Mounting the bully pulpit last week, President Obama gave Wall Street a lecture about the $18.4 billion in bonuses that the securities industry awarded itself in 2008. This was "outrageous," Mr. Obama said. In these tough times, he declared, financiers must "show some restraint and show some discipline and show some sense of responsibility." Well said. Now the president should make the same demand on those in Congress, including leaders of his own party, who are cluttering his fiscal stimulus plan with extraneous and counterproductive provisions.
The United States faces an economic emergency, and economists generally agree that a big package of federal spending and tax cuts could help. But experts are voicing skepticism about the composition of the $825 billion measure that emerged from the Democratic-controlled House last week - and which the Senate is now increasing. The concern: Instead of giving the economy a "targeted, timely and temporary" injection, the plan has been larded with spending on existing social programs or hastily designed new ones, much of it permanent or probably permanent - and not enough of it likely to create new jobs.
Former Clinton administration budget director Alice Rivlin fears that "money will be wasted because the investment elements were not carefully crafted." Former Reagan administration economist Martin Feldstein writes that "it delivers too little extra employment and income for such a large fiscal deficit." Columbia University's Jeffrey D. Sachs labels the plan "an astounding mishmash of tax cuts, public investments, transfer payments and special treats for insiders."
So much for "targeted" and "temporary." What about "timely?" The administration says that it wants 75 percent of the money to "spend out" within 18 months. But the Congressional Budget Office estimates that, under the House bill, only 64 percent of the spending and tax cuts will hit the economy by 2011. And in recent days, a new threat has emerged - namely that the bill will become a vehicle for resurgent protectionism. The House added "Buy American" provisions for iron, steel and textiles, and the Senate seems bent on expanding the list of products. The vice president seems blithely heedless of the danger these measures pose. Supported by Republicans as well as Democrats, the protectionism could undo whatever job creation the stimulus plan achieves by provoking U.S. trading partners into excluding U.S. goods.
Mr. Obama has sought bipartisan support for the bill. This is to his credit, but by simultaneously courting Republicans and assigning the actual drafting of the bill to Democratic congressional leaders, he has wound up zigzagging between the two parties rather than herding them together. When he seemed to lean toward more tax cuts to win over Republicans, Democrats rebelled and opted for more spending. When they proposed hundreds of millions of dollars for contraceptives and the Mall, Mr. Obama had the controversial provisions removed, but too late to win over Republicans.
What he needs to do now is take charge. Yes, the Republicans can try to spoil things with a filibuster in the Senate. And, yes, Democrats won the November election, so they are entitled to shape policy. But only Mr. Obama has a 67 percent Gallup Poll approval rating. Only he embodies this anxious nation's hopes for change. No one in Washington can match his clout. He should use it to make sure Congress gives him a stimulus plan that is not only big but coherent and, most of all, effective.