Much has been made of the various provisions of the stimulus package but there are some broader political and economic consequences that have received less comment.
Partisan Poison
The most important part of the stimulus bill may not lie in what it accomplishes but what it has revealed about the political realities of the next four years. Perhaps the most disheartening and disconcerting part of the entire debate was the behavior of the Republican Party. Even after being thrashed in the November elections the GOP has decided to continue hardball tactics that date back to at least the Gingrich years.
They GOP has essentially said that in order for ANY legislation to pass Congress it must garner 60 votes in the Senate. Even with the President’s attempt to forge bipartisan cooperation and the seriousness of the situation, the Republicans refused to meet him halfway or even part of the way. With them it is our way or no way. They have signaled they will hold this administration hostage on any bill that reaches the Senate floor.
In fact this Congress gives every evidence of taking its script from the last few times a Democrat has been in the White House. Bill Clinton arrived in Washington with the professed ambition of trying to transform America. During his first term the GOP dug in their heels at everything Clinton tried to do, at one point forcing an unprecedented budget showdown in which the government was threatened by having to shut down for lack of appropriations.
The GOP’s opposition successfully made the case in the mid-term elections of Clinton’s first term that the fault all lay with Clinton. In 1994 the Republicans successfully exploited what have come to be termed the “culture wars” and in 2009 they appear to be drawing their strategy from the same book.
That in the middle of the most serious domestic crisis since the 1930s, the Republican Party should seek to obstruct rather than collaborate will have huge implications for American politics over the next four years and probably beyond. The GOP is not only gambling with the future of their party but the future of the American people. It is a high stakes gamble driven by what can only be described as political and ideological hubris.
Whether they commit suicide, take down the country with their narrow-mindedness or emerge the victors in this no-holds barred war will leave the country deeply scarred for another generation. One would have thought the election would have given fresh air to the moderates within the GOP, but instead it has driven the radicals to become even more radical.
To a President who entered his term with the idea of reaching a hand out to his detractors the Republicans’ actions thus far amount to spitting not merely on Obama’s hand but in his face. In their belief they are right and that any compromise is not merely a sign of weakness but aiding and abetting the enemy, they share few precedents in American history. You need to look to Europe and the Far East for parallels.
For at least a generation these ideologues of the radical right have poisoned American politics as surely as if they had been domestic terrorists. They left in ruins the Presidency, which they bent to unconstitutional and perhaps treasonous limits under George W. Bush and Dick Cheney, a Congress that no longer has any rules or decorum that this minority will respect and a Supreme Court that has become a ideological football (wait until President Obama needs to name a replacement for Justice Ginsberg and you will see fireworks like you have not seen in DC since the nineteenth century).
Big Government
Those on the right who have associated the Democrats with big government will find plenty to fuel their ire in the stimulus bill. First, there is the controversial health information technology section which mandates a national health care record-keeping system and puts it under the federal bureaucracy. This has long been a red flag issue to privacy advocates on both the left and the right who are starting to beat the drums to have this section revised.
I will predict this section has the potential to rival the Clinton health care fiasco and ration away much of Barack Obama’s political capital. Why he should choose to devote a major portion of the stimulus bill to this will keep the next few generations of historians quite busy. One would have thought Obama had learned from Bill Clinton that you do not expend political capital on such controversial measures so early in your administration. Yet maybe the Obama team felt now was the time when their political capital would be the highest. It is a gamble of the highest order and not a good one to have made in the midst of an economic crisis where the President will need all the political capital he can muster to deal with issues such as the mortgage crisis and failing banks.
The second area where big government is injected into the stimulus bill is education. Congress and the President have put stipulations on funding granted to the states in the past, but this section ranks as one of the most far-reaching in terms of spelling out exactly how the funds should be spent. In addition it contains a provision sure to rile the nation’s Republican governors by allowing legislatures to overrule them on funding in this section, thus negating the veto power. Expect that some state may well take this provision straight to the Supreme Court.
Here is the exact language in the bill:
LEGISLATURE.—If funds provided to any State in any division of this Act are not accepted for use by the Governor, then acceptance by the State legislature, by means of the adoption of a concurrent resolution, shall be sufficient to provide funding to such State.
