Ecnomic Stimulus Conversation with Rep. Jim Himes

The main topic of conversation over the first few weeks of Barack Obama’s presidency has been the economic stimulus bill (the American Recovery and Reinvestment Act) which passed the House last week, and has just now passed a key vote in the Senate.

Here to take your questions about the stimulus package and what it could mean for Connecticut is the newest member of our state’s congressional delegation, Rep. Jim Himes (D-4th district). Please join me in welcoming Rep. Himes back to Connecticut Local Politics! He will be answering questions in the comment section for the next half hour.

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41 responses to “Ecnomic Stimulus Conversation with Rep. Jim Himes

  1. Thanks for visiting and congratulations on your victory! (I recall the primary all too well)

    First question:

    With regard to monetary policy, what is best for America – sound money or fiat money?

  2. Hello everyone, and thanks very much for taking the time to chat for half an hour or so. Thanks especially to Genghis. This week, in all likelihood, we’ll vote on the American Recovery and Reinvestment Act, and I’ve been trying to get as many ideas, thoughts and criticisms as possible. To get a few things out of the way:

    1) I believe a substantial fiscal stimulus is necessary, and fast. Necessary, but not sufficient. Of our two traditional tools for economic pump priming, the other, monetary policy, is more or less off the table with real interest rates bouncing around zero. In the last five weeks, I’ve listened to economists ranging from Reich on the left to Lindsay on the right–all saying a big stimulus is critical. They disagree here and there on content, but agree that we must go big and go soon.

    2) In addition to the stimulus, I think we need to do two other things: stabilize the banking sector to unclog the credit markets, and figure out how to slow the pace of foreclosures. Big, big topics in and of themselves.

    3) I thought the House bill was pretty good. Far from perfect, mainly in that it contained a variety of things that were probably good investment, but which were not clearly immediately stimulative, eg advanced battery research. Fair or unfair, the criticism of birth control and NEA grants focused on a tiny slice of the House bill. When 600k jobs are being lost a month, I’m prepared to not let the perfect be the enemy of the good.

    What do you think?

  3. Second question:

    In case you were unaware, Bernanke’s Fed and Geithner’s Treasury are currently being FOI’ed for information on the $700 billion Bush bailout.

    http://www.bloomberg.com/apps/news?pid=washingtonstory&sid=aGq2B3XeGKok

    Using a “trade secrets and national security” clause, Bernanke / Geithner claim they are exempt from FOI.

    In terms of this situation, which legislation is more important:

    1) The Freedom of Information Act or
    2) The “trade secrets and national security” exemption from FOI?

  4. I am concerned that the stimulus package is not big enough.

    I believe it has too many tax breaks and not enough stimulus spending. I was wondering if the spending that the Senate cut could be restored if it hit some threshold like 10% unemployment. Would you be willing to suggest this to the committee that will negotiate the differences passed by the House and Senate?

  5. Btw, if you click thru to that Bbg article… they say the total bailout / stimulus is up to $10 trillion. I’m growing increasingly concerned about a collapse / major devaluation of the dollar… yet all the economists seem to ignore that (unlikely, but) possible risk.

  6. Hi Tim,
    Thanks for joining us, and for the congrats. Going straight to the technical! I think the reality is that we’re never going back to a dollar backed by gold reserves, or a continually managed dollar. The global capital markets are just too big for the government to control them. Our current and fiscal accounts are too powerful in influencing the dollar in the long run. The Fed can influence things in the short term and over time has done a good job around the inflation target (though as we’ve learned, it kept rates way too low way too long), but at the end of the day, in the long term, the dollar will be valued by the market.

  7. Thanks for coming on and talking to readers, Rep. Himes. I have a question sent in by a reader: “[What are his] thoughts are on the “buy American” provision in the stimulus? Should that language be removed, watered down or left alone?”

  8. Thanks for coming on and talking to readers, Rep. Himes. I have a question sent in by a reader: “[What are his] thoughts are on the “buy American” provision in the stimulus? Should that language be removed, watered down or left alone?”

    It was removed already… EU objected.

  9. Rep. Himes, thanks for your time, and congrats on the election victory.

    I was wondering what impact you feel the stimulus bill would have on the forever issue of easing congestion on I-95? Would you support bringing back tolls?

