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Obama recovery plan stimulates whining

We need to get money into the economy. Critics and obfuscators often focus on scoring political points instead.

February 23, 2009|MICHAEL HILTZIK

You just can't please some people.

In the wake of President Obama's signing of a historically ambitious economic recovery program last week, the nitpickers and pettifoggers have come out in force.

The program's too big, the program's too small. It's got too many local make-work projects, it's got too many long-term projects. There are too many tax cuts, there are too few tax cuts. Eight bucks more in your week's take-home pay won't save anyone, let's give millions to corporations instead. And so on.

The same thing happened when Obama announced a housing recovery plan Wednesday encompassing many of the provisions housing experts say are needed to spur more home buying and arrest the foreclosure wave. Among them are more low-interest loans from Fannie Mae and Freddie Mac, incentives for loan servicers to keep borrowers out of foreclosure, and new powers for bankruptcy judges to modify underwater home loans.

The next day, Rick Santelli, a market commentator and ex-futures trader on the financial news channel CNBC, staged an extended rant from a Chicago commodities pit about the injustice of helping people in distress, especially while there are still a few people around who aren't in distress.

Santelli asked "if we really want to subsidize the losers' mortgages or would we like to, at least, buy cars and buy houses in foreclosure and give them to people that might have a chance to actually prosper down the road. And reward people that can carry the water instead of drink the water."

When the futures floor erupted in cheers, he swept his hand about the room and proclaimed theatrically, "This is America!"

Well, no. America is a place where 8 million families are threatened with losing their homes, not a futures pit filled with braying traders.

CNBC should have known that the proper response to Santelli's tantrum was to instruct him to put a sock in it. Instead, it re-ran the video incessantly while its anchors congratulated him for making a big noise.

It may be inevitable that government programs of this magnitude bring out flocks of screeching magpies, for they're big enough to have something for any critic to hate. One reader wrote me to object to "Pork-barrel Pelosi's" inclusion of a skateboard park and a Frisbee park in the stimulus bill, though it wasn't clear whether his chief objection was to skateboarders, recreational facilities or the Democratic speaker of the House.

The risk is that these cavils will obscure the virtues of the stimulus and housing programs. They will get money into the economy, which is 90% of the point.

What was drowned out by Santelli's outburst, for example, is that the housing proposal is aimed not at deadbeats but people who are still working and trying to pay their bills but have been rendered overextended by conditions in the credit and housing markets.

Furthermore, a certain amount of inequity is built into any government assistance program, but it gets trumped by society's needs in times like these. "Life is unfair," Tom Davidoff, a real estate expert at UC Berkeley's Haas School of Business, observes apropos of the housing bill. "We're doing this so the economy won't crash." For the record, he believes that most of the housing proposal is "healthy," though more help may be needed.

The experience of the New Deal's first year suggests that almost from the moment the stimulus money begins to flow, positive consequences will appear, including a stemming of unemployment, a halt to the deflation trend, and possibly a better tone in the capital markets.

If Obama has revealed a shortcoming in his first month, it's his failure to seize and hold the high ground of optimism; Bill Clinton was not far wrong when he said last week that Obama should be communicating confidence about his stimulus program a lot more forcibly. That was one of FDR's surpassing talents, and no one doubts that it contributed to recovery.

Among other things, Obama should make clear that much of the grousing is partisan. Just look at the Republican governors of Louisiana, Texas, Alaska, South Carolina, Mississippi and Idaho, who have said they will not or might not accept stimulus money for their states, none of which is known to be in roaringly good shape at the moment, budget-wise.

According to White House figures, the stimulus package would create or save a combined 424,000 jobs in those six states, so that makes nearly half a million Americans who no doubt will take it as an honor to be sacrificed for their governors' stand on principle.

And what is the principle, exactly? Mississippi Gov. Haley Barbour's spokesman griped to the Associated Press that accepting money to enhance unemployment benefits might force his state "to pay benefits to people who wouldn't meet state requirements to receive them." Barbour presumably expects us to defer to his judgment because Mississippi is so nationally famous for its generosity to the downtrodden.

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