President Obama is just days away from signing the world’s largest ever peace-time stimulus plan. But his dream of an end to Washington’s entrenched partisan battles, the setting aside of “childish things” has not materialised.
The problems began when the House of Representatives voted on January 28th on Obama’s American Recovery and Reinvestment Act. There was a fierce debate in Congress, on TV networks and talk radio shows, and at neighbourhood meetings up and down the country about whether the United States should spend $820 billion to revive its economy.
The bill included massive investment in infrastructure and green technologies, tax cuts for the middle classes, extensions to welfare programmes for those affected by the recession, and money so that states would not have to cut back on vital public services. The plan enjoyed the support of many leading economists including six Nobel Prize winners, while polls consistently showed that around two-thirds of Americans were in favour.
Although it passed 244-188, the House split along party lines with every Republican voting against it. No surprise there, I hear you say. Republicans and spending increases; turkeys and Christmas. Yet, 59 of these 188 so-called fiscal conservatives had voted for the $750 billion Wall Street bail out last year. So for those lawmakers it was less a case of principle and more of partisan politicking. They estimate that the stimulus will not have worked by the 2010 midterms and so opposition can help them pick up some seats in swing districts.
In the Senate, Obama’s advisers had announced in early January that he wanted support from 80 of the 100 Senators. But on February 5th after days of meetings with Republicans who had been urging him to exchange investment measures for tax cuts, Obama scolded them by saying, “Don’t come to the table with the same tired arguments and worn ideas that helped to create this crisis … We’re not going to get relief by turning back to the very same policies that, for the last eight years, doubled the national debt and threw our economy into a tailspin.”
Strange rules to prevent opposition filibustering mean that 60 is the magic number in the Senate. Obama just scraped it with a vote in favour of 61-37. In doing so he relied on the support of three “moderate” Republicans but only after a herculean haggling effort to get them on board. The result was a considerably diluted plan that will create or save roughly 400,000 fewer jobs than the House-passed bill. Indeed, the Senate version includes $37 billion in highly inefficient tax measures that were proposed by Senators who ended up voting against the package. So while Senators Collins, Snowe and Specter did the right thing, it has not been without undue pain and sacrifice.
So where now? It is expected that the House and Senate will work together to reconcile a package worth around $800 billion. This will be rejected by every House Republican and most Senate Republicans too but will muster just enough support to pass. Obama is hoping to sign his Act into law on Presidents’ Day which is next Monday. After that, the economy will continue to decline and the Republicans will adopt a “told you so” attitude. Obama is unlikely to find sympathy with this approach. Having had his fingers burned once within three weeks of taking office, politics as usual may be back with a vengeance in Washington.