  10. ctpublius,
    Appreciate the comments. Unfortunately, this debate devolved into a “great taste-less filling” argument around spending vs. tax cuts. I think the truth is that tax cuts that are fast, targeted at the middle class and below, and reasonably expected to last a while are stimulative. Tax cuts for the wealthy are saved. Spending to help states avoid layoffs and to increase the disposable income of people who are unemployed are hugely stimulative. Advanced battery research, probably not so much.

    I think that the Senate cut some of the most stimulative spending ($ to states) and added homebuyer tax credits which are likely to be less stimulative.
    I really like your unemployment trigger, but . . . God help us if unemployment gets to 10%. That’s what this whole thing needs to help us avoid.

  11. Ichabod Crane

    Congressman–

    From your bio it sounds as if you’ve had a very, very successful business career.

    Have you ever thought about foregoing your salary of $169,300/year?

    A gesture like that would really mean something in this belt-tightening period.

  12. Thanks for the thoughtful response. I respectfully disagree (I’m a Ron Paul guy!), but do wonder about the concern of the government’s own Chief Risk Officer, James Rickards:

    But what if some kind of global coalition – say a trillion-dollar sovereign wealth fund allied with several countries around the world – banded together to create a gold-backed alternative to the dollar?

    http://www.politico.com/news/stories/1208/16663_Page2.html

    No need to respond… just food for thought. It’s kinda like asking “how are you going to address our long-term liabilities?” Just wanna put it out there… I have no expectation that you can fix any of these things by yourself.

  13. Rep. Himes, thanks for taking the time to do this. As someone who is following the current debates without any recent education in economics, can you tell me (us?) what, if any, provisions in the stimulus bill are focused on the housing market and whether (or to what extent) a recovery in that market will stabilize the economy?

  14. Halfway through allotted time and only two answers. I do hope you will stay on longer, Congressman!

  15. Genghis,
    I believe the buy American provisions have been changed since I saw them in the House bill. In principle though, there’s no clear answer–it’s an issue of degrees, in my mind. We would like the stimulus dollars to have their multiplier effect right here at home. I think taxpayers deserve that, and American workers deserve that. That said, we need them to be efficient, meaning we shouldn’t wildly overpay for something just because it is made in the USA. The original House bill struck a nice balance in that regard, at least around steel. One thing though, we cannot allow ourselves to make the Smoot-Hawley mistakes all over again. I’m very concerned by the decline in global trade and about the export jobs that may be lost as a result. We can’t forget that we need the rest of the world stable so that they can buy our products.

  16. Hi Congressman Himes,

    Thanks for taking our questions. I just read today that leading economists like Krugman, Stiglitz, Roubini, Taleb, and Baker, all agree that we should nationalize banks in order to get the banking situation straightened out.

    You can see their comments at this link:

    Two questions:

    1. Do you pay attention to what these experts say about the economy (I would assume so)?
    2. What our your thoughts on nationalizing the banks.?

  17. BristolDem,
    95. Yeah. The sad answer is that the stimulus bill will only help on the margin inasmuch as the shovel-ready municipal projects in towns like Bport (I’m thinking of the multimodal transport center) or rail upgrades get advanced. I’ve spent a lot of time with Rep. Nadler pushing the NY Harbor Cross Harbor tunnel, which is almost a game-changer with respect to 95. Unfortunately, it’s not “shovel ready” by a long shot.

  18. AndersonScooper

    Hey Jim, don’t let CTLP’s right-wingers bog you down.

    FYI, when Lt. Gov. Fedele live-blogged here, I asked if he could forego his driver. (The Republicans made a stink about Donovan’s driver.) I also asked him, since his is a part-time job, if he’d consider giving back some or all of his salary, as the House Republicans had proposed something similar already this year.

    I can also say I’m disappointed that Governor Rell’s “shared pain and sacrifice” budget seems as if it’s going to hit Bridgeport harder than Darien.

    Are you being asked to make any sacrifices, except for the damage already done to your investment portfolio?

    Anyway, we’re all in this together…

  19. Jim,

    Its always appreciative to learn the insights of a legislator rather than just hearing the soundbites. Thankyou for coming on.

