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Tilting at Windmills

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December 9, 2008

WHAT IS TIM PAWLENTY TALKING ABOUT?.... The latest "what do we do now?" piece for the Republican Party comes from Minnesota Gov. Tim Pawlenty (R), who outlined his Big Idea in a piece for the Politico yesterday. It's right up there among the most ridiculous pieces I've seen in a long while.

Pawlenty, considered something of a "rising star" in Republican politics, believes the financial crisis we're facing is the result of excessive debt. So, in order for the GOP to "again become the national majority party," the party must take a firm stand against "recklessly issuing even more debt."

In his bid to become the poster child of Neo-Hooverism, Pawlenty believes the Republican Party should respond to the recession by pushing ... wait for it ... a balanced budget amendment to the Constitution.

Republicans should push for the enactment of an amendment to the United States Constitution requiring a balanced federal budget. This initiative is based on the common sense, kitchen table logic that most Americans and businesses live by. They expect the same from their government but haven't been getting it lately.

Passing this amendment will be no small task.... Getting it done will require a two-thirds vote by both houses of Congress, followed by ratification by three-fourths of the states.

While daunting, this effort will unify and energize Republicans. It will require the GOP at all levels to be engaged in a common sense agenda that is compelling, conservative and that will positively transform America.

This is so blisteringly stupid, I find it hard to believe an elected official would actually put his name on it. Maybe the Politico is playing a practical joke on Pawlenty, in the hopes of making him appear like a fool.

I honestly don't know where to begin in responding to such an insane policy prescription. The first point, of course, is that trying to balance the budget in the midst of a financial crisis is the exact opposite of what every sane person realizes we need -- a government stimulus to help spur the economy. Why would Pawlenty recommend slashing hundreds of billions of dollars in government spending right now?

Second, that the Minnesota governor sees a similarity between an individual family's budget and that of the United States government suggests he has a child-like understanding of economic basics. As Publius recently explained: "The micro-considerations of an individual family or business has nothing much to do with what governments need to do to get the larger economy moving again. Even worse, it's often affirmatively harmful to adopt microeconomic solutions to macroeconomic problems."

If Pawlenty is a rising star in the Republican Party, the GOP's future is painfully bleak. This piece suggests Pawlenty looked back at the Great Depression, and became convinced that Hoover was right.

Steve Benen 8:00 AM Permalink | Trackbacks | Comments (53)

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Why would Pawlenty recommend slashing hundreds of billions of dollars in government spending right now?

Because such promises win elections, and this one comes from a party that is interested only in winning elections, because they're the necessary pre-condition for not-governing.

We live in a polity in which 'politics' is a subset of 'marketing'. Marketing doesn't have to conform to any external reality. It doesn't even have to make sense. It must be easily apprehended, easily remembered, easily understood. It has to resonate. If it's also congruent with external reality, that's a plus, but it's not a necessity.

Posted by: Davis X. Machina on December 9, 2008 at 8:18 AM | PERMALINK

You can file this one under "Old ideas". When out of power, Republicans always call for fiscal conservatism. But when they're in power they switch to "small government", which while sounding the same, means fewer restrictions on corporations, polluters, wealthy people, gun thumpers and bible toters.

Posted by: Danp on December 9, 2008 at 8:24 AM | PERMALINK

It seems as if the Republican Party has about four well-aged talking points, none of which actually solves anything. Never mind that no Republican in memory has even *tried* to balance a budget. I suppose that they should be commended for recycling, such as it is.

It's really amazing. They genuinely have no new ideas, and the old ones don't work. When they gain power, they invariably botch things up.

Suggestion for the new RNC motto:

"Republicans: The Elephant In The Room."

Posted by: Churchyard on December 9, 2008 at 8:26 AM | PERMALINK

trying to balance the budget in the midst of a financial crisis is the exact opposite of what every sane person realizes we need -- a government stimulus to help spur the economy.

As long as "government stimulus" includes the option of "massive tax rebates," your statement stands.

But it's not true, for example, that people who are arguing against massive increases in gov't spending are all insane.

But yes, this argument about belt-tightening is painfully inapt.

Posted by: mk on December 9, 2008 at 8:31 AM | PERMALINK

Press conference:

"Any questions?"

"Governor Pawlenty, do you support confiscatory property tax to finance Keynesian pump priming or are you ruling out pump priming as a financial tool towards economic recovery?"

"Uh... um..."

Posted by: toowearyforoutrage on December 9, 2008 at 8:33 AM | PERMALINK

Same shit Pawlenty was pushing on television last week, now in written form to make it more easily mockable.

Posted by: Shalimar on December 9, 2008 at 8:42 AM | PERMALINK

What Davis X. said about politics as a subset of marketing.

