Always read David Leonhard

 NYTimes: In Tax Cuts, the Options Run Short 

His main point is that the democrats have once again painted themselves in a corner. If they can't convince two republicans in the senate to support the extension of the under-$250,000 tax cuts, or some sort of compromise, the the GOP can let all the cuts expire and pass retroactive legislation extending them all permanently once they have the house majority in January. Then the burden would be on the Senate or Obama to reject or veto the extension, expiring all the cuts.

This would be a huge political blow, one that almost all democrats of influence want to avoid (Obama pledged to not raise taxes on those making less than $250,000), and so the real question is how big the Democratic retreat will be to avoid being in this position.  Or, what can they negotiate for to allow them to give the GOP all they want without totally losing faith.

My bet? Tie it to DADT repeal and unemployment extension. But no one cares about the unemployed anymore so I wouldn't be surprised if the democratic "win" would be to extend all the cuts temporarily for 3 years, so it wouldn't be an election year issue (the GOP will push for a 2 year or permanent extension. They'll float 3 years as a compromise.)

So I'm betting the Democrats are not so totally divorced from their base and economic conditions that they won't do their best to get unemployed benefit extension through. Obama's pay freeze announcement gives me very little confidence here; all I've got to go on is the audacity of hope.

The Tea Party; Taibbi; Ticked Off

Steve Benen highlights the following exchange between Matt Taibbi, David Gergen and Gary Hart, and argues that "the Gergen/Hart argument is that their numbers lend them credibility. But isn't that a pretty clear example of argumentum ad populum?" This is the sort of shit that makes me despair for the Democratic coalition.

Taibbi: To me, the main thing about the Tea Party is that they're just crazy. If somebody is able to bridge the gap with those voters, it seems to me they will have to be a little bit crazy too. That's part of the Tea Party's litmus test: "How far will you go?"
Gergen: I flatly reject the idea that Tea Partiers are crazy. They had some eccentric candidates, there's no question about that. But I think they represent a broad swath of the American electorate that elites dismiss to their peril.
Hart: I agree with David. When two out of five people who voted last night say they consider themselves supporters of the Tea Party, we make a huge mistake to suggest that they are some sort of small fringe group and do not represent anybody else.
Taibbi: I'm not saying that they're small or a fringe group.
Gergen: You just think they're all crazy.
Taibbi: I do.
Gergen: So you're arguing, Matt, that 40 percent of those who voted last night are crazy?
Taibbi: I interview these people. They're not basing their positions on the facts — they're completely uninterested in the facts. They're voting completely on what they see and hear on Fox News and afternoon talk radio, and that's enough for them.
Gergen: The great unwashed are uneducated, so therefore their views are really beneath serious conversation?
Taibbi: I'm not saying they're beneath serious conversation. I'm saying that these people vote without acting on the evidence.
Gergen: I find it stunning that the conversation has taken this turn. I disagree with the Tea Party on a number of issues, but it misreads who they are to dismiss them as some kind of uneducated know-nothings who have somehow seized power in the American electorate. It is elitist to its core. We would all be better off if we spent more time listening to each other rather than simply writing them off.

Taibbi is arguing that the Tea Party supporters are crazy. Why? Because "They're not basing their positions on the facts — they're completely uninterested in the facts"; because they "vote without acting on the evidence." Benen defends Taibbi here, arguing that his criticism is "fair" and asking "what do we when we're done listening, and we realize that a contingent is saying things that don't make sense?"

This is nonsense. I disagree with so so much that the Tea Party supports, and I recognize that lacking a coherent and centralized organizational structure [1] identifying what "they support" is itself an amorphous category, the unstable aggregation of protest signs, TV interviews, and the position-taking of elites trying to capture a leadership position (what does it mean to be a leader of the Tea Party? It is unclear. It is almost like a valence leadership, in that if you can be identified as a leader, regardless of whether you have been chosen through any institutional mechanism, you will receive substantial support and opportunity to gain political power and leverage). And I think that Benen is right to point out that the Tea Party is in some sense just the conservative base of the Republican Party. The early organizational apparatus of the Tea Party seems to have been one that drew heavily on existing apparatuses of the conservative movement.