    Just as you mentioned that tax breaks for the upper classes tend to be seaved rather than stimulative, I think the best example of this is the bailout of the banks. The effect seems to be that the money for the banks went to higher wages, day-to-day management of a broken bank, and possibly to reorganization.. In other words, all internal work.

    The intent of the bank bailout was to assist those who were loaned money for homes and to a lesser extent, vehicles. Will you be fixing or stopping the bank bailouts? How about the original laws that allowed risky loans to begin with?

  20. Congressman-
    Thanks for joining us here — your participation is greatly appreciated.

    I think we are spending way too much on stimulus, but others disagree.

    How will the capital infrastructure spending be allocatted? Specifically, will dollars be coming to CT and the 4th district? How much?

    Will we see improvements to Danbury Rail Line? What about the wish list each town submitted to the state? Will they see any money for their projects?

  21. Thanks for your response, but I think you need to prepare for the disaster scenario. I am afraid that it is coming and can easily be extrapolated from the joblessness increases of the last few months.

    My own personal network of friends have 3 people who have been laid off from jobs that they have held 5, 10, 1nd 12 years in the last month.

    I also think that govt spending has a much bigger impact than tax cuts in the short term. I urge you to lobby for the threshold kicker–what would it hurt. If you are right, no harm; if I am right we are prepared.

    No response required.

  22. FYI, when Lt. Gov. Fedele live-blogged here, I asked if he could forego his driver. (The Republicans made a stink about Donovan’s driver.) .

    Does Donovan have a driver in addition to his $160k press guy too? It was Williams who hired the driver…. maybe that is the CT job growth industry?

  23. Ichabod,
    Without delving into my personal situation, I will say that your point is very well taken. Congress gets a COLA, which is somehow different from a raise (!) pretty much every year. I don’t think that should happen at a time when most Americans are seeing disposable income go down, in some cases to zero. Personally, I intend to give the increase we got this year back to the Treasury or to charity. I don’t intend to take a congressional raise until incomes start growing again. I am also looking at co-sponsoring a couple of the bills that are circulating that would head off a raise in 2010.

  24. AndersonScooper

    Congressman,

    Thanks for visiting CTLP.

    Is the bank bail-out working?

    Any chance we should just nationalize the banks, so at least taxpayers would get some return for all the money we’re sinking into them. And hasn’t something like that been done before?

  25. AndersonScooper

    Publius–

    I like your threshold idea, although it scares the heck out of me that we might have to wait for things to get worse to do what we need to avoid a 2nd Great Depression.

    10% unemployment would mean 20% or more here in New Haven, and I shudder at what that might mean for our crime rate. Ugh.

  26. Gideon,
    Great question! If you look at my intro, you’ll see I think that the stimulus will work only if we reduce the uncertainty in the housing market. The House bill had some provisions that would help: HOME investment partnerships, about $4 bn in additional Neighborhood Stabilization funds, etc. At the end of the day, fairly small beer vs. the magnitude of the problem. The good news is that much will happen outside of the stimulus bill. Barney Frank is hell bent on a comprehensive national foreclosure prevention program. If executed well, I will be a big supporter. I think we’ll need something along the lines of what the FDIC has been doing with IndyMac mortgages. Hope Now simply never took off.

  27. Hi everyone,

    It’s 7:30 now. I know the congressman’s time is not unlimited, so he will answer what he can before he has to go.

  28. Just my ow 2 cents – we’ve had many recessions since the government was founded. I’ve witnessed at least two local banks in CT that haev grown quite well in the past 5 years. The bigger ones are in trouble. Perhaps the Gov’t can manage them like they did AT&T years ago i necessay – auction pieces of them off…. or let the free market run it.

  29. I gotta run off to a meeting, but… thanks for stopping by. And FWIW, I absolutely love the fact that you not only know the difference between sound money and fiat money… you can discuss it!

    And without getting too political… any chance you’d be willing to primary an unnamed US Senator in 2010? In 2012? (again… no response expected.)