The good news is that the GOP has been peddling the same snake oil for quite some time, and most people have caught on to the fact that it's snake oil. Before they can rise again, they're going to have to come up with new ways to funnel money to the rich that don't superficially resemble the old ways.

This snake oil's especially idiotic, even aside from the Hooverism. They've been in charge of the government for eight years, and they've been free to propose balanced budgets at any time. Clinton balanced his last four budgets without any amendment forcing him to do so.

And of course, it's amusing how they start calling for balanced budgets and fiscal responsibility as a Dem Administration rolls into town. They're pathetically transparent.

Posted by: low-tech cyclist on December 9, 2008 at 8:47 AM | PERMALINK

In all fairness to Herbert Hoover, Franklin Roosevelt also believed in balanced budgets, and after his re-election in 1936 he got Congress to pass one. The result was, as one might have expected, a disastrous recession. FDR eventually accepted that Keynes was right. So, for that matter, did Nixon and (in practice) Ronald Reagan.

And in fairness to Gov. Pawlenty, he may be remembering the 1990s, when the U.S. combined a balanced budget with phenomenal economic growth. Too bad the leaders of his party then managed to squander both. Pawlenty could have gotten away with being a deficit hawk four years ago, but now he just sounds like a dolt - or dangerously out of touch.

Posted by: Dave Nichols on December 9, 2008 at 8:49 AM | PERMALINK

"This is so blisteringly stupid, I find it hard to believe an elected official would actually put his name on it"

You are talking about a Republican. Their only agenda is to elect Republicans.

So, they are "conservative" (meaning against anything a Dem wants to do) when out of power, and will approve absolutely anything when their guys are in.

Posted by: Mark-NC on December 9, 2008 at 8:51 AM | PERMALINK

Pawlenty is demonstrating he does not care about the effects of his policies so long as they are energizing to his base and keep him in the forefront of Republican policy debates. My guess is that he is concerned not so much with what Obama does now as what Palin does in the next four years. I infer that he would like to run campaigns on such ideas because the Democrats refutation will be easy to characterize as elitist, furthering that well worn Republican attack line. This might work for Republicans with the current voter split, and the information base from which right leaning independents form their judgments. Democrats can't just wish for better voters, they must take steps now to lay out the counter theme. I don't know what that is, but I suggest something along the lines of, "Republicans are assuming voters are stupid and pandering, again." Whatever is chosen, the time to start planning the next campaign is now; we can be sure that the Republicans are. Message discipline and repetition will make something like that a familiar line by the next election. Then when Pawlenty or his equal tries some equivalently stupid pander, he/she will be a source of mirth not a cause for concern.

Posted by: Eric on December 9, 2008 at 8:53 AM | PERMALINK

This initiative is based on the common sense, kitchen table logic that most Americans and businesses live by.

Yes, because Americans are notorious for not borrowing money. And no businesses borrow money.

Posted by: DR on December 9, 2008 at 8:56 AM | PERMALINK

Pawlenty's pandering, pure & simple.

He knows a lot of people, especially conservative voters, want to believe that there are simple solutions to complex versions. They want a government they can understand (without investing effort in learning about elements they don't currently understand). Pawlenty's trying to tap into that, but he's too late, I think. It seems most Americans now understand that complex problems won't be solved easily; the best we could hope for would be to put really intelligent, compassionate people who aren't freaking crooks, in positions of power who can actually take steps towards solving the big problems.

Really, all a Republican can do is hope he can convince voters that Democrats are making things worse by not offering simple solutions. To do that, they also have to be obstructionists, get in the way of solutions being implemented & hope the voters are too stupid to notice. In fact, that's how they lead in general; by hoping their followers are too stupid to notice. Here's hoping they're wrong.

Posted by: slappy magoo on December 9, 2008 at 9:04 AM | PERMALINK

There are good points raised here--as always--but the elephant in the chat room is that the Republicans really are intellectually stunted right now. To call them stupid seems a little harsh, but my God--what are they smoking over there the past 12 years or so? Why do you think they call it dope?

Posted by: Sparko on December 9, 2008 at 9:11 AM | PERMALINK

What a dipshit. Republicans have such a low opinion of their followers that they will peddle obvious bullshit. Then when it stops working, they keep trying to do it over and over. It is as if they learned nothing from this election. Keep pushing the same trash republicans! Keep mispronouncing words and people's names and tell us that all we need to do is cut taxes! And stop spending of course...because that will spur growth. Keep doing that and we will have a permanent democratic majority.

Posted by: Patrick on December 9, 2008 at 9:13 AM | PERMALINK

I don't know whether he actually believes that or not, but it sounds real good if you're the average person, with absolutely no understanding of economics (see: US citizens), and that's all Pawlenty cares about.

