Do you have to be a Nobel-prize winning economist like Joseph Stiglitz [1] to understand that a fast, effective way to spend our way out of the Bush-GOP-invented economic swamp is to put cash into the hands of the poor? Food stamp increases and extension of unemployment insurance benefits could be done quickly by Congress and would be spent right away by the lower-income people they’d reach.

Yet, of course, the Bush-Pelosi plan doesn’t include them. It could be a worse plan, of course but its mechanism, tax refunds, will take five months (best case) and it directs the pump-priming cash to people who might well bank it instead of spending it. Indeed two-thirds of the money in the Bush-Pelosi plan goes to higher income while only a third goes to poorer people. ( Andrew Leonard at Salon [2] tracks the saddest-funniest food story: Republicans saving the poor from fatness by blocking boost in food stamps. Who knew?) Many, many (too many?) updates (5 sets) are at the end of the post. Also Take Action! Urge a progressive stimulus package! Link at the end. .

This has led progressives like economist-columnist Paul Krugman [3] to pan the Bush-Pelosi deal:

Aside from business tax breaks — which are an unhappy story for another column — the plan gives each worker making less than $75,000 a $300 check, plus additional amounts to people who make enough to pay substantial sums in income tax. This ensures that the bulk of the money would go to people who are doing O.K. financially — which misses the whole point.
The goal of a stimulus plan should be to support overall spending, so as to avert or limit the depth of a recession. If the money the government lays out doesn’t get spent — if it just gets added to people’s bank accounts or used to pay off debts — the plan will have failed.
And sending checks to people in good financial shape does little or nothing to increase overall spending. People who have good incomes, good credit and secure employment make spending decisions based on their long-term earning power rather than the size of their latest paycheck. Give such people a few hundred extra dollars, and they’ll just put it in the bank.
In fact, that appears to be what mainly happened to the tax rebates affluent Americans received during the last recession in 2001.
On the other hand, money delivered to people who aren’t in good financial shape — who are short on cash and living check to check — does double duty: it alleviates hardship and also pumps up consumer spending.

Who would have thought that Democratic party leadership under a firm progressive like Nancy Pelosi would be so weak? Well, as it happens, a number of people. Todd Gitlin [4], for one in his moderately new book “The Bulldozer & The Big Tent” in which he characterizes the Democratic Party as an unwieldy and difficult coalition. His prescription – with which I agree – involves even more work by leftists on behalf of Democratic candidates.

But, it’s essential to understand how hostile Democrats are to their progressive constituents and how little room there is on the left side of the big tent. Thus, when Barak Obama slams “Tom Hayden Democrats” [5] (admittedly November news) what my candidate means to tell me is: you have no place here . We should not be surprised that our candidates no longer want to dance with us. They think they own us.

The Bush-Pelosi stimulus plan should be fixed so as to supply meat and potatoes to ordinary people. Will local Congress Members like Jerry Nadler, Nydia Velaquez and the rest follow Ms. Pelosi’s misleadership and forget poorer people and leftists? How about Senators Clinton & Obama.? Stay tuned. We are, it seems to me, facing a very long hard slog.

Update 1 : The Washington Post reports Some GOP Senators Susan Collins Olympia Snowe and Gordon Smith will seek Unemployment and food stamp increases [6] and other aid for lower income people:

Collins said a bipartisan coalition of Northeastern and Midwestern senators will push to secure as much as $800 million in heating assistance for the poor, a provision that House Democratic leaders dropped in favor of securing payments for about 35 million families who earn too little to pay income tax.

Collins said she will push to restore about $12.5 billion in unemployment benefits and $5 billion in food-stamp extensions that House negotiators also eliminated, a call echoed by her fellow Maine Republican, Sen. Olympia J. Snowe, who vowed to add funds next week in the Finance Committee. Snowe will be joined by another Republican on the committee, Sen. Gordon Smith (Ore.).

"The number of long-term unemployed in this country is dramatically higher than during the last recession, and I hope that Congress will pass a stimulus package that responds to this pressing need for so many Americans," Snowe said.

Update 2

For a general account of Ms. Pelosi's abandonment of generally accepted tenets of economics and progressive principles try this Sunday NY Times article [7].

In defending her elimination of Food Stamp increases from the package, Ms. Pelosi (& or her speech writers) carelessly ignored food stamp facts [8]

The Speaker said: “What was bandied about was a 10 percent increase in food stamps. Do you know what that translates into for a person on food stamps? Ten cents a day. Ten cents a day. I thought it was more important to put a check for $1,000 in the hands of the mom in that family.”
These food stamp figures, however, are not correct. For a mother and two children — such as a mother working at the minimum wage — the 10 percent food stamp increase under discussion would have provided an increase of $352 to $396 in food stamps. The 10 percent increase would have provided families of three with $44 more per month in food stamps (an increase of well over $1 a day), and this increase would have been in effect from April or May through December (i.e., for eight or nine months).

Do you want to read a carefully written, well thought-out explanation of a progressive position on economic stimulous? Try The Economic Policy Institute's position paper [9]. Do you want Barbara Ehrenreich's similar, but funnier take? Try her Clitoral Economics post [10]. Do you want more progressive outrage? How about Robert Borosage of the Campaign for America’s Future [11] who picks up where Barbara E. left off.

Updates 3 Monday AM. Do you want more on the origins of this (looks-like-but-not-yet-proved-to-be) Bush recession? Check out Scott Horton's blog at Harpers [12] which relies on Eric Janszen's article in the current Harpers [13] and on this Stiglitz screed published first in December's Vanity Fair [14].

Update 4 Tuesday AM

For an excellent review try James Parrott's essay in Tuesday's Gotham Gazette [15].

For somewhat less clear reporting on the emerging Senate versions try the Washington Post [16] and the New York Times [17] The Senate version, it appears, includes cash for 20 million seniors excluded by Bush-Pelosi and 13-extra weeks of unemployment insurance payments, but as I type, no food stamp increase. For a Inside the Beltway view of the lobbying, winners and sinners [18] try Jeffrey H. Birnbaum's: In The Loop: On K Street.

The very best compare and contrast essay, which shows side-by-side the House & Senate Finance (Baucus) schemes, is the exceptionally clear for non-Krugman economists essay by the Center For Budget & Policy Priorities [19]. The same outfit also has an excellent essay explaining why unemployment insurance extensions are an excellent stimulus tool. [20] The short answer: unemployed people w/no insurance are broke and so spend extra cash right away.

Why, do you think progressive house democrats are silent? Does the Speaker or the President have their tongue? Stay tuned. I'll try to ask congress members or staffers Tuesday.

Update 5 Enacted at 3:10PM House voted 385-35 for the Bush-Pelosi deal. Informed observers tell me that progressive Democratic Congress Members expect to vote in favor of the Bush-Pelosi stimulus plan late Tuesday afternoon. Any changes will have to come from the Senate and from conference bargaining. I will watch for public statements as well. The Pelosi Bill HR 5140 has 15 key co-sponsors including Charles Rangel, Barny Frank and George Miller. Gluttons for punishment can read the text at Thomas, the Library of Congress site [21] New York Times account is here [22] Washington Post here [23]

Take Action

Write your Senators by using the AFL-CIO electronic letter writing campaign [24] OR the campaign run by the National Council of Jewish Women. [25]

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