Harry Moroz

The Battle Was Already Lost

There has been significant back-and-forth of late about President Obama's responsibility, power, and influence. Should he don hard hat and tool belt and set about trying to cap the Deepwater Horizon oil spill? Could he have extracted Senator Lincoln's vote on a more progressive version of health care reform by threatening to withdraw his support in her primary race?

Whatever its merits, the President's strategy (or perhaps his style) from the very beginning of his presidency has been to relinquish the details of legislation to another branch of government - Congress - and instead outline broad goals, at times signaling support for a particular scheme. The financial reform bill evolved differently, with a draft proposed by Secretary Geithner, but this is how health care, the stimulus, and the various jobs bills have developed. (Granted, as these debates dragged on, the President has eventually been forced to provide more details about his vision for legislation.)

While this strategy puts a particular onus on Democrats in Congress, it also highlights their own responsibility, power, and influence. Obama has rarely (again, with financial reform an exception) rejected more progressive proposals outright. On the one hand, he has not lent his support to things like the public option. On the other, his silence has implied that if Congress can pass something progressive, he will support it.

This seems to be the administration's thinking when it comes to its uncertain support of education aid for state and local governments. Congress has not been able to decide on an appropriate mechanism for funding the assistance that would save hundreds of thousands of teacher jobs. Even after a letter from Secretary Duncan suggesting inclusion in a supplemental appropriations bill, policymakers have faltered. The administration has been largely silent ever since.

The latest strategy, according to Politico, is for Congress to redirect stimulus funds to pay for $10 billion of education assistance. While this probably means less spending for infrastructure and, following the CBO's estimates of economic multipliers, a less economically "stimulative" use, the plan would at the very least save a significant number of jobs immediately while still investing for the future, albeit a living and breathing one.

While one might hasten to chide President Obama for not "coming out strongly in favor" of the education aid and thus undermining the long-term reinvestment portion of his stimulus package, the real cause of the current need for more aid is the actions of a few senators almost a year and a half ago.

During debate about the stimulus package, a bipartisan group of senators conspired to strip $40 billion in aid for states from the stimulus package (the ultimate cut was about $25 billion). At the time, Paul Krugman estimated that this cut plus others (in total, $86 billion of cuts) would mean 600,000 fewer Americans employed. The Economic Policy Institute outlined the deep and lasting economic consequences:

The most concerning cut, however, is the $40 billion cut to state aid, which represents nearly 40% of the total cuts in the amendment. This cut in particular will reduce the bill's effectiveness as an economic stimulus, condemn hundreds of thousands to unemployment, and help prolong the recession.

Certainly one can request that the President push forcefully for more aid that will help state and local governments retain teachers. But the real criticism should be reserved for a Congress whose resistance to this aid last year was based not on the number of jobs that could be saved, but on the size of the number describing the package's cost.

But even that didn't matter in the end: $70 billion - 9 percent of the package's cost! - went to a tax break that the Tax Policy Center says "makes no sense as economic stimulus."

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Posted at 3:03 PM, Jun 11, 2010 in Economy
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