Both of the plans forwarded by Congressional leadership
will hurt the faltering recovery, even the IMF thinks so. As for the faltering recovery, look no further than
this quarter's GDP report.
Given that, Adam Serwer writes about what should happen.
Given the awful GDP numbers and the Democrats’ increased leverage, they should push for some stimulus measures in Reid’s bill. As Jonathan Cohn pointed out earlier this week, one of the big problems with the loss of Obama’s otherwise awful “grand bargain” is that at least Obama’s deal contained some small effort at stimulus:
As you may recall, the Grand Bargain that President Obama was hashing out with House Speaker Boehner included an extension of unemployment insurance, a renewal of last year’s payroll tax holiday, and some general language promising more funding for highways.
I was no great fan of that deal but I certainly appreciated that provision. Together, those changes would have pumped at least $160 billion into the economy, officials familiar with the negotiations have said. Very roughly, that would have translated to an additional 1.5 percentage points in gross domestic product and one million jobs, according to several economists I consulted.
Deliberately hurting the economy at a time when growth is weak is bad enough—Democrats should take advantage of the moment to ameliorate what harm the Reid bill is likely to cause, by pushing again for the stimulus measures the president sought.
Given that they are all in the thrall of austerity, it seems more than just unlikely, it's a pipe dream. But that doesn't mean it would be a very smart idea to not deliberately hurt the economy. Nonetheless, that's what the White House and Congress seem determined to do. We're witnessing the greatest feat of political malpractice since the Iraq War vote. At least in that, we've got bipartisanship.