But what is the standard that we are comparing it against? I could definitely find you a large number of Democrats--liberal, conservative, whatever--that hold contradictory positions, that reject certain established 'facts' as being reflective of some form of institutionalized bias. Certainly a lot of us rejected the 'facts' of the Great Moderation, and many of us still reject at least some of the 'facts' of free trade. So one question, which I think the Tea Party has been right to ask, is "whose facts?" Now certainly some of the facts that have been rejected by different voices in the movement are probably actual facts, well-established by any reasonable metric. But even here I guarantee that you could find the same for any sizable portion of the Democratic coalition. And we would in all probably also find a comparable portion of Democrats treating the presentation of evidence contrary to our beliefs by doubling down on our positions.

What about contradictory positions? Those Social Security getting, Medicare loving, farm-subsidy dependents hate government programs, hate government health care, and hate dependency. Maybe these are contradictory, maybe not. Certainly previous generations of Democrats believed that there was value in basing Social Security (and by extension, Medicare) on contributions, precisely to undercut the opposition to redistribution (taking from Peter to pay Paul) that the Tea Party seems to be articulating. They believed that while Social Security was redistributive, that straight out redistribution was not sufficiently defensible or desirable and instead decided to base it on contributions, to make it into an insurance scheme instead. And most of us think that certain industries should be getting various forms of governmental support, either through favorable regulations, subsidies, or tax breaks. And we usually think that the ones that should get the most support are those that are either concordant with our values or that we believe are likely to further our values in some way. So renewable energy, public broadcasting, higher education. There have been a lot of complaints that the Tea Party is hypocritical because various self-proclaimed Tea Parties attack welfare but love farm subsidies. But maybe these Tea Partiers don't see these as hypocritical at all: the first (they might believe) encourages dependency and not working, while the second (they might believe) encourages national food self-sufficiency and working. And even still, how many of us--regardless of how well-educated, how well-informed, how self-criticising--have managed, or even sought, to make sure that our various beliefs are all in alignment with particular expressions of all the different first principles we might hold.

Furthermore, when Taibbi says he "interview[s] these people", does he mean the sympathizers, the identifiers, the active members, the rally-attenders, the rally-organizers, or the various levels of people trying to place themselves in the leadership positions? Like I said above, if you interviewed the Democratic sympathizers, the Democratic identifiers, the active members of the Democratic party (those who have volunteered for campaigns, attended rallies, worn buttons), or the ward leaders, you would almost certainly find a comparable degree of inattention to inconsistencies, to contrary evidence, to contradictory positions. They, like the rest of us, are regular people with some core values, some enduring identifications, some personal experiences, and some informed positions; all these interact in complex ways, and there is always a lot of noise going on around us while we try and sort these things out. That the end result is often an inconsistent, unstable mess is hardly a surprise. You'll even find these amongst members of Congress and the President. After all, their job really is to put together and keep together a coalition of different and often contradictory interests all the while appealing to a broader population whose positions are themselves often unstable. And if he is interviewing higher-ups, those who 'ought to know better,' well like I said, their job is coalition building and maintenance. That will necessarily lead to some issue incoherence.

But more importantly, who the hell are these higher-ups and why should we take them as representative? They haven't been elected as representative of the Tea Party. They are in all likelihood competing with each other for positions of influence within the movement. Some of these positions will be democratically chosen, while others will be valence representation--Sarah Palin representation, where identification with her, in a whole hell of a lot of ways, and appreciation for her, in a whole other set of ways, is sufficient to give her a following and leverage. All movements have this quality to them; all movements have these tensions; all movements try to motivate people by appealing to almost anything that they think will both resonate and further their own specific agendas.

The end result of all of this is that there will be a lack of coherence, a mess, one that relies on appeals that many believe, and many know to be false, and that even the listener and the audience might believe to be false. But they often serve larger movement purposes. The civil rights movement, the Populists, the Progressives, the environmentalists, and pretty much any other popular social movement has done the same. And when, like Taibbi, you disagree with the agendas, you are especially likely to see the worst, to see crazy, to see a deeply regressive and anti-rationalist band that is out to destroy everything you hold dear.

