Firing Back on the Obama Recovery Package -- Again

My God—they're still at it. Two weeks ago, I wrote a 10-point take-down [2] of some of the biggest lies conservatives are telling about the stimulus bill. You can tell just how terrified they are: If this thing passes—and especially, God and Alan Greenspan forbid, if it actually works, even a little bit—it's going to discredit their entire model of how the economic world works. Because the battle over the stimulus package is nothing less than the battle for all the marbles, their Big Lie factory is working overtime, cranking out specious new absurdities on an almost daily basis.

And compared to the last round—some of which were at least sort of plausible if you squinted at them just right—this crop is just bizarre. You may also recognize a few of these points as second passes at arguments we covered in the first piece. In some cases, it's because they've reworked their argument to come at it from another direction; in others, it's because on our end, working out new and better comebacks is an ongoing process.

No matter how long and strange the trip gets, as long as they keep turning out these spittle-flecked fabulations, we'll be standing by to give you what you need to fight back. Here's the latest wave of obfuscating blather oozing out of the right -- and the snappy comebacks that will allow you to fire back.

1. The stimulus bill is just too big!
2. No, wait -- it's too small!

There are plenty of economists -- including former World Bank head Joseph Stiglitz and Nobel laureate Paul Krugman, who are two of the world's leading experts on how countries survive depressions -- who think that this bill is too small. They estimate that before it's all said and done, we'll need to spend between $1.2 trillion and $2 trillion to get to a truly effective recovery. In their view, this is nothing more than a good start. There's much more that will need to happen for America to really get back on its feet. This bill is the first salvo in what may turn out to be several different bills aimed at different parts of the crisis, assuming the conservatives in Congress aren't allowed to derail our efforts at recovery.

We need a bill that contains enough spending to make up for what consumers and businesses aren't putting into the economy right now. And we need to stay focused on getting families and employers right-side-up financially -- and the best way to do this is through spending that secures their jobs, enables them to make their mortgages, and invests public capital wisely to prepare us for the 21st century. That means spending on nutrition, education, health care, and infrastructure -- investments that have always, throughout history, yielded returns that are many, many times what we originally spent on them.

3. It's got too much pork in it!

Conservatives have a rather specific definition of the word "pork." In conserva-speak, "pork" is defined as any government spending that benefits anybody who's not an investment banker or a defense contractor. If you ask them, $700 billion in bailouts to Wall Street is not pork. Neither is the $1 trillion-plus we've spent (largely on private contractors) in Iraq. And, of course, it's not "pork" when the conservatives loaded this very same stimulus bill with sweet giveaways to their patrons in the nuclear and "clean coal" industries. Nope. No pork there. Not at all.

The fact that they've been so generous with the lard bucket themselves is a pretty clear sign that whatever their resistance is about, clinging to core conservative principles probably doesn't have a lot to do with it. People who live in government-subsidized glass houses may want to be careful about flinging that "ham" accusation around.

It's a rather perverse irony that most of what conservatives call "pork" is precisely what most economists, left and right, tell us is exactly the right kind of spending to create stimulus. Once again: that means social services, education, health care, and infrastructure. (See #1 above.) As we'll see down in #7, this is where we'll get far and away the most leverage per dollar spent.

4. It'll increase unemployment!

I'm gobstopped. There's just so much wrong with this [3] that it would take another 2,500-word article just to debunk it all. But of course, only Fox News could argue—with such a weirdly straight face, too—that increasing unemployment benefits will give people incentives to stay unemployed.

Obviously, nobody at Fox has ever actually had to live on unemployment benefits. (Life is sweet when you're in the providential arms of the wingnut welfare system.) Because anybody who has actually tried to hold a household together on those meager paychecks wouldn't consider them any kind of incentive to turn down a paying job—let alone voluntarily quit a job they already have.

Believe those of us who've actually had to do this: There is no moral hazard here.

(A digression: Everything you need to know about this article's credibility comes clear when you consider a brief but telling bit of revisionist history tucked in there at the end. The author breathlessly informs us that by 1939, the average number of hours worked by the average working-age American was still 21 percent below what it had been in 1929—and insists that this is evidence that the Depression was still in full force!

