[Updated w/ Video] Brad Delong Prefers Obama Stimulus Plan
by DPW, Tue Jan 15, 2008 at 02:31:52 PM EST
As MollieBradford diaried here yesterday, Paul Krugman recently criticized Obama's recent stimulus package--characterizing it as "tilted to the right" and citing it as further evidence that Obama "really is less progressive than his rivals on domestic policy."
Krugman unfortunately only spends a single sentence setting forth the basis of these conclusions:
For example, the Obama plan appears to contain none of the alternative energy initiatives that are in both the Edwards and Clinton proposals, and emphasizes across-the-board tax cuts over both aid to the hardest-hit families and help for state and local governments.
I responded in the comment thread of that diary that Krugman's criticisms seemed inattentive to the narrowly defined purpose of these kinds of packages. Specifically, I wasn't persuaded that alternative energy initiatives belong in a stimulus package, given the fact that stimulus packages are typically designed to address immediate and temporary economic needs, as opposed to more farsighted objectives.
Today, I read economist Brad Delong's evaluation of the stimulus packages proposed by the respective candidates (For those who may not be familiar with Delong, he is an economist at Berkeley and generally considered left-leaning). As my headline suggests, he disagrees with Krugman and expresses a preference for Obama's approach. Specifically, he writes:
The plan is clean: there is no place for lobbyists to hang ornaments on it--which means that quick passage is possible. The first $45 billion of checks could be cut and sent out with this April's tax refunds. It meets Elmendorf and Furman's requirements that a fiscal stimulus be timely and temporary. It does not do so well on "targeted"--it doesn't do a great job at making sure the money gets to people who will spend it and thus boost aggregate demand--but this is at least partly offset by its simplicity, which is indeed essential if we are going to get the timely and the temporary right.
More in the extended entry.
Obama's top economic advisor, Austan Goolsbee (if nothing else, the funniest economist you're likely to encounter), made a similar point when asked to distinguish Obama's plan:
"The primary difference between the Obama approach and the Clinton approach is that if you are going to have fiscal stimulus," said Austan Goolsbee, the Obama campaign's top economic-policy adviser, "the absolutely most imperative thing is to get the money into people's hand immediately so they can use it and prevent the slowdown." Several pieces of Clinton's plan, including the home-heating subsidy, wouldn't reach people for up to a year, Goolsbee said. "Anything like that is not a stimulus."
Addressing Clinton and Edwards' plans, Delong notes the following:
These are all worthy causes--things that the government should be spending more money on. But this is not a bill that can be passed quickly--the housing provisions, at least, are one of those things where the devil is in the details of the drafting and where quick, clean passage and implementation is almost impossible. Funds to train and put to work people making public buildings more energy efficient--well, those aren't timely. The proposal is not Obama's: we are going to stimulate demand by cutting a lot of identical checks via a refundable tax credit--a thing that the government can do well and quickly. And this, I think, matters a lot.
As for why this matters, Delong refers to a recent note from Stan Collender:
Christmas 2008 May Be Coming Early For Lobbyists | Capital Gains and Games: A tax lobbyist friend told me yesterday that he's gone into the economic stimulus business. In response to my inquiring look that begged for more information, he said that I'd be surprised how many industries and professions have tax reductions that they want in any economic stimulus package that is considered this year and are looking to him to come up with arguments that confirm they will, indeed, be stimulative. In other words, even though it hasn't yet been introduced, the economic stimulus that has become all the rage in Washington these days has already become a Christmas tree with everyone and anyone who has something they want to do trying to reframe that proposal in terms of its positive impact on the economy. In case anyone hasn't noticed, this includes the White House, with the president all but saying that the reason the economy may be slowing is because of uncertainty about whether the tax cuts enacted during his administration will be extended when they expire in 2010. None of this is suprising. Even though its chances of being enacted are small, an economic stimulus bill may be the only thing that actually moves through the legislative process this year. In lobbyist parlance: it may be the only train leaving the station in 2008. But no matter how good the messaging, loading up the bill with a variety of provisions is one of the things most likely to lead to its demise. It will be too big, too political, too expensive, and take far too long to debate and pass.
Accordingly, Delong writes:
The best way to keep a stimulus bill from becoming a lobbyist-pleasing ineffective and destructive Christmas tree in which a lot of the money goes to people who won't spend it and a lot more to people who shouldn't get it is to keep the legislative vehicle simple and clean. Boosting employment in the short term by cutting a lot of identical checks by April if we need to is something congress and the IRS can do. And Obama's plan seems to me to have the best chance of doing that--if he can sign Pelosi and Reid up to move a clean, focused bill.
John Edwards and Hillary Rodham Clinton and their staffs--they don't seem to have grasped that governance is best when you ask congress to do things that are within its competence, and ask the administrative branch to do things that are within its competence.
Reasonable people can disagree, I think, about the merits of these various proposals. I offer this primarily as an alternative view from an economist with liberal sympathies. Similarly, Robert Reich has written that he favors Obama's proposal.
Notably, Delong doesn't frame his evaluation in terms of whose proposal is more progressive in the way that Krugman does, so these two opinions aren't necessarily in conflict. Rather, Delong is thinking more pragmatically, which I believe is a more appropriate perspective for appraisals of government action like this, viz., legislation with such highly specific utilitarian objectives. And, I freely admit that I tend to agree more with Delong's (and Goolsbee's) economic views than Krugman. Again, I'm just trying to add some other left-sympathetic perspectives to the discussion.
Lastly, I would like to add that often it seems that many folks apply ideological terms like "progressive" and "liberal" to uncritically. I don't think there is a clear, uncontroversial solution to our economic circumstances that follows obviously from a broader liberal or progressive political philosophy. Indeed, I think there are a variety of economic approaches that are plausibly consistent with a more general liberal political philosophy, so long as those economic approaches aim to distribute the benefits and burdens of our economy in a just manner.Update:I noticed this video blog from Brad this morning, in which he basically says the same thing he wrote in his blog post. So for you illiterate folks: