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Tuesday, January 27, 2009

The Stakes for the Stimulus Couldn't Be Higher

The stimulus bill that will likely become law within a few weeks have stakes that reverberate throughout the culture, the economy, and the long term prospects of both parties. As it currently stands, the stimulus is likely to draw little Republican support. Right now, the President is meeting with Congressional Republicans in order to try and find compromise in crafting the legislation.

Republicans are stuck between their principles, a popular President, and a weakening economy. They would be wise not to vote for anything that is at all economically liberal. Their base is already disheartened viewing the Republicans as largely selling out their principles. If the Republicans now vote for a largely liberal bill, that might be the final straw for their base. Democrats, on the other hand, are going all in economically on a plane that has absolutely no comparison. Never has such a large stimulus been tried to successfully recharge an economy. This plan is quite a gamble.

For the President, bi partisan support for this stimulus carries with it all sorts of political capital. First, he campaigned as post partisan. If his first signature legislation is in fact bi partisan, then he can credibly pronounce that a new era has emerged. If his first piece of legislation is mostly party line, those words will start to ring more hollow. Yet, the stakes are much higher than that for the President. If this stimulus passes mostly with Democratic support, he owns the stimulus and the economy.

In such a case, the direction of both parties rests almost entirely in what happens to the economy following the stimulus. Because the Democrats will own the stimulus, the fate of the economy will determine the fate of each party. If we are sitting here come the election 2010 and the economy is no better off than it is now, the Republicans can credibly argue that the Democrat's idea of government spending to stimulate the economy is a failure. They will have their alternative and they can then argue that more tax cuts and limited government would have been the right stimulus.

If this stimulus is seen as working, it will usher in a sustained period of more government and Democratic rule. Unless something terrible happens in the GWOT, President Obama will likely win in 2012 with similar majorities to what we saw Ronald Reagan win in 1984. Following the stimulus, we will see the implementation of some form of universal health care. President Obama will have all the political capital he will need to mount an aggressive attack on global warming. He will easily follow up on his promise for a "new regulatory framework".

By opposing a successful stimulus, the Republicans will be seen as supporting outdated ideas that will have little use in the 21st century. Conservatism will take a back seat and it will be unclear if or when it will return.

On the other hand, the Republicans could easily make big government liberalism obselete if the stimulus doesn't work. They will point to massive deficits. The word pork will be used over and over. They will bemoan the massive expansion of government. The Republicans will in fact make the argument that President Obama's ideas are not new. They are the same failed tax and spend policies that liberals have been known for for years. If the stimulus is seen as failing, the Republicans could use its failure to usher in a new era of Conservatism. It will means significant legislative gains in 2010. They could use it as a mandate to return the country to fiscally conservative economic policies. Meanwhile, President Obama will have been weakened. Bill Clinton was able to successfully navigate similarly difficult political waters in 1994, however President Obama will find little reception for most of the platform he currently wants to implement.

Ultimately, which way we go will be determined by how the stimulus will be viewed. If it is viewed as successful, it will spell the end of Conservatism for the time being. If it is viewed as a failure, it will be viewed as a referendum on big government liberalism. Either way, the direction of the country and the party will ride on the success or failure of this stimulus.

3 comments:

Bill said...

One thing, though: the stimulus will *not* work. Keynsian notions of artificially pumping up aggregate demand are thoroughly discredited, and have never worked (see New Deal, failure of; Zimbabwe, collapse of).

So the economy will still suck in 2010, at least. The Dems strategy of course is to Blame Bush, and their MSM lackeys will push the lie.

The question is, how forcefully will we fight back? (remember, we will likely have lost talk radio by then).

Where is our Reagan, our Gingrich, our Bill Buckley? The Dems have figured out that if the public will swallow the Global warming scam, they'll swallow anything.

Our one hope is that Obama wi8ll trip over his gargantuan ego.

mike volpe said...

First, I agree that I don't think it will work, but let's wait and see before we judge it.

Second, the argument that this is all Bush's fault will not be feasable come November of 2010. If the stimulus is viewed as a failure, it will be a failure. It's just that simple. Democrats won't be able to argue that it failed because of Bush's policies. That isn't something the public will accept.

The Intellectual Redneck said...

We all know the help Acorn gave the Democrats in winning the last election. What was in it for them? Is 4 billion dollars enough?
Democrats attempt to pay off Acorn