Think about it. During a debate, which is more easily defensible, more easily reduced to a soundbite and commercial: balanced budget or Keynesian economic policy?

That's all Pawlenty cares about.

Posted by: Personal Failure on December 9, 2008 at 9:17 AM | PERMALINK

I hate to say this as a hard-core Obama supporter, but I am starting to think that going farther in to debt might not work. I am still for giving it a try, but will not be surprised if things don't improve that much. In order for deficit spending to really work, there has to be a chance of actually growing the real economy (i.e. actually making and selling goods and services at a real profit). All of the economic growth in the last 8 years was due to deficit spending at the government and personal level. If you take out all of the growth driven by credit, there was no real economic growth over the last 8 years. It was all funny money. See figure 4 in this link

http://www.theoildrum.com/node/4846#more


I am not sure the real economy can grow much more. Resource limitations and concerns about the environment may prevent the real economy from getting any bigger. In fact it is probably going to shrink. If that is the case, deficit spending may make things worse. No one is going to want to lends us money pretty soon. This is not neo-hooverism. The world is a lot different than it was in the twenties. We are bumping up against limits to growth that were nowhere in sight in the twenties. How we respond to these limits to growth will be the big story of the 21st century.

Raindog

Posted by: Raindog on December 9, 2008 at 9:28 AM | PERMALINK

Unfortunately, Pawlenty may be more evil than stupid. Consider this, when this economy finally finds its bottom and the government's printing press finally cools down, the massive amount of debt that has been added (on top of the massive amount of debt that got us into this mess) will likely cause massive inflation of the dollar.

Government stimulus is necessary, but will come at a cost. I think Pawlenty is just positioning himself for the whipsaw. He may actually be smart, at least from a marketing perspective. By the time Obama seeks re-election, inflation may be the concern of the day, and Pawlenty will say "see back in 2008 I warned everyone". That, unfortunately, may make him appear relevant to the low information crowd.

I just hope Obama's economic team is preparing for the after affects of this added dilution of the dollar. I'm sure they are, his teams always seem to be a step ahead of the rest.

Posted by: palinoscopy on December 9, 2008 at 9:38 AM | PERMALINK

This is not a global problem. This is a greed problem. In fact, Dubai is growing faster than in where in the world. India follows.

There's no money in the U.S., nor Europe because all bets are placed in Dubai - tax free. Then India, cheap labor.

You must not have seen the shopping malls popping up in Dubai - it's like going to Rodeo Drive in Beverly Hills.

Follow the money,
General Electric
Citibank
Siemens
Dell Computer
Microsoft
Caterpillar.....

The new hotels there look better than the most exlusive in U.S. or Europe

They have ice skating rinks, golf courses...This is the new tourist destination, there's nothing you can't get there that you can't get here!!!!

In fact, they are building communities for Americans that look like Beverly Hills Calif.

Posted by: Annjell on December 9, 2008 at 9:41 AM | PERMALINK

What's really amazing about this dillweeds statements is how a man can talk out of his ass and his mouth simultaneously. Pawlenty has been govenor of Minnesota since 2003. A quick check of the budget of the state of Minnesota for 2008-2009 reveals that they have a deficit ogf 983 million dollars for the period. Now we all know that republicans wiil promise the world to us and give us a backyard in Newark New Jersey but this guy is totally full of crap. Not that his idea would remotely have a chance of working.

Posted by: Gandalf on December 9, 2008 at 9:44 AM | PERMALINK

Not that I'm an expert, but if balancing the budget means not taking on debt, then I think he doesn't merely not understand the difference between micro-economics and macro-economics, I think he doesn't actually understand how family and business budgets work. Everyone borrows, all the time, for capital investments. Like your house, for example. Or a car. Or a new factory. Or, say, transportation infrastructure, education, etc.

I don't think it's stupidity. I just think that above all what they are trying to maximize is income inequality, maintaining the power of the current occupants of the upper class. That's the only rational explanation.

Posted by: larry birnbaum on December 9, 2008 at 9:45 AM | PERMALINK

Disagree with comments above that say rhetoric about cutting govt spending has won the GOP elections. I think it's rhetoric about cutting taxes that wins them elections. Americans love the spending, they don't like paying for it.

Therefore, Pawlenty offers the GOP nothing. Neither good economic policy nor good election strategy. The future of the GOP instead is Palinism: bone-headed populism. I reckon this will give them a nice 40% of the electorate, enough to make trouble but not enough to ever be in control.

Posted by: g. powell on December 9, 2008 at 9:52 AM | PERMALINK

Oh, follow Halliburton - they moved their corporate office to Dubai. They left a satellite office in Texas.