Not so fast, there. One of the provisions of the New Deal was the 40-hour work week, which was adopted in 1936 so that employers would hire more people—creating new jobs—rather than overwork their existing staff as the economy grew. Given that many workers in 1929 were working over 50 hours per week, that law did indeed bring their hours down by about 20%. Just another example of why we should never leave conservatives alone with history books...or put much faith in their interpretations of what actually happened when ideology is at stake.)

5. It'll foster dependency!

"Dependency," like "pork," is another one of those conservative trigger words. It makes it sound like this bill is going to create a whole new class of lazy, undeserving welfare cheats.

And it's completely disingenuous. Conservatives aren't the least bit concerned about "dependency." (You may have noticed that this word never came up once when helping lazy, undeserving CEOs of failed banks was under discussion. Strange, that.) Instead, they're using the word as a euphemism for a word that really does strike terror in their hearts. That word is: "constituencies."

The kind of stimulus that works absolutely does create new political constituencies—mostly among people conservatives really don't want to empower. After all, they've been working overtime for the past 30 years to strangle teachers, nurses and public service workers' unions; wean parents off of Head Start programs; and drive American construction workers into poverty. With apparent victory in sight, the last thing the want to do is pass legislation that will restore the power and influence of these groups. An effective stimulus will, by design, do just that.

Empowering people by ensuring they have secure jobs at good wages isn't "dependency." In fact, investing in the restoration of the middle class is the best way there is get people standing on their own two feet.

6. It's going to go to ACORN!

The most incredible part of this one is that Dick Morris gets paid a whole lot of money to sit around to make up stuff like this fundraising e-mail [4], which went out to conservatives on February 6:

"Outrageously, the Democrats want to give almost $5 billion to groups like ACORN. As you know, ACORN has been accused of massive vote fraud in many states."

Welcome to Planet Idiotcon. This is a complete fabrication—which, of course, hasn't stopped Lou Dobbs, Steve Doocy, Sean Hannity, Karl Rove, Rush Limbaugh, and various Fox News talking heads from repeating it every hour on the hour. (Worse: According to Media Matters, the Washington Times, The Hill, and the San Francisco Chronicle have also forwarded the lie unquestioned.)

Just to make it clear:

First: ACORN was never implicated in any kind of "vote fraud." Voter fraud is fraud by voters, committed at the polls on Election Day. However, months before the election, some independent voter registrars working for ACORN were found guilty of filing fraudulent registrations—which came to light because ACORN itself flagged them as problematic. Investigators concluded that the miscreants committed the fraud so they'd get paid more, and had no intention of interfering with the election process. ACORN has responded by changing its voter registration processes. No harm, no foul.

Second: Nowhere does the stimulus bill even so much as mention ACORN. ACORN itself has said that it's not eligible for any stimulus funds, and does not plan to apply for any. Nobody—either at ACORN or on the Hill—has any idea what Morris is talking about.

Finally: ACORN is a national group that's had tremendous success organizing low-income people to work for living wages, voter participation, affordable housing and better schools. The fact that the right wing has tried to turn this kind of group into the Devil Incarnate says a whole lot more about their own covert classism and racism than it does about ACORN or its members. And we need to be saying so every time they trot it out as their pet boogeyman.

7. OK, smarty pants. Whatever. It still won't stimulate the economy.

Pay attention here, because this is the most important part of this entire article:

[5]

Print this out, trim it down, and stick it in your wallet, because you're going to want to wave it under the nose of every conservative you know. And don't forget to mention that the data was gathered by Mark Zandi, who was John McCain's economic adviser, and who presented it last month in testimony before Congress.

As you can see: the biggest stimulus of all is food stamps. Infrastructure isn't far behind. And what's that there at the bottom of the chart...tax cuts?

It's irrefutable now. The more the final bill focuses on social and infrastructure spending, the bigger the economic boost we're going to get from it.

8. But won't corporate and capital gains tax breaks be a better stimulus?

Go back up and look at that chart again. No. They won't.

The past 20 years has taught us two hard new truths about tax cuts that conservatives have yet to internalize. The first one is: Tax cuts directed at the wealthy don't create new wealth. Larry Beinert has run the numbers [6] that show that, going all the way back to the 1920s, economic growth correlates absolutely perfectly with high marginal tax rates on the rich. The higher the top tax bracket, the better the U.S economy does. This happens so reliably that we probably need to consider it a bit of settled economic wisdom.

