Forgive me for making a separate post, but I wanted to take issue at length with Congressman Himes' vote against the new jobs bill (HR 2847, December 16) that Congress barely passed. His office issued this explanation (as Jonathan Kantrowitz posted):
The Congressman voted against a $75 billion Democratic spending plan which largely expanded programs in the American Recovery and Reinvestment Act. While the Congressman shares many of the priorities contained in the legislation, he was unwilling to authorize additional spending when over $545 billion, or more than two thirds, of Recovery Act funds are still being spent. This bill uses remaining funds from the Troubled Asset Relief Program to pay for this expansion. The Congressman believes that TARP funding, which was regrettably requested by President Bush, Treasury Secretary Paulsen, and Federal Reserve Chairman Bernanke as critical to averting financial meltdown, should not be used for anything other than debt reduction unless the money is distributed through the full appropriations process.
"As many sectors of the economy begin to show clear signs of recovery, we need to get our fiscal house in order," said Congressman Himes. "The simple facts are that we have to pay our bills, and the only long-term path to continued improvement is to replace public spending with private-sector job growth."
I have to point out that Nobel laureate economist Paul Krugman takes the opposite point of view, and has for months. He has steadfastly pointed out, and I agree with him, that the initial stimulus bill was far too small. Though Congressman Himes suggests that the economy is "showing clear signs of recovery", I would suggest he focus on the nearly half a million new jobless claims that were made this week, and the double-digit unemployment rate. As Krugman has pointed out, we are in for years of subpar growth and unemployment and underemployment rates that are painfully high. Krugman put it starkly just a week ago:
I don't think many people grasp just how much job creation we need to climb out of the hole we're in. You can't just look at the eight million jobs that America has lost since the recession began, because the nation needs to keep adding jobs - more than 100,000 a month - to keep up with a growing population. And that means that we need really big job gains, month after month, if we want to see America return to anything that feels like full employment.
How big? My back of the envelope calculation says that we need to add around 18 million jobs over the next five years, or 300,000 jobs a month. This puts last week's employment report, which showed job losses of "only" 11,000 in November, in perspective. It was basically a terrible report, which was reported as good news only because we've been down so long that it looks like up to the financial press.
Unless, that is, our Democratic congress joins with Barack Obama and passes substantially greater job stimulus. Congressman Himes has taken the very disappointing position of the minority Republicans that the key economic problem is the deficit, while Krugman, whom I respect above all economists, has pointed out that the deficit is not the problem; the dismal job situation is.
Congressman Himes was one of just 38 Democrats to side with every Republican on this measure. And let's be clear that the $75 billion measure is chicken feed compared with what is really needed. Ben Bernanke's remarks recently that he intends to keep interest rates low for the forseeable future belies the concern over deficits. If he thought that deficits would lead to inflation in the medium term, he would have hinted about the need for higher rates at some point soon. But he and Krugman understand that with the substantial unutilized capacity in the economy and the dangerously high unemployment rate, we are in no danger of inflation.
Krugman has been warning for months that we are in danger of seeing the economy decline into a second downturn next year as the initial stimulus funds are spent and federal spending reverts to lower levels. And let's be clear that this is the recent recipient of a Nobel prize in economics, and in 1991 the recipient of the John Bates Clark medal as the best American economist under the age of forty. So he's no slouch, and he's been right about the downturn and about Obama for a long time.
On the issue of jobs, the Democrats have it largely right, while the Republicans have reverted to the benighted economics theories of Herbert Hoover in the 1930's. Every Republican voted with Jim Himes and against this modest jobs bill. I'm a dedicated Democrat, and on this issue Congressman Himes should stay on the side with economic common sense and Krugman's wisdom.
Then there is this aspect:
The Congressman believes that TARP funding, which was regrettably requested by President Bush, Treasury Secretary Paulsen, and Federal Reserve Chairman Bernanke as critical to averting financial meltdown, should not be used for anything other than debt reduction unless the money is distributed through the full appropriations process.
Does Congressman Himes believe that we should not have bailed out our financial institutions? I think most economists and, frankly, anyone who understands the financial system, understands that without the quick funds authorized by Congress, the entire economy would have collapsed in a Great Depression-like implosion. I don't regret that expenditure, because there was no other choice. Should Obama and Geithner have taken over the banks and returned 100% of the upside of relistings of the recapitalized banks to American taxpayers? Absolutely. But it wasn't regrettable that we staved off total collapse.
I think the point about going through the appropriations process is a red herring. We need the expenditures now. If it takes a bit of bending of the rules to get relief for hard-pressed workers in this country, then so be it. I don't see the Obama administration getting prickly about bending rules when they can't be bothered to prosecute Bush administration officials for war crimes, and are even defending John Yoo from prosecution who was the key in the legitimization of torture under the Bush administration.
No, we need additional job stimulus spending, most Democrats got it right. Congressman Himes was on the wrong side this time. Let's hope he joins Krugman, Keynes, and the Democrats on this in the future.
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