Another Useful Crisis

By PAUL KRUGMAN of the New York Times

November 11, 2001

 

            Remember California's energy crisis? It illustrated, in particularly

            stark form, the political strategy of the Bush administration before

            Sept. 11. The basic principle of this strategy — which was also used

            to sell that $2 trillion tax cut — was that crises weren't problems

            to be solved. Instead, they were opportunities to advance an agenda

            that had nothing to do with the crisis at hand.

 

            It is now clear that, at least as far as domestic policy is

            concerned, the administration views terrorism as another useful

            crisis.

 

            Let's recall the California story. Between November 2000 and June

            2001 — or, if you prefer, between last year's election and James

            Jeffords's defection, which gave the Democrats control of the Senate

            — a shortage of electric generating capacity, exacerbated by the

            puzzling fact that much of this capacity stood idle, led to power

            outages and extremely high prices.

 

            The appropriate response was obvious. First, encourage conservation

            until new capacity could be added; second, temporarily cap prices,

            both to limit the financial damage and to discourage power companies

            from manipulating the market.

 

            But Dick Cheney dismissed conservation as a mere "sign of personal

            virtue," and administration officials waved aside pleas for a price

            ceiling. Instead, they used California's woes to push for large

            subsidies to the coal industry, and, of course, drilling in the

            Arctic National Wildlife Refuge. We never did learn what all this

            had to do with electricity generation.

 

            Eventually, price controls were imposed, and the idle capacity

            mysteriously came back on line; meanwhile, conservation led to a

            sharp drop in demand, and the crisis evaporated.

 

            Now to the present. After Sept. 11, we need to spend substantial

            sums on reconstruction and homeland security, and the sagging

            economy could use a temporary stimulus. But George W. Bush has

            threatened to veto any additional domestic spending beyond the $40

            billion already agreed upon — "We wage a war to save civilization

            itself," he declared on Thursday, but apparently this war must not

            cost more than 0.4 percent of G.D.P. And the administration favors

            "stimulus" proposals that have nothing to do with helping the

            economy, but everything to do with its usual tax-cutting agenda.

 

            The stimulus package introduced by Senate Democrats isn't perfect,

            by a long shot — it contains billions of dollars for things like

            agricultural price supports, which don't belong there. But at least

            $70 billion of its $90 billion is real stimulus, in the form of

            temporary investment incentives, temporary grants of income support

            and medical care to the unemployed, and checks to low-income

            families who are likely to spend them.

 

            The administration, however, favors the Senate Republicans'

            proposal; while that bill is less lurid than the one passed by the

            House, with its huge retroactive tax cuts for big corporations

            (according to Ari Fleischer, Mr. Bush was "pleased" with the House

            bill), over all it's just as bad. It would cost $220 billion over

            three years; less than $20 billion of that total seems to have

            anything to do with economic stimulus.

 

            The rest of the proposal consists of tax cuts for corporations and

            high- income individuals, structured in such a way that they will do

            little to increase spending during the current recession. For

            example, tax incentives for investment are valid not for one year —

            as in the Democratic bill — but for three years; this is an open

            invitation to companies not to invest now, when the economy needs a

            boost, but instead to delay investments until the economy has

            already recovered.

 

            Why does the administration's favored bill offer so little stimulus?

            Because that's not its purpose: it's really designed to lock in

            permanent tax cuts for corporations and the wealthy, using the Sept.

            11 attacks as an excuse.

 

            Ten months into the Bush administration, we've all gotten used to

            this. But politics, while never completely clean, didn't used to be

            this cynical. We used to see bills like the Democratic stimulus

            package: mostly serving their ostensible purpose, with the

            special-interest add-ons a distinctly secondary feature. It's

            something new to see crises — especially a crisis as shocking as the

            terrorist attack — consistently addressed with legislation that does

            almost nothing to address the actual problem, and is almost entirely

            aimed at advancing a pre-existing agenda.

 

            Oh, by the way: the administration is once again pushing for

            drilling in the Arctic. You see, it's essential to the fight against

            terrorism.