Economic Stimulus Bill postmortem.

It’s done.  The House and the Senate approved the final version of the stimulus bill, and it’s off to the White House.  President Obama is going to sign it into law on Tuesday, in my stomping grounds, Denver, CO, in the Museum of Nature and Science.

I’ve been wanting to do a postmortem on this first big piece of legislation that came since President Obama took office.  Let’s first take a look at some problems with the bill itself.

The stimulus, while helpful, is insufficient.

The stimulus is just too small.  It’s about half the size it should be.  President Obama himself was worrying about the U.S. repeating the mistakes of Japan in the 90′s, which resulted in the Lost Decade.  Japan endured almost a full decade of economic stagnation, because its government implemented half-measures when they fell into recession.  It was only when they got serious and acted boldly with stimulus spending that Japan’s economy came out of its funk.  If we don’t have something significant to supplement this bill soon, we’re going to find ourselves in our own Lost Decade.

Economists such as Paul Krugman stated that the country needs about 1.2-1.4 trillion dollars of spending on high bang-for-the-buck stimulus such as food stamps and infrastructure construction.  We got about 790 billion, with only part of it going to effective stimulus, and part of it going to GOP-style tax cuts which are not so efficient.  Some things, like the Alternative Minimum Tax fix, weren’t necessary in the stimulus bill.  Democrats were already planning on implementing that fix in another bill.

That said, the stimulus will help.  I predict that this stimulus will succeed in keeping the country out of a full-blown depression, and leave us instead in a lesser, but still miserable recession.  It’s progress, even though it’s not enough.  President Obama seems to have picked the total value he did, because he felt that’s what he could get out of Congress without losing too much support due to sticker shock.  It will take some creative politics to move more stimulus into the pipeline.  Maybe implementing a health care plan would be a good way to feed more money into the economy.  Certainly, he and Geithner should be focusing on structuring TARP to provide direct relief for homeowners in danger of foreclosure.

Lessons for Congress and the Obama Administration:

Nancy Pelosi has improved, and worked the House of Representatives effectively.  She made sure the Blue Dogs were on board and gave an obligatory nod to bipartisanship by giving the Republicans opportunity to contribute to the bill.  When it was clear they weren’t going to play ball, she steamrolled them.  Boehner thought he did a neat trick in getting every single Republican to vote against the bill, but what it really proved is that in the House, the Republicans are now powerless.  They don’t have enough clout to resist the Democrats.

The Senate was where things went wrong.  Senator Reid still does not have his act together.  He didn’t have the Blue Dog Democrats on board, but should have, by cutting a deal in advance so a simple amendment could ensure things were settled with them.  Instead, Republican Senators Snowe, Collins and Specter teamed up with the Blue Dogs, led by Sen. Nelson, and got Reid to give away the store.  Senator Reid has again shown that he is a weak leader and a weak negotiator.

President Obama himself stumbled a couple times.  He spent too much time working for bipartisanship.  Bipartisanship only works when both parties are interested in a mutually agreeable solution and negotiate in good faith.  The Republicans were not doing that.  They’re solely interested in reclaiming power in 2010 and 2012, and they’re more than happy to block effective action and watch the economy nosedive on President Obama’s watch.  Their strategy is pure obstructionism, taking priority over everything else, including the welfare of the American people.

Granted, a big part of President Obama’s strategy was giving the Republicans enough rope to hang themselves, and in that respect, Mr. Obama succeeded spectacularly.  The stimulus package has broad support from the American public, and GOP approval numbers are deep in the toilet.  The President now has plenty of room for playing hardball.

President Obama’s best work was in the bully pulpit.  He made nearly daily speeches, held press conferences, did a few prime-time TV events, and went on the trail, selling this bill as if he was still running for office.  People were skeptical of the stimulus bill because of the high price tag, but the President kept a strong drum beat going from his bully pulpit, and managed to get his message out, despite the machinations of the hostile right-wing media.  He sold us, and because of that, Congress didn’t dare refuse to put a bill on his desk.  Even when he screwed up, he got back up and got back into the game very quickly.  Tom Daschle’s tax screw-up blew up in Obama’s face, and he ended up losing a news cycle, but the next day, he was back on the stimulus bill.  He knows how to fix his errors and adjust his tactics, and even apologized for his mistakes, which is refreshing after eight years of Bush stubbornly doubling-down on his blunders and taking America into the ditch.

President Obama’s work in the bully pulpit pulled this bill through.  The House work on the stimulus should serve as the model for future dealings with the Republicans.  In the Senate, Harry Reid caved as he usually does, so he needs to be put on a leash for dignity’s sake.  President Obama needs to set bipartisanship aside and shove the GOP out of the way, so he can get actual work done.  He did a tremendous job using the bully pulpit to push this bill through, despite Republican obstructionism.  He’s going to need more of that soon, because the bill that ended up on his desk is only part of what’s needed to get the economy out of recession.