Tax-free, if corporate office is in Dubai, technically you can't touch them.

Yet, as an American citizen, your personal income is under progessive tax system. Meaning, your income is taxed world-wide. If you leave the country and work in Dubai, you still owe the U.S. for income tax. If you try denounce your citizenship, the taxes would penalize you to the point you'd give up. That is unless you have money like the Rockefellers or DuPonts.....

Posted by: Annjell on December 9, 2008 at 9:55 AM | PERMALINK

Minnesota is in serious financial trouble, and Pawlenty is going head-to-head with Minnesota's Democratic legislature right now.

Minnesota has two strong parties, a conservative Republican Party and a liberal Democratic Party. It leads to strange political swings.

Posted by: John Emerson on December 9, 2008 at 10:16 AM | PERMALINK

It's a never-ending quest for the perfect GOP bumper sticker slogan.

All tactics, no strategery. Sound familiar?

Posted by: numi on December 9, 2008 at 10:23 AM | PERMALINK

Look, it's so painfully obvious why this is the right's talking point...

In the next two years the deficit is going to explode under a democratic Washington. ALL BAD THINGS that happen will be because of this deficit explosion. The increased taxes that come will be from profilgate spending, not economic stimulation.

It's a fucking set up.

Posted by: jvoe on December 9, 2008 at 10:26 AM | PERMALINK

And this is from a Guv who vetoed spending for infrastructure, such as repairing the I-35 bridge, prior to the collapse.

Really learned well, eh?

Posted by: bertheclock on December 9, 2008 at 10:32 AM | PERMALINK

Pawlenty made the same comparison (right up to the 'kitchen table') of a family and government budgets in the campaign that got him elected.
So, he must be thinking, if it worked then, why not now?

Whether he believes it or not is a different story...

Posted by: CarloP on December 9, 2008 at 10:49 AM | PERMALINK

These comparisons are a little unfair to Hoover.

We have the benefit today of almost 80 years more experience, including the Depression itself, and economic thought to help shape policy.

Posted by: Bernard Yomtov on December 9, 2008 at 11:04 AM | PERMALINK

I've come to the conclusion that the blatant conflation of micro-economics and macro-economics serves just two purposes: First, it appeals to low-information and not particularly thoughtful people, who are expected to respond "Yeah, the government should have to suffer through some belt-tightening just like I do. The fact that they can print money is just a cop-out." Second, if the federal budget has to be balanced, then cuts to even entitlement programs like Medicare and Social Security will be inevitable, which was the point of the entire exercise.

Posted by: DrGail on December 9, 2008 at 11:11 AM | PERMALINK

Second, that the Minnesota governor sees a similarity between an individual family's budget and that of the United States government suggests he has a child-like understanding of economic basics.

Third, Pawlenty doesn't even have a child-like understanding of individual family budgets if he thinks they operate with a balanced budget since most families have, for example, a mortgage (or a car loan, education loans, etc). Many if not most families operate in the red for years while paying off their mortgage -- if you required them to have a balanced budget every year after year, they'd never have been able to take out the mortgage (or buy the car, send their kids to college, etc.) in the first place.

This initiative is based on the common sense, kitchen table logic that most Americans and businesses live by.

Um, businesses don't take on debt for short-term financing, capital improvements, etc.? Businesses run a balanced budget every year? In what world is this?

Posted by: Stefan on December 9, 2008 at 11:27 AM | PERMALINK

In fact, Dubai is growing faster than in where in the world.

Not any more....

Posted by: Davis X. Machina on December 9, 2008 at 11:37 AM | PERMALINK
These comparisons are a little unfair to Hoover.

We have the benefit today of almost 80 years more experience, including the Depression itself, and economic thought to help shape policy.

They seem to me to be more than a little unfair to Hoover, who, IIRC, rejected calls for belt-tightening from his Secretary of the Treasury when there was a clear recession, and tried a combination of what was seen at the time as massive stimulus (both the same kind of aid to major industries being tried now and public works programs) and protectionist policies to get the economy started again. The protectionism was, of course, self-destructive, and the stimulus probably would have been inadequate without the protectionism, and was clearly inadequate with it. While Roosevelt's stimulus was even more massive, and even more of it directly aimed at the public rather than trickling down to them, to characterize Hoover as a belt-tightener does not seem remotely reasonable. Hoover's mistakes were being slow to react (I don't think he responded until a year into the recession) and trying to use protectionism, not supporting belt-tightening in response to a clear and severe recession.

Posted by: cmdicely on December 9, 2008 at 11:52 AM | PERMALINK

the U.S. paid off its debts after the Civil War. The policy was harsh on people who need easy credit, such as farmers, and the economy experienced some large booms and busts during its growth.

