Editore"s Note
Tilting at Windmills

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July 3, 2010

'INJECTING DEMAND INTO THE ECONOMY' IS A GOOD IDEA.... House Speaker Nancy Pelosi spoke to reporters on Thursday, and stressed the importance of extended unemployment insurance. It's not only vital to offering some relief to the jobless, the Speaker said, but also serve as "one of the biggest stimuluses to our economy." Unemployment benefits are "spent quickly" and that money "injects demand into the economy," she explained, making the investment "job creating."

The right seemed to find this ridiculous. High-profile right-wing bloggers characterized the remarks as "laughable" and "lunacy." A Fox & Friends co-host said she didn't understand the "logic" of the argument. The publisher of the conservative Las Vegas Review-Journal said anyone with "half a brain" would disagree with Pelosi.

The intensity of the right's response is matched only by how terribly wrong conservatives are.

Mark Zandi, chief economist with Moody's Economy.com and a former adviser to Sen. John McCain (R-Ariz.), said Friday that Congress needs to hurry up and reauthorize expired jobless aid or risk derailing the nascent economic recovery.

"The odds that the economy will slip back into the recession are still well below even," Zandi said during a conference call with reporters. "But if Congress is unable to provide this help, those odds will rise and become uncomfortably high." [...]

Zandi said the deficit dithering is just bad economics -- it's more important to get the benefits to the people, who will immediately spend the money and help the economy. "Paying for it should not be a necessary condition for passing it," he said. "In my view, the risks are just too high."

Zandi said it would be a good idea for Congress to plan to offset the cost of benefits -- but not this year or the next year.

Even conservatives should be able to understand this. The Congressional Budget Office has documented that aid to the unemployed is one of the highest-scoring stimulus policies (pdf) for exactly the reasons Pelosi explained. In terms of fiscal bang for the buck, Zandi's analysis found that the single most stimulative investments the government can make comes from a temporary increase in food stamps -- but extended unemployment benefits were a close second. (Both perform far better than tax cuts.)

It seems those with even "half a brain" should appreciate the concept. The point of any stimulus exercise is to inject money into the system. If the government provides a benefit to an individual, and he or she sticks the money into a savings account, that's not stimulative. But when the jobless receive benefits, they tend to spend it all quite quickly -- they have no choice; they're struggling to get by.

That Republicans and Ben Nelson think the deficit is more important than this is misguided. That media conservatives find this incomprehensible is bizarre.

Steve Benen 8:30 AM Permalink | Trackbacks | Comments (25)

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Comments

Steve, the point is not economics, it's religion. It is these people's belief that those without money are, by definition, morally worse people than themselves, who still have money. God is punishing those without money, and who are we to get in God's way?
Or to put it another way, they're evil people who enjoy the suffering of others.

Posted by: JMG on July 3, 2010 at 8:30 AM | PERMALINK

Steve, one minor nit to pick - The R-J is a Libertarian newspaper, not a conservative one. Funny how the R-J began as a Democratic voice of long ago, but, morphed into a moderate conservative paper. However, since the eighties, it has become slanted heavily to the Libertarian side of the road. It is this Libertarian view of the publisher which decries any "free" money going to anyone. If the powers at the R-J had their way, there would be no unions in Nevada, no welfare, no social services and no unemployment pay for anyone.

Posted by: berttheclock on July 3, 2010 at 8:46 AM | PERMALINK

The big question is, does Obama understand this? The NYTimes today has a story about how his economic team is recommending more stimulus but his political advisors are insisting on deficit reduction, just like the Republicans. To whom will Obama listen? Will he just split the difference and come up with another half-a-loaf stimulus like last time? Will he finally lead on this issue?

Posted by: sjw on July 3, 2010 at 8:47 AM | PERMALINK

There was a segment on this topic on Newshour last night that was almost painful to watch. A guy from Heritage, mouthing the "anyone with half a brain" bit, opposite a woman who works with the unemployed who obviously disagreed. They couldn't even look at each other through the segment. Brings Krugman to mind: "Whenever you encounter research from the Heritage Foundation, you always have to bear in mind that Heritage isnt really a think tank; its a propaganda shop. Everything it says is automatically suspect."
http://krugman.blogs.nytimes.com/2009/07/06/administrative-costs/

Posted by: wvng on July 3, 2010 at 8:48 AM | PERMALINK

The publisher of the conservative Las Vegas Review-Journal said anyone with "half a brain" would disagree with Pelosi.

