The new Republican credo: “No, we can’t”

The stimulus plan won't work, declares a discredited and marginalized GOP. But whether they like it or not, action is on the agenda.

Topics: U.S. Economy, Globalization, How the World Works, Wall Street,

“Amid Cascading Layoffs, Plunging Confidence, Analysts Worry If Mix of Tax Cuts and Spending Will Be Enough,” reads a headline on Wednesday’s Wall Street Journal. The article makes for instructive reading when compared with the analysis of the stimulus bill released by House Republicans the same day. The Journal quotes a handful of economists and analysts who aren’t sure that the plan will deliver enough of a jolt to the economy. Goldman Sachs, for example, argues that $1.2 trillion in stimulus is necessary to offset private sector contractions over the next year. The Senate version of the stimulus bill has a price tag creeping up to $900 billion, but that still falls short.

Meanwhile, the House Republicans declare flatly that the bill “will not work and it should be defeated.” But not because the plan isn’t ambitious enough, but rather because, fundamentally, government spending is bad, bad, bad. Their only prescription for current economic woes is “relief for struggling taxpayers, homeowners, and small businesses.” By which is meant tax cuts.

Sure, everybody likes a tax cut, an enduring reason explaining why Republicans always campaign on a tax relief platform, and, for that matter, why Obama made a middle-class tax cut a centerpiece of his own campaign. But there’s a very easy-to-comprehend explanation for why tax cuts may not be the right medicine for an economy as sick as ours.

On Wednesday, Boeing joined the slew of blue chip corporations announcing significant workforce reductions this week — a decline in jet sales will force the company to lay off 10,000 workers.

Now suppose you are one of those Boeing workers who just got laid off. Suppose you are carrying a not insignificant amount of debt on your credit card and you’re having trouble making your mortgage. And then the government cuts your taxes. What are you going to do with the extra cash? Go on a shopping spree? Or engage in some combination of paying off your bills, cutting down your debt and socking away whatever is left in a savings account?

As we learned from the tax rebate last spring, most Americans aren’t going to spend any new cash windfall at the mall — and that was in an economic climate much less severe than right now. Americans are running scared, and every new economic headline just reinforces their fears. Consumer confidence is at an all-time low. It’s time to hunker down and hope that you’re still standing when the storm blows itself out. Of course, by doing what makes sense for us individually, we only exacerbate our collective economic problems.

There’s only one player in this economy with the resources and capability to kick-start the economy, and that’s the federal government. Thus the argument in favor of massive government spending. We don’t know for sure whether it will work, and we certainly don’t know for sure if every single program included in the various versions of the stimulus bills working their way through the House and Senate is the best, most productive use of taxpayer money.

But we can guess that flooding the educational system with dollars will mean more teachers are hired, and fewer are fired. We can guess that boosting the federal share of Medicaid funding will ease fiscal burdens on the states, which in turns means that they won’t be forced to lay off government workers or cut their own infrastructural spending. We can guess that opening up the funding spigot on a whole array of already existing programs will ripple outward through the economy, providing the critical spark igniting a crippled economic engine back to life.

Again, these are guesses. But when faced with a crisis as bad as the current one, doing nothing and hoping for the best is unlikely to find favor with the general public, especially a general public that has just thrown out the reigning political party and has made it pretty clear that it is ready for “change.”

Restricting government help merely to tax cuts is just another way of doing nothing. It is an abdication of government responsibility, an admission of failure. It is also, in many instances, a clear triumph of ideology over pragmatism. The House Republicans don’t want expansion of broadband because they oppose provisions for “open access”; they don’t want to support funding for state education programs, because the funding is restricted to public education; they don’t want to support a big boost for renewable energy, because it doesn’t include handouts to the coal and nuclear industries.

The Grinch had nothing on these jokers. After running the country into the ground during a period in which their ideological predispositions reigned supreme, now all they can do is say no. When instead, they should be telling us how sorry they are, and shutting up.

Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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