How to follow the coming sausage fest
“Laws are like sausages – it is best not to see them being made.”
— German Chancellor Otto von Bismarck (committee report)
Ziss vassn’t how ve did it in ze olt days
[We're interrupting our regularly scheduled programming to honor the Obama inauguration by providing this little Visitor's Guide to
The arrival of President Obama has been the signal for a global collective intake of breath, for with the shift to a laminar political environment, where Presidency, House, and Senate are all controlled by the same party, hardly a pixel passes a news screen without including the phrase ’stimulus bill,’ activity that for the next many weeks will consume Washington, Wall Street, most of America and a lot of the world.
Don’t look too closely at what goes into the grinder
Until something like a structure emerges, I have no plans to give you blow-by-blow updates of the progress – it’ll change from day to day and you’ll be able to get all that information and more, breathlessly reported by correspondents in trench coats, from hundreds of other places.
And here with the latest speculations …
Instead, let’s consider how to help you sniff and taste the sausage as it’s being ground up, shaped, and squeezed into tubes.
A. The sausage itself
The government factory makes two types of products – laws and money – some better than others. Calling it a ‘package’ neatly obscures what’s in the package:
We’re all in this together!
Since we’ll all be both opening the package and paying for it, we’ll want it to be a nice present.
A1. Does it have clarity?
Can you see how the guts work?
The best legislation has clarity of purpose – it seeks to do one thing and does it with a minimum of words. Here the goal is to jump-start the economy and thereby get capital flowing and jobs growing – without kicking off a hyperinflationary environment.
As in sausages, the more lard, the less protein. Can ordinary people understand what it’s doing?
It’ll be a bad sign if we can’t.
A2. What’s the mix of tax incentives versus appropriations?
Financial products of the government factory divide into two basic kinds:
Appropriations, which are actual checks sent to deserving recipients.
Tax expenditures (as they are called) which represent reductions in taxes otherwise payable. They come as deductions and tax credits.
While the debate will likely divide along partisan lines – Republicans preferring tax cuts, Democrats appropriations – there are other practicalities.
A tax expenditure means that money in your and my pocket stays there, so we, rather than the government, decides whether and how to spend it. That’s efficient (no middleman) but undirected (who knows what we’ll spend it on). As George Best put it, “I spent a lot of money on booze, birds, and fast cars. The rest I just squandered. “
I did a lot of squandering
An appropriation, on the other hand, is only as effective as the administrators and bureaucrats directing it. Appropriations money tends to go out more slowly than tax expenditures.
A3. What’s the mix of uses of appropriations?
Stimulating the economy means putting money and people to work. But whom? Through whose hands will the money flow?
It can be anybody.
In its wisdom, the Federal government spends money on roads, prescription drugs, weaponry, schools, welfare benefits, new construction, rehab … anything and everything, you name it, the Federal government buys it or pays for it.
A4. How much clutter does it have?
Earmarks by any other name are still earmarks. The more earmarks, the less clarity.
It’s clear to me
B. The sausage-making process
Making legislation is a long grind, Congressional sausage-making especially so.
Maybe “Verboort” is Dutch for “don’t watch”?
When Congress finds itself hamstrung by its own rules, Congress (particularly the House) has no compunction about changing those rules. So there’s no set timetable for legislation, no immutable sequence, nothing guaranteed. You’ll want to watch out for these indicators:
B1. Does it have pace?
As former House Whip Lady Macbeth put it, “if ’twere done when ’tis done, then ’twere best done quickly.”
But screw your courage to the stocking place and we’ll not fail!
The faster legislation happens, generally speaking the greater its clarity. (Think Reagan’s 1981 tax cuts, Lyndon Johnson’s great Society programs, or Roosevelt’s New Deal.) It may be foolish or wise, but it’ll usually be a huge idea that remakes the landscape.
B2. How much do the House and Senate versions differ?
The House always acts in haste, repents at leisure. The Senate can always find dozens of reasons to defer just about anything. These differences derive not just from electoral cycles (Reps face the voters every two years, Senators every six) but also procedural rules (the House often experiences tyranny of the majority, the Senate caters to the loquacious minority).
I have not yet had my say
As a result, the two bodies often produce widely different versions, which have to be reconciled. Egos are at stake, as are scoring considerations. Granted, with the talk of stimulus suspending all normal budgeting rules, it’ll be Katy bar the door on expenditures <shudder>, and that always makes reconciliation easier. Still, the more the two bills differ, the more likely they are to be cluttered up and lose clarity.
B3. Will the Republicans be a force, and if so in what direction?
Setting policy considerations completely aside, Republicans have a challenging multi-dimensional political problem: Do they support or oppose? If they oppose, on what basis? Do they try a heroic stand?
Do we stand and fight? And die?
or engage in the guerrilla warfare of a thousand compromises?
We may be outnumbered, but we stand on a solid base
Much of the Republicans’ posture, I suspect, will depend on whether they think they can make any difference, or whether they can stick the Democrats with all the political downside.
I have no blooming clue how this will play.
If you do, let me know!
B4. Will the inevitability effect drown us?
It seems inevitable that we will experience the inevitability effect, which I’ve previously described:
When an enterprise of great pith and moment, such as a real estate closing or a piece of major legislation, shifts from a possibility to an inevitability, all sorts of people think, “Oh, okay, it’s inevitable, so they’ll give me what I want just to shut me up.“ Sometimes the addenda are reasonable. Sometimes they’re purely selfish. Sometimes they’re ridiculous.
I’ve dealt with inevitability effects my entire professional career. For a decade or so, they drove me crazy. Now I see them coming.
Inevitability, it’s a bitch, isn’t it?
In fact, the inevitability effect is already flooding my email In Box with ask-plea emails. Call my representative, call my senator. Ask for this, ask for that. We won’t support unless we get thus-and-such.
No more political emails, okay?
You know the old Wall Street saying, Bulls make money, bears make money, pigs get slaughtered. I worry that at some point the American public’s gorge will rise, as we are treated to hour after hour of special interest pleading for bailout (the porn industry ?!?).
Keep
We could yet be much too greedy.
C. The consumer reaction
Because government not only moves slowly but also transparently – indeed, government is one of that entities that routinely boasts of what it intends to do even as such boasting undermines its own efforts – it actually is influenced, even before it acts, by the anticipatory reactions of its audiences. We have three groups of consumers whose twitches will be scrutinized as the legislation rolls forward.
How is my proposal going over?
C1. What does Wall Street think?
Many among my acquaintance have intimated that they, or the money sources with whom they work, have paused in their investing while waiting for the stimulus to emerge. If the stock markets tank the day after announcements, Congress will rethink. If they soar, Congress will be emboldened.
How does the market like me now?
C2. What is the dollar doing?
As the
If they go thumbs down on the greenback, the legislation will need to be rethought.
The ultimate referendum on the stimulus?
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