Since WWII the U.S. has not paid off its debts. Under Republicans and Democrats, the value of increasing debt has been to forestall recessions, or reduce their impact (at least that has been the hope, and the dominant political economy, though there are debates about the details of exactly which kind of debt is best.) The result of this experience is that each recessionary threat has required bigger and bigger debt. The long term consequences have been worse and worse, but each new round of debt has been justified by the claim that it will help the economy ward off the next recession.

Hoover was correct, and so is Pawlenty. But the U.S. is not going to vote for a policy of short-term misery for long-term wealth accumulation.

The idea that government spending can ward off recessions is the most thoroughly disproved idea in political economy behind the idea that a communist government can run an economy. Yet each time a stimulus package fails the economists refine their thinking to explain how it would have worked if it had been done differently.

The current stimulus will not work. Those of us who live long enough and have the interest to do so will be able to read thousands of pages of well-researched documents about how it would have worked had it only been done differently.

Meanwhile, there are thousands of pages of explanations of why the Japanese spending in the 90s did not produce the hoped-for economic recovery. And you can read lots of explanations about why the stimuli applied to date in 2008 have not worked. The economists are not afraid to contradict themselves, because they previously wrote nuanced qualifications, previously thought to be minor, but now identified as major.

Right now, almost everyone who advocates a larger federal debt was happy in 2000 when the Republican Congress and Democratic President ran a surplus at the onset of a recession.

Posted by: marketeer on December 9, 2008 at 12:41 PM | PERMALINK

And in fairness to Gov. Pawlenty, he may be remembering the 1990s, when the U.S. combined a balanced budget with phenomenal economic growth.

Actually, the greatest growth occurred when the budget was in deficit, and the growth slowed dramatically after the budget was balanced. The Republican Congress advocated a slower growth in government spending while the budget was in deficit, but then advocated reduced taxes at the time that the growth was stalling. By the time the tax cuts were passed, the economy was clearly in recession, and the budget was back in deficits as tax income fell while federal spending was increasing. You can read elsewhere the explanations of why the deficits did not ameliorate the recession -- they have to be exactly the right kind of deficits, like the Congressional Democrats are working on now.

Posted by: marketeer on December 9, 2008 at 12:53 PM | PERMALINK

the only way tim pawlenty's recommendation for fixing the economic crisis makes sense is if "out of control government spending" were the source of the crisis.

it clearly is not.

but i suppose it's the best we can expect from the runner up for republican vp nominee behind sarah palin.

Posted by: karen marie on December 9, 2008 at 1:05 PM | PERMALINK

What advocates of a federal balanced budget amendment always fail to mention: States and localities that are required to keep their budgets in balance get around that constraint by issuing bonds (i.e., going into debt) for construction, development and other public-spending projects. Congress authorizes spending that exceeds tax receipts, and the executive branch issues Treasury bonds to cover the deficit. The only difference is that the feds don't pretend to be debt-free.

So, if a balanced budget amendment to the U.S. Constitution were ratified, Congress would stop voting for appropriations bills and start voting for bond issues. At which point everything would be all better?

Posted by: allbetsareoff on December 9, 2008 at 1:13 PM | PERMALINK

Pawlenty and his ilk know that this is a ridiculous policy idea if you what you want to do is solve our current economic mess. They don't want it fixed and, in fact, would like it to stay the same or get worse between now and 2012. They know the only way to become a party of influence in the not-distant future will be to see the Dems fail to fix the economy. If the Dems deliver on half of what they are promising, however, the GOP will be in the wilderness for the next couple of decades...and they know it.

Posted by: Alex Kirby on December 9, 2008 at 1:18 PM | PERMALINK

Interesting that we've all become economists now.

It disturbs me that the debate is already closed to the point of ridiculing the opposition, since it is far from clear to me that a 'money bomb' will work - Krugman's fixation with depression era economics seems to over simplify the similarities with the current crisis, and there are very credible concerns on the opposite side of the debate... if a money bomb is deployed and fails to stimulate real productivity growth, it could saddle the taxpayer with a level of debt they could never hope to pay back without inflating it away at the printing press, which would kill the US$ and the reputation of the US as a safe target for foreign (or even domestic) investment... so it seems worthwhile seriously discussing it before signing it into policy - a perfect example of what an opposition party should be doing in fact.

Posted by: NewHorizons on December 9, 2008 at 1:56 PM | PERMALINK
Hoover was correct, and so is Pawlenty.