  30. Rep. Himes, thanks for the response. Just a follow up suggestion – you don’t have to respond:

    It seems to me there is a glaring hole in the media reporting of the stimulus bill and lack of any clarity from congressmen about what the bill actually is and how it will help the economy (for dummies, if you will). I gave up after the last stimulus bill. Maybe, since you’re “web savvy”, you could put up a quick tutorial on the stimulus bill, to better educate us, your constituents. What are the features of the bill? How will it work? Why is this necessary? How will this help the economy? I feel like I’m taking a stab in the dark trying to deconstruct this behemoth legislation and frankly, I feel very left out as a citizen.

  31. CapCt,
    I do spend a ton of time looking at what the economists across the spectrum are saying. With respect to nationalization, I gotta better understand what you mean. I assume you mean taking majority stakes in the banks. I would rather not see that happen, even though it has begun. I would rather see the banks recapitalized AFTER a segregation of the bad assets. That would allow for capital injections into healthier banks, and reduce the likelihood that the gov owns most or all of a bank. I would also like to see private capital step in to recapitalize if possible, but again, I think that happens only after the bad assets have been segregated OR somehow floored through a government insurance program against the steepest downsides. In any event, I’d like to see the government be able to dispose of stakes as rapidly as possible, hopefully at a gain that pays us for the risk we took. Hey, a guy can dream . . . .

  32. AndersonScooper

    Congressman,

    When it comes to foreclosure prevention, would it make more sense to just put a portion of a distressed mortgage into abeyance? (with a ballon payment 5-10 years down the line.) This would have to be better for the banks, (underwritten by us btw), than adding another foreclosed home to the marketplace. At least they’d have some chance of getting their prinicpal back.

    In practicality, I don’t see how courts can write down mortgages. Everyone will want similar treatment.

    fwiw.

  33. At this point we should cut off questions.

    A huge thanks to Rep. Himes for coming onto the site this evening and talking with us! We really appreciate your time.

  34. Anderson,
    Am I being asked to make any sacrifices? I noted during the campaign that our former President squandered a wonderful opportunity to ask us all to sacrifice and to come together to make some radical changes. Didn’t happen. Look, at the end of the day, when there are hundreds of thousands of families wondering if there kids are going to come home from Iraq or Afghanistan, you’re not going to hear me talking a lot about the sacrifices I’ve made.

  35. CTDude,
    It’s been interesting to watch people pound the table on the stimulus, saying we’re spending way too much while others say we’re spending way too little. I’m not sure anyone knows the answer. No way $800 bn replaces the aggregated demand lost to the recession. On the other hand, pre-recession aggregate demand was fueled by huge and unsustainable debt. The consensus, such as it is, by the economists is that $800 bn slows, but does not stop unemployment. How you feel about that probably depends on how secure your job is.

  36. Wolcottboy,
    The original TARP slug of $350bn was deeply flawed. No transparency, no accountability, no attempt to get to the heart of the matter, ie. the toxic assets and the plummeting real estate values they reflected. Just because that’s true doesn’t mean that we don’t have a lot more work to do to get the banks lending again, and no, it won’t come free. So, I’ll be working hard to see that we get the banks lending again, but that we do it in a much more responsible, transparent fashion.

  37. Folks,
    I know I haven’t gotten to all the questions, and I’m very sorry about that. I’ll be back. This stuff is big, important and hard. We need to keep talking about it. Thanks, though, for taking the time. I gotta go jump the Amtrak for points south. All the best to you all, and I look forward to next time.

    Jim

  38. You didn’t respond to the heart of my question, but maybe next time.

    (btw — I’m on 100% commission — so have lived in constant fear of my job and performance. Let me tell you — it sucks right now, but it was my choice).

    I’m not a table-pounder. I fear the huge debt that we have, and continue to build that is being passed on to future generations. And how it is making the counrty I love so much — weaker.

  39. Folks,
    I know I haven’t gotten to all the questions, and I’m very sorry about that. I’ll be back. This stuff is big, important and hard. We need to keep talking about it. Thanks, though, for taking the time. I gotta go jump the Amtrak for points south. All the best to you all, and I look forward to next time.

    Thank you, Congressman! You are welcome back on CTLP at any time!

    And thanks to everyone for asking such great questions.

  40. AndersonScooper

    Genghis, Congressman Himes,

    That was interesting and fun. Thanks!

  41. Just got home from work, sorry I missed it. Looks like it was a good (albeit quick) discussion. I look forward to Jim coming back and spending a little more time here. Thanks, Jim!

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