From the Bureau of a Misdirected Destiny

I had to use this graffiti I saw yesterday on a fence in Washington D.C. It seemed appropriate when I heard Michael Steele on the local radio station spell out the Republicans view of how to move ahead on the economy. Steele was the most articulate of the Republicans so far in talking substantial economic points but he reiterated the mantra of more tax cuts--some of which actually to make sense if targeted to job creation. With Kay Baily Hutchinson parroting the party line on the weekend talk shows and Mitch McConnell threatening to filibuster the economic stimulus package in the Senate. The question has to be raised: According to Republicans, where is the country economically?

I think there is a consensus of Republicans that we are in a severe recession but with low inflation. Given the genetic programming from the 1980s, when the US had stagflation and after Reagan built up the national debt, the logical Republican argument is to stimulate the economy through tax cuts and fiscal policy and curtail government spending, especially on social programs. Unfortunately, the Fed is out of tools--loaning money at 0% interest--and tax cuts have been used throughout the last eight years. With growing unemployment, the safety net has huge wholes that need plugging. So then are we back in Hoover land as New York Times' columnist Frank Rich maintains? In his Sunday column he pointed out that the Republicans have no sense of urgency of this matter. That's because they really do not understand we are on the precipice of a Depression.

One of the reasons the House stimulus plan passed so easily was that the Obama team came prepared the first week to get the ball rolling. This has stunned Republicans who remember the chaos of the Clinton transition and the slow pace of Bush. It's in response that they are now reacting, except without much intellectual firepower. This past weekend, John McCain claimed the Senate Republicans would offer their own stimulus plan.

How this goes in the Senate is anyone's guess. But Alice Rivlin, the former Clinton adviser, raises red flags for those who believe Obama has the ability to re-invent the country at this time. She warns that China, which is starting to plunge into a recession, will not have the ability or will to buy up our debt as in the past and that this should curtail some of Obama's ambitious goals. Remember during FDR's time the US was a creditor country and not a debtor. So the restrictions on Obama are based on whether the US can sell sufficient treasuries to other countries, almost all of whom are in recession, to cover our massive debt.

Our friends at The Young Turks have voiced their justifiable concern that if Obama puts health care reform and an energy policy on hold so as to adjust the short-term economic problems, by the time he comes back to Congress, the response will be that the US has no money left. That's part of the reason Nobel Prize winners Joseph Steiglitz and Paul Krugman are warning Obama off creating a bank to buy all the "toxic assets" of the American banks. Not only would that quadruple the national debt but it would forestall any meaningful change.

It seems to me that the media should get Republicans to answer simple questions about where we are in the economy, what caused the current situation and what happens if we do not respond in a timely fashion. The media allow Republicans to respond to the Obama plan without critically following up where they are coming from and whether they feel any urgency on these matters.

Republicans governors have abandoned ship on their congressional counter-parts because they have to govern and their states are close to or are in bankruptcy. They have been lobbying the Hill for passage of the stimulus, particularly on infrastructure works and employment plans.

People are rightfully angry at the Bush bailouts and $15 billion given bankers as bonuses. This past weekend the Associated Press did an investigative story that showed the bankers wanted to hire some 25,000 plus of foreign workers with the bailout money and not rehire the Americans. The jobs in question were in the $90,000 wage range.

The problem is that no one can tell whether the economic stimulus package will work in a meaningful way. As Robert Samuelson wrote in the Washington Post the other week, Obama is facing several different financial crises and that to solve them all is like winning the Tour d' France.