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Parsing Obama's Opening Bid On The Stimulus

The WaPo has a few interesting nuggets in its piece today about the early saber-rattling over the stimulus. These mostly have to do with what looks like a genuine effort to get Republicans on board. According to the piece, Obama is hoping to get up to 80 votes for the bill in the Senate, which would be remarkable. He's apparently already begun calling Senate moderates like Olympia Snowe, who's also met with Treasury nominee Tim Geithner. Joe Biden is also involved in lobbying his former colleagues on the measure, which strikes me as a good use of the incoming veep.

One thing to mull over in the meantime: The Obama team appears to be aiming for between $675 and $775 billion in stimulus over two years. According to this WaPo article from a week ago, $775 billion is the largest amount Obama's aides think can win congressional approval. Unfortunately, it's at the low end of what most economists think we'll need to revive the economy--the range seems to be something like $750 billion to $1.2, $1.3 trillion. And, as Larry Summers, Obama's top economic aide, recently wrote in the Post, "In this crisis, doing too little poses a greater threat than doing too much."

Which raises a question: Is $675 to $775 billion the right opening position? On the one hand, spending bills typically get more expesnive as they move through Congress. So maybe an initial bid of that size will get us to the trillion dollars the economy probably needs*--and has the initial benefit of not inciting Republicans from the get-go. (One notable thing about today's piece: The statements by John Boehner and Mitch McConnell seemed pretty circumspect.) On the other hand, there's a chance the GOP will eventually get traction highlighting fears of wasteful spending, in which case the opening bid may become the upper limit and the final number ends up closer to $500 billion.

I have no idea which way we're headed. A higher opening bid would have probably ensured a bigger spending package, but it would also have made 70-80 Senate votes impossible, which has implications for future legislation. The lower opening bid keeps the bipartisan dream alive, but creates the risk of doing too little. Being risk-averse about these things, I might have opted for the former. But, you know, that's why we pay Obama the big bucks...

--Noam Scheiber

*This assumes the add-ons pack the same punch as the rest of the package. It's certainly possible that they won't--they could be give-aways to wealthy interests that won't spend much of it--but assume for the sake of argument that they do.