Pawlenty has it exactly reversed, and Hoover is mostly irrelevant. Are balancing budgets by cutting spending, even so far as creating a surplus to use for paying off debt a good thing? Sometimes, sure. Particularly, its a very good thing to do during an expansion where increases are being seen across the economy, not just at the top. Why? Because during such an expansion, investment in the domestic private economy is attractive, for both domestic and foreign investors, and additional money returned for that purpose is spread across all income groups. At that point, it makes sense to pay down debt, which makes more money available for private sector investment when it is attractive to invest in the nation's private sector, spurring more growth, and the rewards of that growth will be well spread. For the same reason, it can make sense to reduce overall taxes in such an economy, though one has to be careful to make sure not to do so selectively in a way which disturbs the distribution of returns and encourages it to be concentrated at the top, or which otherwise changes the incentives in ways which kill the growth.

When the short-term market incentives do not encourage investment and spending that spurs the economy and promotes the public welfare, it makes more sense to suck money out of areas where it is not being used in a stimulative way (either by taxing or borrowing), or direct it to uses where it will have a high velocity in the domestic economy and promote growth. Deficits (e.g., borrowing, largely from external sources) can be more useful than taxing here, because more of the money borrowed is likely to come from sources that otherwise would not have been spent or invested in the domestic economy. But the key part is that you are redirecting money from less stimulative uses to more stimulative uses, not that the government is running a deficit.


Right now, almost everyone who advocates a larger federal debt was happy in 2000 when the Republican Congress and Democratic President ran a surplus at the onset of a recession.

A surplus may have made sense in the situation apparent in 2000, though even so, the particular places where tax and spending decisions were made to attain those may have helped contribute to the 2001 recession. But even assuming that what was done in 2000 was correct in the circumstances, the right policy during a period of strong growth that precedes a recession is not the same thing as the right policy during a recession, especially a year into a recession that, by all evidence, is deepening at that point.

(Especially when that recession follows unusually close to a prior recession, and when the growth in between the two recessions still saw stagnant or declining incomes for the bottom four quintiles, and most gains seen in the very top fraction of the top quintile.)

The right policy is not independent of the immediate circumstances.


Posted by: cmdicely on December 9, 2008 at 2:11 PM | PERMALINK

As we've seen from all Republicans lately, they don't mind spending, hell, even giving away our tax dollars as long as it goes to the uber rich, but forget about saving middle class jobs and union jobs are to be targeted and eliminated.

And the poor (use to be called the middle class) are to be pushed into serfdom, all under the loving embrace of "compassionate conservatism".

Posted by: Glen on December 9, 2008 at 3:22 PM | PERMALINK

Hoover was not a laissez faire president. The Great Depression was as bad as it was because of FDR's attempts at having the government fix the economy. You Democrats love it because you love having the government be a larger part of the economy. It is why AFSCME (American Federation of State County and Municipal Employees) is such a big supporter of the Dems.

Posted by: Brilliant 47-Year-Old on December 9, 2008 at 3:44 PM | PERMALINK

WW II was the massive stimulus that pulled the US out of depression. It was about 4x the size of anything FDR tried in the 30's. Bigger is better in this case.

But the larger point about Pawlenty's statement is as Davis noted above: it makes superficial sense to the ill-informed. The challenge to liberals is to create a soundbite explanation for a stimulus program that is even more compelling. "Pump-priming" and "investment" are decent starts, but the goal has to be to reach the American people where they live in words and pictures they understand.

It is all about winning the hearts and minds of American voters - not being "right" - and out of office.

Posted by: High Desert Optimist on December 9, 2008 at 4:22 PM | PERMALINK

As a Minnesotan, I've heard T-Paw's song and dance for years. He's a full-fledged member of the Taxpayers League, whose no new taxes stand has put a stranglehold on the State of Minnesota's budget. He's the one, you remember, who Cheney called in person to ask him to step down from a run for Senate, leaving Norm Coleman a clear field to run against Paul Wellstone in 2002. Most of us know how that turned out.

I believe Pawlenty is a true believer of Grover Norquist's desire to shrink the government to the size that it can be drowned in a bathtub. He has cut valuable programs in MN in order to keep the well off and Taxpayer League friends happy. Education, MinnesotaCare (health care for the poor), infrastructure, what have you--all have been cut to the bone. In fact, his Lieutenant Governor Carol Molnau (who he put in charge of MnDOT) tried to wrangle a deal so that the winning construction firm that bid on a road project would have to finance the job themselves, just so T-Paw wouldn't have to approve additional funds for MnDOT. Income taxes were cut for the wealthiest, while our property taxes and fees have jumped. People are crying for property tax relief after Pawlenty pushed funding to the local level. Let the cities and counties be the bad guys, just as long as T-Paw can keep his promises to the Taxpayers League.

