Robert Bluey

I wouldn’t want Hank Paulson negotiating on my behalf.

The U.S. treasury secretary did such a poor job representing the White House in negotiations on the economic stimulus deal, it wasn’t clear if Paulson was purposely trying to help House Speaker Nancy Pelosi or simply unaccustomed to how business is done in Washington. If it weren’t for House Minority Leader John Boehner, this deal would be far worse -- and that’s not saying much, given some of the misplaced priorities that made their way into the package.

The episode represented an abysmal failure by the White House to stand firm on conservative principles. After spending much of the last year winning battles with Democrats on everything from Iraq funding to the federal budget, there was no reason to give in to so many demands so quickly. Bipartisanship is honorable, but not when it benefits just one party.

In this case, the problem stemmed from Paulson’s willingness to accept many liberal priorities even before anyone sat down at the table to talk. For instance, the White House floated the idea of giving handouts of $800 for individuals and $1,600 for married couples -- figures significantly higher than what Democrats had proposed.

Sen. Barack Obama, competing against Sen. Hillary Clinton and John Edwards for the most aggressive stimulus package, proposed handouts of only $250. And congressional Democrats put forward a figure of $500.

Given where the White House started in negotiations, it’s not surprising the final figure ended up at $600 for tax-paying individuals and $1,200 for couples. But the real kicker was a concession to Pelosi that will send $300 to Americans who paid no income taxes last year. With Paulson setting the number so high at the start, there was little room to actually negotiate.

Contrast this episode with the fight over the dozen appropriations bills in 2007. Democrats wanted to spend $20 billion more than Bush proposed, but the president held firm on his number. After much rancor, liberal lawmakers finally settled on Bush’s number just weeks before Christmas. The White House walked away with a win when almost everyone in Washington thought it wasn’t possible.

No such luck with the stimulus. Let’s begin with the tax rebates, which amount to government giveaways that will probably have little impact on the economy in the short term. “Tax rebates and similar cash transfers don’t stimulate the economy,” said Rea Hederman of The Heritage Foundation. “The federal government cannot just wish new purchasing power into existence.”


Robert Bluey

Robert B. Bluey is director of the Center for Media & Public Policy at The Heritage Foundation and maintains a blog at RobertBluey.com