But democracy doesn't require intellectuals; it doesn't require a highly informed citizenry; I don't even think, Machiavelli to the contrary, that it requires a virtuous citizenry. It just requires one that is able in the aggregate to recognize when times are bad, and to vote out whoever is in government at that time. That's all we've ever had; that's what we have now; and that's part of what we had in the midterms, mediated through the specific institutional arrangements of American government (namely, that we voted on  1/3 of Senators, all the House and not on the Presidency).

And I despair for the Democratic coalition, because it's exactly Taibbi's brand of Jane Addams elitism, albeit with his own particular anti-corporate aggression (which I wholeheartedly support), that feeds the impression that liberals are fundamentally looking down their noses at the mass of the population. It is an impression rooted in the fact that the Democratic party, with the exception of the union movement and much of the civil rights movement [2], has become intellectually and electorally un-moored from the working classes of this country.


[1] It is not unorganized; nor is it disorganized. And saying it is over-organized is also inaccurate. Rather, it is a valence label, one that a resonates with a significant number of people and which a number of different groups and individuals are trying to organize into something more coherent. But its temporary strength has to be in some part its lack of coherence, something like the old Democratic-Republican societies, those "self-created" societies that claimed to speak for the people directly and that sought to bypass existing institutional structures.
[2] These are obviously influential components of the Democratic coalition, but I would also suggest that they are the components that are least influential in the progressive-managerial consensus that has dominated, in one form or another, the Democratic party since Clinton.

The President writes a children's book...

... and Fox News make asses of themselves.

Original headline (as indicated by the URL):

Obama Praises Indian Chief Who Killed U.S. General

Then, of course, we get

Editor's Note: Headline has been corrected for historical accuracy.

with the new headline

Obama Praises Indian Chief Who Defeated U.S. General

Now I don't care about the President's book. But this is some pretty petty stuff. This is referring to Obama's inclusion of Sitting Bull in Of Thee I Sing: A Letter to My Daughters, which is a tribute to 13 Americans presented to children.

Francoise Hardy...

...incomparable. She apparently does not like her version of this song, and the music is something of a departure from other renditions. It ranks as amongst my favorite versions, however, and the simplicity of her voice could carry the song even were one not to like the latin beat.

Obama might believe the GOP wasn't elected on a mandate of gridlock...

... but he doesn't seem to really be holding out for a lot of progress being made in the next Congress.

“They are not going to want to just obstruct, that they’re going to want to engage constructively,” he said of his Republican adversaries. “And then we’re going to have a whole bunch of time next year for some serious philosophical debates.”

There's nothing like "whole bunch of time" for "some serious philosophical debates" to really inspire a belief that any significant legislation will be passed in the 112th Congress.

Dumbest thing you'll read today...

... from Douglas Schoen and Patrick H. Caddell. 

It involves such gems as 

But it is clear, we believe, that the president has largely lost the consent of the governed. The midterm elections were effectively a referendum on the Obama presidency. And even if it was not an endorsement of a Republican vision for America, the drubbing the Democrats took was certainly a vote of no confidence in Obama and his party. The president has almost no credibility left with Republicans and little with independents.

This, by the way, from a former Clinton (both Hillary and Bill) adviser. Now they I don't think Schoen [1] actually believe this. He was an adviser to Bill Clinton, who was also drubbed in the first midterms. It is also beyond ironic for Schoen to write

Obama can and should dispense with the pollsters, the advisers, the consultants and the strategists who dissect all decisions and judgments in terms of their impact on the president's political prospects.

This, from the man who insisted that they shouldn't pass health care reform because it would negatively impact the Democrats at the polls. They suggest a national unity government, and claim that "if he is to bring Democrats and Republicans together, the president cannot be seen as an advocate of a particular party, but as somebody who stands above politics, seeking to forge consensus." Now this is standard 'third party' claptrap. Without actually changing the institutions of governance, this would result in a largely ineffective President who had few allies whose fates were tied to him and so could cut him loose at will. We have seen this movie before; Mr. Tyler I am thinking of you.

