (press willing). If the public is behind a policy - if, for example the proper foundation is put in place for health care reform, a process that starts at the grassroots level rather than in Washington courting Republicans - then the votes will follow.

The Democrats need to make their case to the public, win it, and then fight for the best possible policy. If Republicans want to obstruct that process, then they can have the blame when, for example, the stimulus package is insufficient and doesn't work. In addition, I think policy decisions are sufficiently independent so that bipartisan support on one piece of legislation says little about what will happen next time. Politicians are opportunists, and if  good opportunity presents itself, if, for example, they can shore up the support of their base by being contrary in particular instance, then that's what they will do.

But maybe you see things differently?

    Posted by on Tuesday, January 20, 2009 at 10:53 AM in Economics, Politics | Permalink  TrackBack (0)  Comments (46)

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