The FDR Test
The first part of this series evoked Franklin Roosevelt’s 1932 acceptance speech as a touchstone for an economic recovery program. Remember that in this speech he issued a stern warning about the effectiveness of stimulus packages:
I have favored the use of certain types of public works as a further emergency means of stimulating employment and the issuance of bonds to pay for such public works, but I have pointed out that no economic end is served if we merely build without building for a necessary purpose.
The stimulus bill falls short of this ideal in several ways.
Obamanomics
With the stimulus package we have enough evidence to be able to define what I term Obamanomics. Roosevelt’s New Deal, of course, is known for its advocacy of Keynesian economics. Ronald Reagan’s administration created Reaganomics. Obamanomics is an entirely different creature than either of these.
Roosevelt’s Keynesian measures consisted largely of putting money and relief in the hands of the unemployed. Reaganomics operated under the principle that if you cut taxes for corporations and the wealthy they would invest in job creation programs that would aid everyone. In simplified terms, one was bottom-up, the other top-down.
Obamanomics is a curious hybrid of the two. There are elements of the stimulus plan that echo both Reagan and FDR. Yet the contemporary twist that Barack Obama puts on these is in his emphasis on information technology. Futurists have written about the so-called Information Age for almost a generation, but Obama is the first President to actually incorporate these ideas into a relief plan.
Yet the information side of the American economy is not what is ailing. The conventional wisdom has long held that we are in the midst of a transition from a manufacturing to an information-based economy. Many of these analysts have predicted that at some point old-style manufacturers and people who lacked information skills would find themselves in deep trouble.
Yet this recession/depression is not about the Information Age vs the Manufacturing Age. Part of it echoes both the 1893 Depression (which was worse than the 1930s) and part echoes the Great Depression in that many of our troubles stem from the same circumstances that caused the previous two depressions–unregulated speculation and excess concentration. In 1893 it was the railroads that mirrored the problems of today’s auto industry. In 1932 banks mirrored the problems of today’s financial gamblers.
Obamanomics seems to come from a generation which bought into the Information Age hype, but I have news for you, this depression marks not the transition into and Information Age, but the end of it. The information Age relied on the compartmentalization of information, breaking it into bits and bytes and filing it away in those folders that are the major icons of that period and our computer screens.
The long, complex stimulus bill reflects this mindset. And that–not its particular provisions–is its major failing. If 1893 was about the end of agrarian America and 1932 about the end of laissez faire, this depression is about the end of the Information Age and its reliance on what I term box thinking–the tendency to put everything in those folders. The stimulus bill bears a striking resemblance to my wife’s desktop screen which has folders everywhere.
Barack Obama needs to say goodbye to the Information Age and say hello to the Systems Century, for the next era will be not be about folders but the connections between them. Systems thinking and technologies like system dynamics will be needed to deal with the interdependencies and interrelationships of this emerging world.
For the first portion of the New Deal, Franklin Roosevelt, like Barack Obama, relied on traditional academics like Raymond Moley and clung to the beliefs that had dominated his times, such as a balanced budget. Only as the Great Depression resisted his efforts did he move to the new way of thinking advocated by Keynes that said in a depression business and consumers could not create demand, so government had to “prime the pump.” Fittingly, Moley left the administration and became one of the critics of what historians term the Second New Deal.
My belief is that Obama’s present team of advisors, particularly Summers, who hasn’t the foggiest idea of what systems thinking is about, are the equivalent of Moley. Because of the flaws of the stimulus bill and the unique nature of this economic crisis, Barack Obama may come to the same crossroads as FDR far earlier than his predecessor.
Roosevelt’s strength, as he expressed it in his acceptance speech, was in his pragmatism and his willingness to experiment. I hope that Barack Obama will learn to both experiment and listen to new voices because the ones he is relying on now threaten to take this country into a deeper crisis much as Grover Cleveland did in 1893.
So that is the big question we are left with after perusing every one of the words in the stimulus bill: will Obama be a Roosevelt or a Cleveland? Will he cling to the past or embrace the future? Will he rely on old ideas or seek out new ones? Can he, like FDR, break with his own personal beliefs?
It is far too early to know the answers to these questions, but not to early to ask them. Like others, I want Barack Obama to succeed, but I am convinced that can only happen if he dumps Summers and Geithner and seeks out new voices.
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