Schoen and Caddell claim that

Forgoing another term would not render Obama a lame duck. Paradoxically, it would grant him much greater leverage with Republicans and would make it harder for opponents such as Senate Minority Leader Mitch McConnell (R-Ky.) - who has flatly asserted that his highest priority is to make Obama a one-term president - to be uncooperative.

This is nonsense. They do their best to shuffle away from providing any mechanism by which this supposed increase in leverage would be accomplished. And they ignore the fact that if Obama were to announce that he was not seeking another term it would feed the Republican (and Schoen/Caddell) narrative that Obama's agenda has been repudiated. It is not a paradox that this would strengthen him; it is a lie.

Also, lines such as

Moreover, if the president were to demonstrate a clear degree of bipartisanship, it would force the Republicans to meet him halfway

might as well have been written in 2009. Oh wait, they were. But the Republicans stuck to their game plan of 'no' and were handsomely rewarded. Not to say that this will always work, but that it can, especially when the economic factors are favorable. All in all, this is the dumbest article I've read in weeks. There is an argument with shallow explanations and with no mechanism. It lunges across the line from ironic to hypocritical. And it has about as much likelihood of influencing the President as I do of being elected President. But that's not the point. The point is to feed the narrative to achieve policy (and political) objectives, namely, the repudiation of any progressive gains, hardline military stances against Iran, and possibly the re-ascendancy of the Schoens and Caddells of the world in the Democratic party.

[1] Did you know that Schoen wrote a biography of Enoch Powell? Presumably a PhD dissertation. Given my own interests, I am pretty sure that sooner or later I will be reading up on the old Ulsterman.

Working class anthems...

...inspired by the recurring joy I've been getting from remembering Stan Rogers' classic. The criteria here is not necessarily songs about working class life, but rather songs that get everyone singing when they are played at the bar.  If there is a gathering at a house, and the whisky's been flowing, these are the songs that most people know and everybody sings.

Now the immediate impulse is to go with another Stan Rogers, maybe "Barrett's Privateers" or "The Mary Ellen Carter" [1]. But the morbid, fatalistic lyrics of Dark as the Dungeon will get any good bar going [3]. It'll start off as a low hum, and when it is done will leave the bar empty of sound, as everyone stares into the drinks and remembers or imagines the loved ones dead on the job.

Now the only question is whether to go with Cash, Travis, or Ernie Ford. I think I'll go with Travis, which includes the often-skipped final stanza

The midnight, the morning, or the middle of day,
Is the same to the miner who labors away.
Where the demons of death often come by surprise,
One fall of the slate and you're buried alive.

[1] Don't think this is a working class anthem? Go to any bar in the Maritimes and many bars in the west or Ontario, put this one on the juke, and hear the slowly gathering crescendo [2].

[2] I recognize and disregard the redundancy.

[3] Eventually we'll bring these selections up to date a little; it's not just the old hands singing, but the young'uns as well.

More on the Chairmen's Mark...

Two charts tell the story of the proposed reduction of the top rate of taxation to 23%, and how this reduction has been labeled a tax increase.

This shows the proposed tax rates under a number of different scenarios. The one that they suggest is the "Eliminate all Tax Expenditures," including the mortgage tax credit, the health care tax credit, the earned income tax credit, the child tax credit, and other political favorites. Now some of these are policy favorites as well, especially the child tax credit and the earned income tax credit, and so the chairmen propose first getting rid of them all (making this the Zero Expenditure Plan), lowering the tax rates accordingly, and then raising the rates according to which of the tax credits are brought back.

So the top bracket gets a decrease in their tax rates under the zero expenditure scenario of 35%, that is from 36% of income to 23% of income. (I'm going to assume that the Democrats cave, of course, and all the Bush tax cuts are extended.) The lower top rate gets a 30% reduction, from 33%-23%. The current bottom rate, introduced by the Bush tax cuts, is 10%, and this decreases to 8%, a 20% reduction. The next lowest is at 15%, and decreases to 8%, a reduction of 46.7%. The lower middle, currently at 25%, gets a 44% reduction to 14%, while the upper middle gets a decrease of 50%, from 28% of income to 14% of income.