It's worth pointing out that this observation is correct. High-profile right-wing bloggers and Fox & Friends disagree with Pelosi, and in fact they do have "half a brain".

Or less than half, possibly.

It's also interesting that these conservatives feel confident in their view, since I'm going to guess that all of them together have spent less time learning about the fundamentals of the economy than a typical first-year undergraduate. Of course, their certainty that Pelosi is wrong doesn't come from any knowledge they have of economic fundamentals, but rather from the fact that Rush Limbaugh (or someone of comparable stature) told them that everything Democrats say is wrong.

Fuckin' idiots.

Posted by: David Bailey on July 3, 2010 at 8:49 AM | PERMALINK

The Lehrer News Hour last night had a guest from the Heritage Foundation who actually argued that people on unemployment tend not to spend the money "on the things they used to." He then concluded that it was not stimulative. I'm not sure if he was suggesting that unemployed people start using all their money on illegal drugs, or yard sales or what, but my real question is why PBS even had him as a guest. The insincerity was mind-boggling, and you could see it in interviewer Jeff Brown's face, though he bent over backwards to show deference to his guest.

Posted by: Danp on July 3, 2010 at 8:54 AM | PERMALINK

Danp, I beat you to it. On your larger point, Newshour is part of the MSM, and must provide "balance." Heritage is "serious", after all.

Posted by: wvng on July 3, 2010 at 8:57 AM | PERMALINK

Two points: First, if the Repubs and Nelson want to filibuster unemployment benefits, why does not Harry Reid keep the Senate in session 24/7 ?? No July 4 break, no break to go home to campaign for re-election. Just stay in session until the people's business is done.

The Dems look wimpy, weak and timid. Getting money to those that need it most would help stim the economy and help re-elect Dems.

Second: Raise taxes on the richest 1% of Americans. From the 30s to the 70s the top income earners paid taxes at the rate of 91%. Now the top earners pay a paltry 15%.

Congress, especially the Senate, needs to grow a set.

Posted by: Chief on July 3, 2010 at 8:58 AM | PERMALINK

wvng types faster than I do, so I'm glad we agree. The Heritage Foundation is rather amusing in a way, though. If you look at their "Index on Economic Freedom", and then click on each country and read the details, the facts pretty much prove that small government does not work. Heritage therefore comes up with an artificial formula to weave these bad numbers into a magic formula, and pretend that Russia and India would be great if only they had better banks and less corruption.

Posted by: Danp on July 3, 2010 at 9:00 AM | PERMALINK

The whole purpose of the Republican/Libertarian/Conservative doctrine as it is practiced is to lock priviledged people into their privilidged positions. They are Old Europe.

Posted by: nonheroicvet on July 3, 2010 at 9:07 AM | PERMALINK

Yes, having "half a brain" is a necessary condition for establishing cogent and effective macroeconomic policy.

Unfortunately, we're here now because for 8 years we handed the reins to the halfwits who think it's also a sufficient condition.

Posted by: Lionel Hutz, Attorney at Law on July 3, 2010 at 9:11 AM | PERMALINK

Not that the Fox right have ever been coherent, but it is logically inconsistent to not believe this while maintaining that lower taxes raise revenues.

Posted by: Walker on July 3, 2010 at 9:15 AM | PERMALINK

Indeed, Chief, I too am amazed at this lost opportunity (yet again) for Dems to spotlight Republican intransigence.

The prospect of keeping the Senate in session over Independence Day to shine a bright light on how Republicans are holding up unemployment legislation should be appealing.

Millions of people are losing the last bit of hope and dignity, and instead of embarrassing Republicans, everyone's taking their marbles, flying home, and politicking for the upcoming election.

Posted by: terraformer on July 3, 2010 at 9:16 AM | PERMALINK

The publisher of the conservative Las Vegas Review-Journal said anyone with "half a brain" would disagree with Pelosi.

But shouldn't the opinions of those with complete brains matter more?

Posted by: Raven on July 3, 2010 at 9:17 AM | PERMALINK

terra, Kevin Drum dealt with this problem on Friday: "This would sound plausible, anyway, if Democrats had their act together a little better. In general, the idea here would be for Obama to submit a raft of popular, highly targeted jobs bills to Capitol Hill and insist that Congress vote on them. One by one, either Republicans would defect and Dems would get a series of wins, or else, one by one, we'd get a series of 59-41 votes that would showcase Republican intransigence on the economy.

But would it work if, instead, each bill were the source of intra-party bickering that turned off the voters, long delays that made Washington seem impotent, and votes that ended up 53-47 because a handful of centrist Democrats insisted on breaking ranks? Probably not. And unfortunately, that's probably what we'd get. Better Democrats, please."
http://motherjones.com/kevin-drum/2010/07/democratic-unity-possible

Posted by: wvng on July 3, 2010 at 9:26 AM | PERMALINK

Even conservatives should be able to understand this.

no. conservatives are non-thinking, especially the non-rich ones that have bought the tall tales of the plutocrats without having the faintest idea what the words they spew mean.

Posted by: pluege on July 3, 2010 at 9:36 AM | PERMALINK

The right want to break what's left of the unions and to kill the Social Security program. Because the unemployed don't contribute payroll taxes, the SS break-even date moves up ever so slightly. Conservatives figure that another 20 years of unemployment/depression will make the SS numbers look really bad.

Posted by: elbrucce on July 3, 2010 at 9:59 AM | PERMALINK

Not "bizarre" as the intent is to continue to blame Democrats for a failing economy so voters will return conservatives to power.

Posted by: Tom Paine on July 3, 2010 at 10:21 AM | PERMALINK

Considering that the $60-80 BILLION supplement for the Afghanistan war has passed the House and probably will pass in the Senate (this money also added to the deficit) seemingly outweighs the need to protect our own citizens from economic ruin. There always seems to be plenty of money for war. It's this type of paradigm that will result in the ultimate destruction of our democracy and the U.S., not any threat from any other country.

Posted by: winddancer on July 3, 2010 at 10:40 AM | PERMALINK

Sure, and this link from Miller-McCune.com argues it's a good idea to hand out cash to poor people. They'll spend it and help grow the economy.

Posted by: Neil B on July 3, 2010 at 10:59 AM | PERMALINK

Even conservatives should be able to understand this.

That’s a bridge too far for their Neanderthal brains.

Posted by: Joe Friday on July 3, 2010 at 1:23 PM | PERMALINK

wvng & Danp,

That exchange on Lehrer was excruciating to watch.

What was needed was a Marshall McLuhan moment like in Woody Allen’s ‘Annie Hall’, with a Nobel Prize winning economist walking up and telling the propagandist from Heritage that he hasn’t a clue what he’s talking about.

Posted by: Joe Friday on July 3, 2010 at 1:24 PM | PERMALINK

It's not only vital to offering some relief to the jobless, the Speaker said, but also serve as "one of the biggest stimuluses to our economy..."

...The right seemed to find this ridiculous.

You know what I find ridiculous? The Speaker of the House using the word "stimuluses!" Is political pandering to the lowest common fool denominator a requirement for re-election in this country? Does Nancy feel like using the proper "stimuli" make her sound like one of those elite smarty-pants politicians to the peanut gallery of buffoons?

The left seemed to find this ridiculous.

Posted by: President Lindsay on July 3, 2010 at 2:26 PM | PERMALINK

Sorry guys but I have to stop this little circle jerk that you liberals are having :P

The bottom line is that if you increase the benefits that people receive for unemployment then that gives them less incentive to actually try and get another job! Nuff said?

Posted by: Ryan on July 8, 2010 at 12:59 AM | PERMALINK

Mr. Benen, at the risk of beating a dead horse, it might make sense to consistently point out that the conservatives may very well not believe a word they are saying.

Posted by: toowearyforoutrage on July 8, 2010 at 12:27 PM | PERMALINK
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