Compromise

Most of the headlines over the weekend could have read as follows: “Tentative compromise reached on stimulus deal.”

Long story short, due to GOP tenacity, the bill dropped a little under $100 billion.

Economists roundly stated that the original amount wasn’t going to be enough. What’s more, the spending shaved off the initial bill was some of the most effective, including some fast-stimulating aid to state governments.

Economist Paul Krugman estimated that 600,000 fewer Americans will be employed due to the changes.

Let’s talk about “compromise”: There’s sticking to party lines, and then there’s sticking to what’s going to work for the country. For a litmus test as to “what’s going to work,” we can look not to Republicans in Congress, but to Republican governors. With most states facing a balanced budget requirement, governors across the country, both Democrat and Republican, are nodding their heads to the stimulus.

Florida Gov. Charlie Crist went on Hardball to talk about how badly his Florida constituents (due to a breakneck rate of rising foreclosures) need the bill passed. Vermont Gov. Jim Douglas, the Republican Vice Chairman of the National Governors Association, was in Washington Monday urging Senate Republican leadership to pass the bill.

It seems like – if we’re talking about holistic argumentation – the sum of all parts is a bunch of Republican governors all in agreement that this stimulus is clearly not just “mindless government spending.” This suggests, in turn, that our nation as a whole needs stimulus spending. Yet GOP lawmakers on Capitol Hill won’t budge and won’t hear anything but “tax cuts.”

The problem is, for many Americans, the cash from the next tax cut is going straight into a savings account. As opposed to nothing, tax cuts help, sure. These are all “demand-stimulating” options. But we can’t ignore opportunity cost. And the multipliers on these options (spending versus tax cuts, and more specifically, payroll tax cuts versus business tax cuts) vary widely – but that of spending is unequivocally higher.

A few Republicans on the Hill have fought and fought, cookie-cutter partisan-style, so hard for tax cuts that the final product of the stimulus package was dragged, in the name of compromise, far more toward the low end than it should have been. Because of empty, ideological rhetoric, we have a stimulus package that is too small and ill-proportioned to boot. Even within the tax cut component, a key feature of the new plan favors lower bang-for-the-buck business tax cuts rather than more efficacious payroll tax cuts.

Who’s driving this compromise? Is it the economists? Or is it a select handful of Republicans – from whom, I might add, their Republican governor counterparts have broken away and joined in approval for the bill? Sadly, it’s the latter.

If the GOP governors’ support isn’t a valid litmus test for what’s best for all Americans, what is? The word “compromise” has tacit undertones suggesting both camps are logically sound. I can’t say that’s the case here.