Of course this still benefits the top bracket the most, as their 36% decrease will--in actual dollar terms--dwarf the decrease of the middle's 50% reduction. It is not exactly progressive, although in percentage terms it benefits the middle more than the top (less so, however, if the Dems don't actually extend the Bush tax cuts for the above $250,000 crowd). And the slim reduction for the bottom bracket? We call that "broadening the base," on the grounds that the $0-$8,375 crowd currently isn't contributing their fair share from the less than nothing they have left over after scraping by another goddamned year.

But when we assume that the major tax expenditures are not going to be eliminated (the most likely scenario in my view), then this changes somewhat. The bottom bracket gets a tax increase, from 10% to 13% (30% increase), the upper bottom gets a 13% reduction from 15% to 13%, the bottom middle gets a 16% reduction, from 25% to 31%. The upper middle gets a decrease of 25% (from 28 to 21% of income). The lower top gets a 15% decrease and the upper rate gets a 20% decrease.

So to be clear, under the most likely scenario

• $0-$8,375:  tax increase of 30%
• $8,375-$34,000: tax decrease of 13%
• $34,000-$82,400: tax decrease of 16%
• $82,400-$171,850: tax decrease of 25%
• $171,850-$373,650: tax decrease of 15%
• $373,650-above: tax decrease of 20%

And under the situation they propose:

• $0-$8,375:  tax decrease of 20%
• $8,375-$34,000: tax decrease of 46.7%
• $34,000-$82,400: tax decrease of 44%
• $82,400-$171,850: tax decrease of 50%
• $171,850-$373,650: tax decrease of 30%
• $373,650-above: tax decrease of 35%

Not the most regressive it could be, but not exactly making the tax code more progressive. Remember, we want to "broaden the base" not "soak the rich."

The next chart is the distribution of benefits from tax expenditures. It is effect of the credits on the after-tax income, by income quintile.

The benefits of the tax expenditures go disproportionately to the wealthy. Surprised? So eliminating some of these might mean a progressivization of the income tax, although it depends on which are eliminated.

The devil will be in the details. On the whole it seems likely to make the tax code less progressive (which is troubling, given that federal income taxes are pretty much the only progressive element to the American tax system). But that overall it will likely be a reshuffling and simplification of the existing rates.

Deficit Commission

The key point in the Deficit Commission's Chairmen's Proposal[1]:

Set global target for total federal health expenditures after 2020 (Medicare, Medicaid, CHIP, exchange subsidies, employer health exclusion), and review costs every 2 years. Keep growth to GDP+1%.

 Well hell, if the CBO could just say keep health care inflation to GDP+1%, then we wouldn't need a Deficit Commission in the first place. And their mechanisms for achieving this?

If costs have grown faster than targets (on average of previous 5 years), require President to submit and Congress to consider reforms to lower spending, such as:

• Increase premiums (or further increase cost-sharing)
• Overhaul the fee-for-service system 
• Develop a premium support system for Medicare
•  Add a robust public option and/or all-payer system in the exchange
•  Further expand authority of IPAB

Now that's all well and good. I recognize that each of these could in fact lower the health care inflation rate. And I certainly like the "Add a robust public option and/or all-payer system in the exchange," although I suspect that when crunch time came we would have a premium increase, a premium support system for Medicare, and maybe, just maybe, an expansion of the authority of the IPAB.

The main problem is political: "require President to submit and Congress to consider reforms to lower spending." Now there might be some mechanisms that could require Congress and President to do this, but I can't think of any off the top of my head that would not be easily avoided by a Congress or President who didn't want to take on health care. The exception, of course, is that if health care costs continue to rise at the rate they've been rising, then eventually there will be so much pressure to tackle the deficit (interest rates will be high and the Fed will say that interest rates are where they need to be to maintain price stability) that some course of action, almost certainly involving caps, rationing, and withdrawal of coverage, will be necessary.