The second truth is: What tax cuts do create—better than anything else you can name—is economic bubbles. It doesn't take long before you've got too many rich people with too much capital chasing too few real investment opportunities. When they can't find places to park their excess cash, they start gambling with it. In the 1630s, it was tulips. In the 1990s, it was dot-com stocks. In this decade, they turned to flipping houses and stashing it in hedge funds.

Of course, con men and scam artists (paging Bernie Madoff) thrive in the overheated, gravity-free, anything-goes casino atmosphere that follows. Worse, a whole lot of paper "wealth" gets created that doesn't have any real-world basis of value. Eventually, the bubble overinflates and pops, taking that phony "wealth" with it. And this happens every single time we cut taxes on the rich below the 50 percent threshold.

Tax breaks were one of the main reasons we got into this pit. More tax breaks will not get us out of it. And the conservatives need to let go of that shattered fantasy, and move on.

9. We don’t need to throw more taxpayer money into another bailout of the Wall Street bankers.

Congress has been throwing around unimaginable amounts of money over the past six months, so it's not surprising that people are now thoroughly confused about what's going where, and when, and why, and to whom.

The bailout bill passed back in October—a Bush administration production, from start to finish -- gave $700 billion to Wall Street, no questions asked. Half of that money -- $350 billion -- has already been spent. God and Hank Paulson only know where it's gone. We sure as hell know that it's not being loaned out to businesses and homeowners who need credit.

The other half of that money has yet to be released. Yesterday, treasury secretary Tim Geithner announced the new rules under which that's going to happen. Maybe better oversight and tougher regulations will make sure more of this half gets to where it's needed.

However: the stimulus bill is not the bailout. It's a completely separate piece of legislation, designed to address the other side of the equation—Main Street and the middle class. (Even the tax cuts are targeted at lower- and middle-income families.) The idea is that by stimulating demand for goods and services—and giving people enough income to afford them—we can get the economy moving again.

10. All the stimulus package will do is saddle the next generation with insurmountable debt. It’s just not fair to them.

As I explained in the previous article, this argument is rooted in the belief that national economies work like household budgets. But they don't.

There's a strong consensus among economists that we can't afford not to do this—and it will be far cheaper to do it now rather than wait until later. Every month we dawdle, the economy will continue to spiral downward—and the longer it does, the more money it will eventually take to restart it. Delaying action because we're afraid of taking on debt now will only vastly increase the amount we'll have to borrow later. And that would, indeed, create an intolerable burden on future generations.

Fortunately, though, the spiral spins both ways. The stimulus money we spend today (compounded by other measures like tax reform, further investment in public goods, and increased corporate oversight) should, over a period of a few years, lead to greater economic growth in the future. And that growth will give us the money we need to pay off those debts handily, without having to pass them on to our kids. This idea is at the core of Keynsian theory. It's been tried and tested by dozens of countries over the course of 80 years—and done right, it works.

Bonus Question: Why should I expend any effort in getting a bill passed that is far less than what is required?

Even though most progressives agree that this bill isn't enough—and that too much of it is going out in tax cuts and other expenditures that won't give us enough return on our investment—it's still the one of the most progressive pieces of legislation the Congress has passed in decades.

Remember, too, that this is only the first of many bills that will be needed over the next few years to put things right again. (Remember: FDR took office in 1933—and was still passing New Deal bills in 1937.) In the weeks ahead, Congress will be taking up next year's budget, which will also be shaped to respond to the crisis at hand. There may be more stimulus in the months ahead. And there will be other issues that affect our recovery, including universal health care, war funding, and climate change.

Looking ahead to those efforts, we can build on even a small victory. But a defeat now will be a major political setback for the new administration and the increasingly liberal Congress. Worse: it will be a devastating betrayal of the tens of millions of people who stand to lose jobs, homes, retirement savings, health care, and their very futures if we wait even another few weeks.

We can't afford to let that happen. We need this bill, and we need it now -- no matter what the conservative Big Lie factory says.