the perverse logic of d.c. economics

On Friday, while the leaders of the federal government were all jumping up and down and running around in circles telling us that the sky is falling because Congress had not yet approved the magical $700 billion bailout of some of the most badly-behaving financial institutions in the country, the very same leaders of the federal government categorically refused to consider a new economic stimulus package that was a mere 8% of the size of the bailout that sought to provide aide to ordinary Americans for such luxuries as food, heating oil, and paying the bills.

I say "leaders of the federal government" and not "the Bush Administration" or "Republicans" because this was truly a failure of leadership across the board, Congressional Democratic leaders included. As Paul Rosenberg's column points out, Senate Majority Leader Harry Reid gave Republicans a free pass on this one, not even forcing an actual filibuster by Republicans on why they hate people who are struggling as we enter the time of year when the ability to pay for basic sustenance, heat, and housing mean survival. As we have seen too many times since the Democrats regained the majority in the Senate, the party leadership is more concerned with the compromise itself than getting a good deal for the American people. "Bipartisanship" requires two parties, not one party and one group of cowering enablers.

Of course, this doesn't mean that the wrongdoing isn't heavily on the current Administration. It very much is; it's just that sometimes staying angry this long is a very, very hard thing to do. Our visceral reaction to cold-hearted moves by the Bush Administration has become desensitized and calloused over eight long years, but undoubtedly his veto threat of a $56 billion stimulus package that sought to provide funding for food stamps, low-income energy assistance during the winter months, and extension of unemployment benefits for the record high number of unemployed pretty much made the bill dead on arrival. By the way, considering that they're pushing for a yet-unexplained $700 billion in bailouts, the White House still apparently has no grasp of irony, saying

"Record spending that could lead to record tax increases or higher deficits will not advance our economic recovery."

Hilarious.

But to get to this post's title, the muffled death of the economic stimulus bill on Friday (a.k.a. "take out the trash day") is just another example of the perverse economic logic that current rules D.C., which amounts to something along the lines of "from each according to the inverse of his ability to contribute, to each according to the inverse of his need." Corporations and individuals do not succeed in America on their own; they benefit from the infrastructure and opportunities in the United States that have been created not magically, but rather by investment by taxpayers and communities and, yes, the government. The rule of law and the court system, the internet, electricity grids, water and sewage lines, roads, highways, schools, crosswalks, currency itself, these symbols of stability did not all appear instantly, but rather are an investment in the common good. And those who have succeeded most in this country, who have accumulated the most wealth and found themselves the beneficiaries of the greatest number of opportunities, they have not coincidentally also been the greatest beneficiaries of this infrastructure. And now they are most able to contribute their fair share to the American community, to maintaining and rebuilding the infrastructure that makes the country strong. And now they are also the least in need of direct assistance from the government.

And yet it is from them that D.C. asks the least, and gives the most. This is perverse logic from an economic perspective. If there is a recession and you want to increase spending, you should be investing funds in a way that will actually increase spending in the sort of goods and services that create jobs here at home, not so that P-Diddy can refuel his private jet with foreign oil (poor guy has to fly commercial!). The non-partisan Congressional Budget Office found that direct assistance to the neediest Americans (specifically in the form of extending unemployment insurance and by increasing funding for food assistance) is the most cost-effective and certain way to stimulate the economy with the shortest lag time. Meanwhile, the same Congressional Budget Office recently had this to say about the expected impact of throwing $700 billion at companies who aren't even suffering from a lack of money, but rather just a lack of liquidity, meaning that too much of the assets they do hold are tied up in the high-risk mortgages and debt that they gave out in droves like Halloween candy:

Non-partisan Congressional Budget Office Director Peter Orszag testified that he has no idea what the plan would actually do:

He added that there were no guarantees that the plan would work as intended, or at all.

So it boils down to this: if you are a ridiculously rich corporation or individual, we're not going to ask you to pay your fair share toward rebuilding the economy, but we will give you oodles and oodles of money every time you need to get yourself out of a bad gambling debt, because you're just "too big to let fail." On the other hand, if you're an ordinary working American who is suffering from the economic downturn that those same speculators caused, you don't get anything. Because you're just "too small to care about."

I guess you and Lehman Brothers have something in common.