But avoiding this seems to be the whole point of a Deficit Commission. So "mandating" these changes doesn't really make much sense to me, if the only real mechanism for making the President and Congress act is the fact that the problems of a large debt have already arrived.

[1] Note the qualifiers--this is not the Deficit Commission's proposal, as they are unlikely have the 14 votes needed to approve the report. Rather, this is the Chairmen's proposal, sent out to the media in order to dominate the conversation. Its release was not approved by the full commission, many of whose members are surprised that the chairmen did this, considering they have yet to vote on these proposals. Furthermore, the Deficit Commission is not a congressionally established Commission--it has no privileged procedural rules, as was originally proposed, and so its primary influence is in shaping the conversation. Which is partly why having staffers whose salaries for working on the commission are paid for by hard-right conservative institutes and centrist New Democrat institutes is such a scandal. Kevin Drum puts it well:

It's just a draft presentation put together by two guys. Do you know how many deficit reduction proposals are out there that have the backing of two guys? Thousands. Another one just doesn't matter.

I disagree on the "just doesn't matter point," largely because I think the Chairmen knew damn well that the headlines were going to be  "Examining The Deficit Commission's Proposals" (NPR) and "Examining The Deficit Commission's Proposals" (Examiner.com) and "Factbox: Deficit commission tax cut ideas" (Reuters) and "The President's Deficit Commission Makes Recommendations" (Nightly Business Report) rather than "Two Guys Spew Off."

Bush, McCain, and Obama

Bush had a remarkable candor with other politicians; Bush was always willing to lie to his constituents; Bush got a kick out of screwing with people; Bush saw very little in Obama that would unsettle the basic achievements of his administration; Bush can hold a grudge.

All of these and more might explain the following:

The venue was the Oval Office. A group of British dignitaries, including Gordon Brown, were paying a visit. It was at the height of the 2008 presidential election campaign, not long after Bush publicly endorsed John McCain as his successor.
Naturally the election came up in conversation. Trying to be even-handed and polite, the Brits said something diplomatic about McCain’s campaign, expecting Bush to express some warm words of support for the Republican candidate.
Not a chance. “I probably won’t even vote for the guy,” Bush told the group, according to two people present.“I had to endorse him. But I’d have endorsed Obama if they’d asked me.”

 

Many summers were spent driving through Saginaw, Michigan

A classic "gone west" song. Note the differences with The Idiot: here the reason to go west is to earn enough to marry his love, not his own sense of dignity, which a changing economy has not denied to him; here the contrast is not between work and "lying down," between a rotted soul and self-respect, but between greed and humble living. It is probably more in line with the classic themes of country music, and it lacks some of the moral complexity of Stan Rogers' song.

But its a different time, and I wonder what the song would be if it was about the end of the Saginaw fishermen, the collapse of that industry, and the fact that you could no longer support your family, not even taking her father's avarice and standards into account.

The End of the World...

...or, why Obama shouldn't have reappointed Bernanke.

Now there are many things about a hyper-polarized media and political environment that are probably harmful to the achievement of desirable public policy. But, given that right now expectations of future high inflation would be a net positive, inducing people and companies to invest in the present, it would have been nice to use the hyperactive bombast that already characterizes so much of our political and policy debates to good use.

In short, we should have dumped Bernanke. It might not have been the End of the World, in the way that going off the gold standard signaled the collapse of Western civilization, but surely in this media environment it would have led to (greater circulation among influential voices of) claims that Obama is interfering in the Fed, undermining its independence, and trying to loosen up monetary policy with reckless disregard for the future costs of inflation. We might not had CNBC or Bloomberg making comparison with Zimbabwe or Wiemar, but I'd bet a pretty penny that they'd be raising the possibility of Venezuela or Argentina (they would couch it in "such an action could potentially lead to high inflation, which Argentina and Venezuela are currently experiencing" language.)

