Frum Hell

David Frum is a former speechwriter for George W. Bush who once wrote a book with Richard Perle. He is an opinon-shaper who helped pave the way for the Iraq war disaster. Given that resume, a saner society would have relegated this individual to the fringes ages ago.



It says much about our culture that Frum is, in our debauched public discourse, considered a centrist.



A few days ago, Frum published a piece about Obama's failed stimulus. (Also see the follow-up here.) I should have commented on it at that time; his words have lingered in my head like a bad stench.



Arguably, an analysis like Frum's is more dangerous than are the bleatings of the tea partiers, because Frum has a greater likelihood of impacting those who consider themselves reasonable and moderate. Worse: Frum says some of the right things. The presence of those "right things" makes all of the wrong things more insidious.



First, let's talk about what Frum gets right.



He gets the number correct (at least in his follow-up piece) when he says that the stim package came in at nearly $800 billion. Most Republicans have intentionally misled the public on this point. Their propaganda confuses the bank bailout with the stimulus.



Frum, to his credit, is honest enough to admit the key fact that most Republicans will never tell you: The largest item in the Obama stim package was tax cuts. Not only that: Frum confesses that not enough of the package went to jobs creation.

Only about $100 billion of the stimulus -- one dollar in eight -- went to support new infrastructure projects. When Americans wonder: "Where's our Hoover Dam? Where's our East River Drive?" the answer is directly traced to Obama's abdication of decision-making in 2009.

So far, so good. Or at least, so not bad: I question that "abdication" presumption.



But.



Frum's main argument is that the stimulus package was ruined by the Democrats in Congress, who couldn't resist the temptation to pork up:

Congress larded up the stimulus with ancient Democratic wish lists utterly irrelevant to the crisis at hand: $15 billion for more Pell grants, $9 billion for community and rural development, $20 billion for the renewable energy tax credit and so on.

Frum tries to create the impression that most of the $800 billion went to beloved but unhelpful liberal boondoggles. That is not the case.



$15 billion in Pell grants did not create a $14 trillion deficit. This country has had a much more generous Pell Grants program in the past (measured in constant dollars) without breaking the bank.



The logic behind helping people stay in school was clear: Cash-strapped states hiked university fees dramatically, which threatened to force students out of college and onto an already overstrained job market. Competition for jobs would have increased. Unemployment would have shot up even more dramatically than it did. There would have been even more downward pressure on wages. Consumption would have gone even lower even faster.



As it was, most students still had to struggle, and quite a few had to interrupt their educations, because the Pell grant increases often did not match tuition increases.



(Of course, libertarians would prefer to see the riff-raff leave our campuses; to them, colleges belong to the sons and daughters of privilege.)

Obama may have assumed that if his first stimulus failed, he could always go back for a second. But his mission in 2009 was to overwhelm the crisis. Instead, he allowed congressional Democratic spending priorities to overwhelm his economic leadership.

"Democratic spending priorities" did no such thing.



This is an important point. We cannot allow people like Frum to twist history in order to blame the liberal wing of the Democratic party.



In fact, the problems were caused by the conservative Blue Dogs and the Republicans. They were the ones who made it politically difficult -- if not impossible -- for the creation of an FDR-style jobs program.



(Presuming that Obama wanted such a thing. That would be quite a presumption indeed.)



To placate the conservatives within both parties, the major item in the stim package was a tax cut. To his credit, Obama enacted a tax cut which favored the workers. Today's GOP presidential candidates have boldly admitted that they want to increase taxes on the working class.



Even though the 2009 cuts went to the right people, the ultimate message is the same as the message we gleaned from the 2008 Bush tax cut, as well as the earlier Bush tax cuts for the rich: Tax cuts don't work. Tax cuts don't work. Tax cuts don't work.



Frum can't say those words. If ever he did, he'd be asked to leave the club.



The most he can say is that "most economists warned" that the tax rebates "would do little or nothing to stimulate economic activity." Just who were these economists? I don't recall many prominent warnings along those lines in early 2009.



In his follow up piece, Frum writes:

Jared Bernstein denies that the administration abdicated in the face of Democratic congressional spending demands. Really? So why then did the plan take the weird and inadequate shape that it did?

I'll tell you why: Republicans and conservative Democrats felt extreme discomfort with the very notion of spending on jobs. Contrary to the impression Frum gives you, the people who de-fanged the stimulus weren't chanting "spend, spend, spend." Just the opposite: They were chanting "Don't spend. Don't spend. Don't spend."



They certainly did not want to spend in an innovative fashion. Increasing funding for an already-existing program of proven popularity carries much less political risk.



Conservative Demcorats feared -- no doubt correctly -- that if they did invest in (say) a modern-day TVA, they would encounter a massive propaganda campaign designed to portray such a project as a waste-filled boondoggle. And let's face it: There would have been waste in any kind of TVA-style program. Waste, like shit, happens. Somewhere along the line, there would have been mis-spent dollars or over-compensated overseers or embezzlement or something. And when examples of waste came to light, how would the Murdochian hordes have reacted?



In sum and in short: Fox and Rush still shape our nation's discourse. That all-important fact made a real stimulus impossible.



Frum also states that

$87 billion was used to bail out state governments that had overspent on Medicaid.

No. They had come to rely on property tax revenues, and did not plan for the possibility of massive foreclosures and lowered property values. In other words, they believed the hype being emitted daily from the mouths of "most economists."

Obama failed to mobilize the Federal Reserve to support his fiscal stimulus.



During the financial meltdown of 2008-09, the Fed acted boldly and decisively to save the banking system. Once the banking crisis was contained, however, the Fed's boldness faded. It ended its first round of quantitative easing in spring 2010, for fear of sparking inflation. Yet inflation barely existed as a problem in 2010, while unemployment remained desperate.

That's because the Fed cares only about bankers, not about the jobless. Throughout that period, there was a hideous amount of propaganda designed to scare us about the menace posed by inflation. Only a few marginal bloggers such as moi dared to ask: "Inflation? What inflation?"



I didn't notice Frum asking that question in 2009. Obama sure as hell didn't.

Yes, the Fed is independent of the president. But presidents can shape the Fed through their power to name Federal Reserve governors. Obama has failed to get his people on the board.

What the hell is Frum talking about?



The Board of Governors has seven members; here they are. They normally serve fourteen year terms. In 2010, Obama nominated three members: Peter Diamond of MIT (for an abbreviated term ending in 2014), Janet Yellen of the San Francisco Federal Reserve Bank (for a full term) and Sarah Bloom Raskin, the Maryland state banking regulator (for a partial term ending in 2016). Pete didn't make it (thanks to nonstop Republican opposition), but Janet and Sarah were confirmed unanimously.



Two out of three, as they say, is not bad.



It's not as though things would be radically different if Peter Diamond had gotten in -- he was the mentor to Ben Bernanke, the Fed chairman. Diamond is in his 70s now -- and even back in the day, he never seemed particularly radical. This dude ain't Zorro.



Bernanke, incidentally, was nominated for a second term by Barack Obama; previously, he was appointed by George W. Bush.



So just who are these bold individuals that Obama "failed" to get on the board? I wish Frum would humor us by dropping a few names.



This post will rankle some of my readers, whose disdain for Obama has morphed into a lumpish, thuggish and simplistic disdain for Democrats in general. But incalculable damage is done by pundits like Frum, who unfairly try to blame Obama's failures on the liberal wing of the Democratic party. In fact, the damage was done by the party's conservative wing -- and, I would argue, by the innate conservatism of our media infrastructure, and of the president himself.