Monday, November 30, 2009

How to simultaneously pass a stimulus, lower deficits, and disallow a filibuster

A large stimulus can be done through reconciliation, and therefore need only 50 votes plus the Vice President, if it's deficit neutral. But how can it be deficit neutral and still be a stimulus? One answer is that for reconciliation it must be deficit neutral over a period of 10 years (see here and here), so put in the spending now, and the tax increases, on the very wealthy, to more than pay for it 5 or more years later. If unemployment is still high by then, do another one of these stimuli at that time.

Yes, the Republicans will howl. They can't say it will explode the deficit (with much traction), because it's deficit paying. And, in fact, if the tax increase is a large permanent one on the wealthy, as it should be, the CBO score could show it paying down trillions in debt over 20 years to satisfy the deficit hawks. Nonetheless, the Republicans will, of course, say that the economy, and civilization as we know it, will end because taxes are being raised, despite the fact that Bush had massive tax cuts for the rich and brought us to the brink of a depression and trillion dollar deficits, while Clinton raised taxes and turned record Republican deficits into record surpluses, and had the longest economic expansion in U.S. history. I sincerely hope that if this happens Obama will end his harmful aversion to touting the achievements of the last Democratic president. The constant reply to Republican claims of disaster whenever taxes are raised should be Clinton, Clinton, Clinton (and in California Pat Brown, Pat Brown, Pat Brown).

And it's crucial for the Democrats to understand that any negative at the ballot box from the Republicans screaming tax increase, will be swamped many, many times over by passing a stimulus, and jobs programs, that will make unemployment and the economy far better by election time. A bad economy at election time, that's improving very slowly if at all, will hurt the Democrats immensely more than the Republicans screaming about tax increases which will be only on the very wealthy. Unfortunately, it may be too late for great improvement by the 2010 midterms, but strong action now would also greatly improve prospects in 2012, when not only much of congress, but also you know who, is being voted on.