Centrist and clueless

By Harold Meyerson
Wednesday, June 23, 2010

Liberal Democrats know what they're for: a second stimulus to create more investment and jobs at a time when the economy is still dangerously weak. Republicans ("conservative Republicans" is redundant) know what they're against: anything the Democrats are for. That leaves the centrist Blue Dog Democrats, who don't really know what they're for or what they're against.

Earlier this year the Blue Dogs, and many other Democrats, were saying they would welcome an end to the debate over health-care reform so they could turn their attention to jobs, jobs, jobs. But now that President Obama and Democratic legislative leaders have done that, the Blue Dogs have largely turned skittish.

Efforts by the leaders in both houses to pass bills that would save the jobs of teachers and police officers, maintain states' ability to make Medicaid payments and extend unemployment insurance have hit not only the expected bumps in the road (unified Republican opposition) but also fresh potholes: Blue Dog resistance to countercyclical spending. The House passed a second stimulus in December, and in theory this is what the Senate is belaboring. Although its version is far punier than the House's, the Senate stimulus bill, which had already been pared by such Scroogish expedients as cutting weekly unemployment benefits by $25 -- thank centrist Montana Democrat Jon Tester -- last week came a few votes short of the 60 to needed cut off a potential filibuster. And recent efforts by House Appropriations Committee Chairman David Obey to come up with funds to keep the states from devastating the ranks of teachers have had rough going at the hands of the Blue Dogs, not to mention the Republicans.

The downside of not passing any further stimulus legislation is clear: "Nothing will come of nothing," as Lear told Cordelia. In today's economy, alas, the government remains the only source of significant investment. According to the congressional panel overseeing the Troubled Asset Relief Program, banks are still not lending to small businesses. Beyond the realm of mom-and-pops, nonfinancial companies are hoarding cash -- a record-high $1.84 trillion, according to a Federal Reserve report this month -- but with unemployment still high and purchasing still low, they are not using it to expand.

The administration is rightly touting the large number of infrastructure projects funded by last year's stimulus that are finally underway this summer. But these projects have a finite time span, and absent a second stimulus, an infrastructure-led recovery is likely to run out of steam. Home construction is falling again. The possibility of a double-dip recession cannot be discounted.

Until recently, virtually every Democratic member of Congress could be counted on to support some level of countercyclical spending. That was one of the basic ways Democrats distinguished themselves from the laissez-faire right. But today, the Blue Dogs insist on offsetting stimulus with cuts, which can create a self-negating position. Suppose you vote for a stimulus that enables the states to save teachers' jobs, while offsetting that expenditure at the federal level by reducing spending on, and jobs in, building rail lines. In aggregate economic terms, you may well have zeroed out the net effect of your action. It's hard to believe that anyone ran for office to craft such exquisitely balanced nullities.

The problem here is that the Blue Dogs, like much of the public, conflate the issues of the nation's long-term fiscal sustainability with the short-term deficits created by the worst downturn since the '30s. Thus the Democratic imperative of creating jobs in 2009 became, earlier this year, one of creating jobs and reducing the deficit, and now, for some Blue Dogs, has become chiefly one of reducing the deficit. In polls, meanwhile, the public rates "jobs" as its chief concern, with the deficit lagging far behind. But because this recession is deeper and longer than any since the '30s; because the job-creating component of the first stimulus, while considerable, was clearly too small; and because the administration did not concentrate those jobs in visible agencies, as Franklin Roosevelt did in the Works Progress Administration, only a minority of Americans credit the stimulus with saving or creating jobs. For millions of Americans, concern over the deficit is at least partly a concern over the government's broader inability, as yet, to "fix" the economy. Reducing the deficit now, however, will make the economy worse.

Yet the Blue Dogs' short-term deficit hawkery is more than bad economics. It's bad politics, too. Even pragmatic centrists -- especially pragmatic centrists -- have to be in favor of something. The Blue Dogs don't seem to know what exactly that might be.


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