My reading of Obama's keeping on Bernanke was that he wanted (and wanted to stress) continuity in the economic management of the crisis. This seemed, in part, an effort to assuage markets and conservatives, similar to his keeping on Gates at Defense in order to not be accused of undermining the American war effort. This seems to me to have been politically disastrous, but I'm increasingly convinced that assuaging the markets was also a bad policy move. Whether a non-Bernanke Fed Chair would actually have been able to get the Fed to pursue more expansionary monetary policy sooner is unclear; but I expect that replacing a Republican with a Democrat (hell, even a centrist Democrat) would have led to expectations of more expansionary monetary policy. It is unlikely that this would have had a similar impact as going off the gold standard, but with 24 hour news needing to fill time with ratings-grabbing bombast, it probably would have been portrayed as a huge regime change, the expectations of which would have been for higher future inflation. And that in itself would likely have been helpful.

Blue Yodel No.9

One of Louis Armstrong's last performances?

The Jimmie Rogers version is perfect, but it's always nice to see Cash in action.

Cheers...

Classic Cheers

I think this scene captures Cheers at its best. The back story is that this man has come in with a problem, and wants to talk to the former owner Gus about it. The problem, which he has already stumped Coach with, is that his son has just come back from college with his fiancee, who is black.

The rest is just golden.

Felix Salmon on QE

There have been a number of excellent discussions on the new round of quantitative easing and what exactly that means. My understanding is that it is an effort by the Fed to impact the long term interest rates, with this round of QE being aimed at the interest rate on 5 year Treasury notes. The Fed will 'print' off some cash, buy 5 year Treasury notes--in increments of $1 million--and thereby lower long-term interest rates (the short term interest rates are already up against the zero-lower bound). Felix Salmon's summary in particular is worth a read.

The way that QE works is that the Fed will publish a schedule of how many Treasury bonds it intends to buy and when. It will then go out and buy those bonds from “the Federal Reserve’s primary dealers through a series of competitive auctions operated through the Desk’s FedTrade system.”... what that means is that the New York Fed has a direct line to the biggest banks in the world (Goldman Sachs, Morgan Stanley, Deutsche Bank, etc — 18 in all). And it gets all those banks to compete with each other, either directly or on behalf of their clients, for who will sell the Fed the Treasury bonds it wants at the lowest price. The winners of the auction get the Fed’s newly-printed cash, and give up Treasury bonds that they own in return. The people selling Treasury bonds to the Fed, then, are big banks, who are told in advance exactly how many Treasury bonds the Fed wants to buy. As a result, they’re likely to buy Treasuries ahead of the auction, with the intent of selling them to the Fed at a profit....Once the banks have made that profit, it’ll get paid out in bonuses to the people on the bank’s Treasury desk, with the rest going to their shareholders. We’re not exactly helping the unemployed here.... [T]he Fed isn’t going to be buying any more bonds than the Treasury is issuing — so it’s not going to be lifting a lot of holders of Treasury bonds out of their long-term investments. But insofar as the Fed is forced to offer such high prices that investors simply can’t say no, those investors are probably just going to take the proceeds and invest them in agency debt instead from Fannie Mae and Freddie Mac. That debt is just as safe as Treasuries, and it even yields more than Treasuries, to boot.What’s emphatically not going to happen is that the people who used to own Treasury bonds will take the Fed’s billions and suddenly turn around and spend them buying croissants at their local family-owned bakery. We’re talking about monetary policy here, not fiscal policy: the aim here is to bid up the price of Treasury bonds, which means that the yield on Treasuries will fall, and that those lower interest rates will somehow feed through into greater economic activity. The aim is not to take $600 billion and spend it on stuff in the real economy. That would be a second stimulus, and the chances of a second stimulus right now are hovering around zero. Which is why Brad DeLong puts the value of buying $600 billion in Treasury bonds at about $7 billion in total, rather than anything near the headline $600 billion figure. The Fed is playing around with interest rates here — that’s its job. It’s not trying to directly stimulate demand.

Of course its Congress's job to directly stimulate demand. But that is not going to happen, and so we are dependent on what looks to be pretty weak sauce, which has the wonderful appeal of being another giveaway to the banks.