Economic Panic Makes GOP Bipartisan

Posted by Scarecrow , Firedoglake at 6:32 AM on January 18, 2008.

All last year, Republicans obstructed and defeated virtually every progressive initiative the Democrats proposed, even going so far as to uphold Bush's veto of health insurance for 4 million uninsured children. But yesterday, the Republicans began to line up behind a progressive economic stimulus approach, and the only way to explain it is near panic.

To be sure, it helped greatly that the current Chairman of the Federal Reserve Board, Ben Bernanke, appears to be an intelligent, non-ideological adult -- in stark contrast to the disingenuous ideologue he replaced. Bernanke, appearing before a House Budget Committee that has been considering possible elements of an economic stimulus plan, essentially endorsed the key components of the Democratic view:

(1) An economic stimulus plan was needed/worthwhile, and somewhere in the neighborhood of $100-150 billion is okay;

(2) It should be designed to get cash quickly into the hands of those most likely to spend it immediately to boost the economy; and

(3) It should be temporary and not have some permanent ("structural") adverse impact on the national debt.

The last two points appeared to deflate the hopes of Bush Republicans who had hoped to make a permanent extension of the Bush era tax cuts the center piece of the stimulus plan. Democrats would have strongly opposed that condition, and had they tried to get a stimulus plan through without them, we'd have been back to the obstruction and stalemate of last year.

Bernanke claimed he was taking no position on whether any of the Republicans' dream proposals should be pursued in the long run, but his insistence that the stimulus be immediate and focused on those who need cash now pretty much doomed the Republican hopes. Extending the Bush tax cuts would have no effect until 2010, when they are set to expire.

Our President, fresh from his visit to the Middle East's wealthiest dictators who feted him in the most sumptuous splendor (e.g., read MoDo's description of the opulence for the contrast with what ordinary Americans are experiencing these days) will condescend to speak to us later today to announce his own stimulus package. I could be proved wrong in about two hours, but with Bernanke hemming in the White House and Republicans, it now seems less likely the President will again poke the country in the eye, and his Republican allies are not likely to follow Bush even if he does.

With the stock market reeling, new home construction facing it's worst slump in 27 years, major investment firms showing record losses, and virtually every economic indicator that matters to voters looking awful -- check out Blue Texan's post for the Bush straight-Fs economic report card -- the Republicans who were quite willing to obstruct children's health care can't afford to be seen obstructing an economic stimulus plan designed to head off recession in an election year -- especially a year in which they are already expecting to get battered.

Economic stimulus when a recession approaches has a history of bipartisan support, but the Republicans put bipartisanship in the deep freeze during the Bush years. Their sudden abandonment of obstruction politics is a clear sign of fear, near panic. Or to give them credit, it's a sign they realize that if you have to go to the polls after the worst economic performance in decades, it's better to have embraced bipartisanship so that if the stimulus plan doesn't work, you can at least share the blame with the Democrats.

We appear to be headed towards a set of proposals that include tax rebates -- they're talking somewhere between $300 and $800 -- for low and middle income tax payers, extensions of unemployment insurance, and possibly additional support for food stamps, low-income energy bills and other programs that deal directly with people most in need. The Republicans will get a few breaks for businesses to help them expense near-term costs and investments that could also provide some stimulus. But thanks to Ben, I hope, we won't have to fight the Bush tax cut extension battle just yet.

Update: Paul Krugman has more on how we got to this point.

Tagged as: republicans, economy, bernanke

Scarecrow is a regular blogger for FireDogLake