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House Passes Economic Stimulus Without Republicans

The House quickly passed a version of the economic bailout plan pushed by President Obama today without the support of a single Republican. The massive huge $819 billion stimulus bill passed by a vote of 244-188, showing two things: Democrats can pass whatever they want without GOP support as long as they stick together; Republicans are willing to risk looking like they stand in the way of economic stimulus.

Next stop; The US Senate where Democrats hold a substantial majority as well.

"Another week that we delay is another 100,000 or more people unemployed. I don't think we want that on our consciences," said Rep. David Obey, D-Wis., chairman of the House Appropriations Committee and one of the leading architects of the legislation, according to Talking Points Memo.

Republicans said that the bill was short on tax cuts, despite an estimated $275 billion in tax cuts for individuals and businesses. and Rep. John Boehner of Ohio, said the measure "won't create many jobs, but it will create plenty of programs and projects through slow-moving government spending." A GOP alternative, comprised almost entirely of tax cuts, was defeated, 266-170, moments before the final vote.

Funny thing is that corporate tax cuts, which Republicans favor, don't necessarily result in jobs either. What does is demand for goods and services, you know...the kind nobody can afford right now but might be able to if they have a few more bucks in their wallets and a decent paying infrastucture job.

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Comments

A tax cut means nothing if you're not earning a paycheck.

Unless they cut the tax on unemployment benefits! :)

tax cuts have time frames attached to them. for the most part historically recession are short term and recoveries/expansions are long term. i can see where they are coming from given normal trends, but this recession is a little deeper than most.

it's 2000 finally catching up with us. there's been so much rigging of liquidity through interest rate adjustments and money supply adjustments that it created the false sense of security we were living with over the past decade.

though, roots to current economic malaise have roots back to the reagan administration. i don't have to go into all the details of it, since you've heard about the whole "tickle down" economic policy before.

depending how this administration addresses this recession, it will set the tone for the next handful of years. it will clearly address parity in responsibility in all citizens.

as mentioned above, the cycles of boom and bust usually way more on the boom. over the past thirty years the usa have felt downturns that have lasted on anywhere between six and sixteen months. on average, around 9.5 months. on the other hand expansions have proven to last an average of 74.25 months over the last four times (anywhere from 12 months to 120 months).

while the great depression lasted most of a decade, the actual initial steep downturn lasted 43 months - that's 3.5 years. interestingly, that was most of the hoover administration. why did the recovery take so long? after the laissez-faire economic approach under the coolidge administration brought with it a period of prosperity through a consumer driven economy fueled by cheap and easy money with little government oversight. after the depression hit, hoover continued the previous administration's approach and did little to intervene. he actually opposed government intervention because the markets should be able to fix themselves and the markets would right themselves. They didn't. 8 months into his administration the downturn hit and it lasted all the way through until the next administration took office. FDR's policies lead to a recovery period of 21 months. this recovery only took a downturn when FDR try to balance the budget and pulled back on government spending.

currently we're looking at a recession that most likely stared in December 2007. So, we're at 13 months and counting. without a dramatic turn around within three months, this will be that largest downturn since the beginning of the great depression (and given that we're sitting in the first quarter after a protracted downturn of 13 months... good luck!). so, with any luck and strong, prudent actions we'll be in this thing for another 12 months. History will out. Though, what happens over the next several months will set the pace for the rest of the Obama administration. And if it work out well, it will greatly impact macroeconomics for decades to follow.

modern republicans are falling in line too closely with Hoover's attitude at the onset of the great depression. modern day democrats are falling squarely in the FDR camp. if history has shown us anything, it is that any one approach is not correct over a protracted period of time and that a happy balance between the theories championed by adam smith and john maynard keynes must be found and executed. somewhere between laissez-faire free market and strong government intervention there's an answer. I have a very strong belief that the Obama administration will find it.

so, with that, here is my note to the Obama camp - bring on the stimulus package, get the liquidity flowing, start up plenty of government programs, throw in the oversight of the financial markets, champion labor, but remember to pull back and cut some programs when the time calls for it, don't allow use to become a strictly protectionist economy, and all the while, please remember to expand the money supply to off-set inflation. there's a way to get out of this. and there's a way to long term prosperity. the way is a balance between the individual and the corporate entity. there's a place where all can benefit. please find it.


"...any one approach is not correct over a protracted period of time..."

- I was thinking the same thing recently. As the economic landscape shifts, so must policy. This is where the Republicans have screwed themselves; they are absolutely rigid in their policy positions.

jude... this is where dems could end up screwing themselves as well. though, i have a lot of faith in obama as a student of history, it will be fascinating to see where they can take this. a shake-up like this gives way to a lot of opportunity for someone to step up and address the situation.

the great depression/new deal gave milton friedman the opportunity to incubate and eventually be birthed into our consciousness. while his views were interesting, they have proven to be somewhat short-sighted and nurtured within the vaccuum of the past several decades. hence the rebirth of keynsian economics.

interesting times we live in, eh?

I hear you, Vitas.

I was thinking, though, since the Dems have the votes without the Repubs, and since the bill was clearly gonna pass, wouldn't it make sense for the Repubs to assign a few of their own to vote for it in the event that (perhaps contrary to Repub expectations) this bill does usher in a reversal of the country's misfortunes? If it works, then they would be able to say, "Hey, look, we weren't completely out of the loop..." On the other hand, if it turns into a colossal failure, it could well be an albatross around the collective Dem neck.

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