Felix Salmon seconds Paul Krugman’s contention that the AIG bailout and bank bailouts in general have confused and soured the populace on any further stimulus bill. I think that’s just part of the burr under the saddle of the electorate.
Here are a couple of other things that people are chafed about.
It was one thing to rescue the banks, it’s quite another to see them profiting handsomely as a result of the rescue. The prospect of yearly bonuses in amounts greater than most Americans will make in a lifetime being doled out to bankers who fouled their own nest has quite reasonably passed the point of tolerance. Essentially, the perception that the system is rigged is being validated by this outcome.
The bailout of the auto company and their suppliers may play well in the affected states but it’s viewed elsewhere as a political payoff. For every union auto worker who benefited there’s another non-union auto worker who sees it as an assault on his welfare. The bulk of the electorate never bought into the idea that the nationalization of these companies was essential for recovery.
The seemingly endless support for the housing industry is wearing thin. In fact, a great deal of money is being spent on a group of people that many consider to have been irresponsible. Those who rent and those who are paying their mortgages on time are beginning to wonder when their stimulus might arrive. It’s worth noting that number is probably somewhere in the range of 85% to 90% of the general population.
We probably do need more stimulus but it has to reach more broadly across the economy than the initial efforts have. Michael Boskin had an excellent article in yesterday’s WSJ in which he argues in favor cutting the payroll tax. Yes, it can be gamed but I would ask if it can be gamed any more egregiously than we have seen with the current stimulus program.
Unfortunately, the Obama administration seems committed to a micromanagement philosophy. Their apparent inclination to reauthorize TARP amounts to little more than a ploy to maintain a slush fund to be utilized when and where they choose without any debate on the merits of the expenditures. The trial balloon floating around about “Cash For Caulkers” (Daniel Indiviglio does a nice job on deconstructing this one) is yet one more example of stimulus with a politically correct stamp on it.
I don’t think the American public is so much adverse to more stimulus as they are not willing to continue to pony up money for the political class to spend in furtherance of their own interests.