Pawlenty would have a disastrous impact at the national level. Like Palin, he's gotten the taste of the Big Time and wants to make that next step. Too bad he's off gallivanting around, trying to up his political stature, instead of staying in Minnesota and promising to work with the MN Legislature on ways to resolve our state's budget crisis. He's already claimed he won't ask for Federal funds to help. I'm assuming he will push for more cuts. The MN GOP is floating the idea of privatizing the Minneapolis/St. Paul International Airport (an extremely short-sighted plan). T-Paw has wanted to put in toll roads to pay for MnDOT (nevermind he vetoed plans that would up the sales tax on gasoline).

Pawlenty has aspirations and, like Palin, is trying to keep his name in the news. I'm not looking forward to the next few years with him as Governor. I'm certain he will be even worse as he tries to maintain his cred with the Taxpayer League and the big guns at the national level.

Posted by: Jane on December 9, 2008 at 4:26 PM | PERMALINK

Pretty good revisionist history making there, not-so-Brilliant. Sure you'd like to back up that view with some recognized academic sourse.

You might want to go here and figure out the truth about who grows government and who grows debt.

Obviously the irony of Pawlenty's speech is lost on you as it is on him.

Republicans believe in freedom? That's new to me. Personal and moral responsibility? Fool me twice. Power of capitalism? Spoken as we are exactly where we are because of that "power"! Security? Energy independence? Free-market solutions? Conservative fiscal responsibility?

And I won't go into his naive comparison of national economics compared to a family budget, or his apples to oranges use of debt numbers.

I'm not sure which parallel universe you guys are operating in, but it sure must be comforting to ignore the Republican contribution to the mess all the rest find ourselves dealing with.

Yeah, T-Paw is about as brilliant as you so obviously are. And he'll do his best to screw us here in MN that he's done such a fucking brilliant job of mismanaging.

Posted by: notthere on December 9, 2008 at 4:35 PM | PERMALINK

The difference between macro and microeconomics is key to this debate because it predicts the level of success a stimulus achieves.

For instance, the New Deal ultimately failed to achieve its web of vague and ill-organized goals largely because businesses used that period to shore up their liquidity and rebuild their savings, thus stultifying large portions of the economy. Granted, saving is a good thing, but when businesses refuse to participate in outward investment during times of stimulus, they actually hurt themselves -- an interesting twist on the whole BS about "avoiding short term-pain." Even further still, not a single economist can point out any true benefit resulting from the savings/liquidity policies of large businesses during the Depression.

And let's keep this all in perspective: The New Deal was not a fundamental revision of the US economic structure, but a series of props designed to support and propagate the existing structure -- which was clearly on the mat. Theoretically, a stimulus SHOULD work because it loosens the restraints of circumstance and provides a mechanism to pay for itself quite quickly. However, just as businesses are doing now with the Bailout Funds, the money rarely goes to the actual operation of the respective firms, and essentially ends of in a non-expansive format. Businesses are seeking security -- and such hermit-crabbing produces only short term and localized security.

Security -- whether it be financial or or not -- always comes at the compromise of freedom. Whether you admit that or not depends on your view of particular freedoms.

Posted by: operative of the left on December 9, 2008 at 4:40 PM | PERMALINK

Makes sense to me.

What we have is a debt problem. Borrowing capital makes sense as a means of generating wealth, but wealth production and manufacturing have moved to China, so we have been using borrowed capital unproductively for consumption. Therefore a Keynesian stimulus package can only generate more consumption, shifting poverty from individuals to the federal deficit. A zero sum game.

Posted by: Luther on December 9, 2008 at 5:38 PM | PERMALINK

In the Bush years, the economy has not been stimulated by spending on two wars at the same time, the largest tax cuts in history, a housing bubble and all of the spending from Hurricane Katrina. I think people need to be prepared for the fact that more stimulas might not work.

Posted by: aline on December 9, 2008 at 8:50 PM | PERMALINK

Aline,

do you honestly believe the crap coming out of your mouth?

First of all, the tax cuts weren't for working or middle classes. It went to wealthy and corporations.

Second, the war was not funded by war bonds - it was on borrowed money.

Third, big business made the profits from this war. There were more private contractors than troups. Take in consideration, Triple Canopy hired mercenaries from Peru at a pay rate of $30 USD a day.

Housing bubble, there was no regulations!!! Not only were people wanting to buy a big house, real estate agents, and mortgage companies encouraged people to buy bigger under the pretext that adjustable rates were the way to go. Do you know what the difference is between, LIBOR, MTA, Six week treasuries/Six month treasuries, COFI, well, a lot of the buyers don't.

As far as Katrina, that's something you need to ask the administration. Billions of dollars poured in from around the world, in addition to the billions that came in from U.S. citizens. Half of the household goods were donated, given to employees, never reaching Katrina victims.

Just because Boy George and his cronies did things one way, doesn't mean that the Obama administration will run his administration the same way.

Get it right, it's the white man that screwed you, not the black man. The black man has been walking on egg shells since announcing his campaign. If you stop judging a person from his looks, maybe you can filter through the con games the GOP-ers run on you every time.

Posted by: annjell on December 9, 2008 at 9:32 PM | PERMALINK

It's time for me to play nice.

Boy George stimulus packages wasn't meant for us, it was meant for the fortune 500 club!!!

Posted by: Annjell on December 9, 2008 at 9:58 PM | PERMALINK

As yet another Minnesotan posting here, I have to say: I was never entirely convinced that Pawlenty was a true believer in the anti-tax jihadism he signed on to years ago. Consider that doubt now removed.

Gandalf, your mention of Minnesota's current deficit brings a related point to mind. During the Ventura administration, Pawlenty was Majority Leader of the MN Legislature. Tax receipts were high at the time, mostly thanks to the tech bubble. With Ventura, Pawlenty gleefully championed a series of cuts in income taxes and vehicle registration fees, plus sizable individual tax rebates.

State tax revenue hasn't really been the same since. It wasn't an issue so much while property taxes were pouring in thanks due to the housing bubble, but it was a problem before and it's one now. A reasonable person might ask if perhaps we cut taxes too much back when the tax base was artificially high, but Pawlenty isn't one of those people.

This past session, Pawlenty fought a small increase in the state gasoline tax to the political death. The Legislature overrode his veto. Keep in mind, this was in the direct aftermath of the I-35W bridge collapse. Over his tenure, he has presided over the raiding of every discretionary fund available (including the multi-billion dollar tobacco settlement fund), diverted revenues intended for things like subsidized health insurance...anything aside from raise taxes.

The man is an ideologue in the worst sense of the word. He is a slave to his ideology, and the desires of his constituents, especially the ones who didn't vote for him, come in a distant second. I can tell you one thing though, if Minnesotans come to see Pawlenty's governance as geared towards the Washington, DC limelights, he will lose in 2010.

Posted by: Joe Bob on December 9, 2008 at 10:27 PM | PERMALINK

Deficits (e.g., borrowing, largely from external sources) can be more useful than taxing here, because more of the money borrowed is likely to come from sources that otherwise would not have been spent or invested in the domestic economy. But the key part is that you are redirecting money from less stimulative uses to more stimulative uses, not that the government is running a deficit.

About the second statement, some expenditures are better than others. For economic growth, spending on fuel and energy sources right now would be more stimulative than spending on new weaponry.

About the first statement, borrowing and taxing basically take money from the same place, basically because that's where the money is. Thus, each has a depressant effect approximately equal to the stimulative effect of the spending.

Can you point me toward any examples of intentional stimulative policies that had the hoped-for stimulative effects? Mostly I come across case studies of what didn't work, and detailed explanations of what would have worked instead.

Posted by: marketeer on December 9, 2008 at 10:36 PM | PERMALINK

The outstanding public debt is $10,659,413,113,421.30 as 8:55am GMT 10 December 2008. The arguments for public expenditure to reduce a recessionary ecomonomy would need to bear such a figure in mind. On the basis that an extensive belt tightening will have to happen at some stage in the future. The article is not ab initio stupid.

Posted by: GJ on December 10, 2008 at 4:01 AM | PERMALINK

Regardless of whether a balanced budget is a good idea in these economic times, a Balance Budget Amendment is a terrible idea because no one, even its most ardent proponents, can say how it would be enforced.

Suppose such an amendment is adopted, and Congress passes an unbalanced budget and the President signs it--or someone says that the government cooked the numbers to make the budget look balanced even though but it really isn't. What happens next?

The idea behind the amendment is that Congress and the president can't balance the budget on their own. So unless the judiciary takes a roll, we won't get fiscal responsibility. But what will a judge do? Do we really want unelected judges who are not economists deciding whether the entire federal budget is balanced? And if it isn't balanced, will the judge have the power to raise taxes? Cut spending? Put members of Congress or the president in jail for contempt if they don't obey a court order to come back with a balanced budget? Wouldn't it be just bizarre if conservatives gave the judiciary so much power? (And all of this doesn't even touch on the issue of who, if anyone, would have legal standing to sue in the first place.)

I believe in long-term fiscal responsibility. But I think the idea that some magical constitutional amendment will somehow make the hard decisions for us is delusional. When we're serious, we'll make serious choices. Until then, not even a constitutional amendment will help us make the choices that we need to make ourselves.

Posted by: dsimon on December 10, 2008 at 10:00 AM | PERMALINK




 

 

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