Open Thread on the "Stimulus"

The_Tim

House Speaker Nancy Pelosi:
emphasis mine

Nancy Pelosi wrote:

Every month that we do not have an economic recovery package 500 million Americans lose their jobs.

President Barack Obama:
emphasis mine

Barack Obama wrote:

And if nothing is done, this recession might linger for years. Our economy will lose 5 million more jobs. Unemployment will approach double digits. Our nation will sink deeper into a crisis that, at some point, we may not be able to reverse.

I'm so glad we have left behind the "politics of fear."

Chris

Here's this little vote to build your confidence in this "stimulus".

jon

Where does it say in the Constitution that they can enslave me, my children, and my children's children all to bump up the GDP by a percentage point for a year ot two?

The_Tim

CBO: Obama stimulus harmful over long haul

President Obama's economic recovery package will actually hurt the economy more in the long run than if he were to do nothing, the nonpartisan Congressional Budget Office said Wednesday.

CBO, the official scorekeepers for legislation, said the House and Senate bills will help in the short term but result in so much government debt that within a few years they would crowd out private investment, actually leading to a lower Gross Domestic Product over the next 10 years than if the government had done nothing.

Here's the actual pdf from the CBO.

biliruben

Jebus, Tim. This site's got more credibility than the Washington Times.

I think I'll wait until I can access the PDF, rather than take their interpretation of the CBO analysis at face value.

Focus on quality!

rose-colored-coolaid

The problem is with the stimulus bill, per-se, but rather on why we can't afford it. If we hadn't spent the last 8 years doubling our national debt, and increasing our obligations to entitlement programs by another $8T, then we would have the money now for government to be a spender of last resort. Not enough to stop the blow, but maybe enough to cushion it.

This is exactly the kind of situation that I've been pissed off would happen after we'd ballooned our national debt to such a high level.

That said, there's some good and some bad in the stimulus package. I think anyone putting pork in there should be pretty ashamed right now, even if the total levels of pork are being exaggerated. The bill in its current form at least includes spending on the kinds of things that will help us for the next 15+ years (infrastructure, science projects, etc), which is a plus. Of course, I find it depressing that the major complaint about the bill seems to be that it doesn't throw money off the helicopter quickly enough!?!

So, in summary - yes, we need spending now, but too bad we've screwed up for so long that we can't really afford to...

jon wrote:

Where does it say in the Constitution that they can enslave me, my children, and my children's children all to bump up the GDP by a percentage point for a year ot two?

Oh yeah, I agree with your intent, but wording it like some kind of self-appointed martyr makes you sound pretty whiny.

The_Tim

biliruben wrote:

Jebus, Tim. This site's got more credibility than the Washington Times.

I think I'll wait until I can access the PDF, rather than take their interpretation of the CBO analysis at face value.

Focus on quality!

Quote from the CBO pdf:

According to these estimates, implementing the Senate legislation would increase GDP relative to the agency's baseline forecast by between 1.2 percent and 3.6 percent by the fourth quarter of 2010. It would also increase employment at that point in time by 1.3 million to 3.9 million jobs, as shown in Table 1. In that quarter, the unemployment rate would be 0.7 percentage points to 2.1 percentage points lower than the baseline forecast of 8.7 percent. The effects of the legislation would diminish rapidly after 2010.
...
Including the effects of both crowding out of private investment (which would reduce output in the long run) and possibly productive government investment (which could increase output), CBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net. H.R. 1, as passed by the House, would have similar long-run effects.

I guess I don't see where the Washington Times article is mischaracterizing the report, but that's why I included the link to the pdf itself (which I couldn't find in any news articles I read on the report), so you could judge for yourself.

Let's not fall victim to the logical fallacy of ad hominem attacks.

biliruben

Logical fallacy and ad hominem attacks? A little defensive, or what?

Where you got that from my suggesting your source has a tendency to spin, (which anyone who reads them regularly can hardly deny), and saying I'd wait until I was able to access the PDF, I don't know. I was simply timing out.

Reel it in and take a deep breath before throwing out big words that don't fit the situation.

I'll leave it to the reader to determine if they two quotes are equivalent, though I admit it wasn't as bad as other "news" I've read from them.

jon

The bill contains a $2 billion earmark for an energy plant whose design was already discarded as being uneconomical.

http://corner.nationalreview.com/post/? ... liOTlmYTQ=


Who put that earmark in? Rod Blagojevich

The_Tim

I don't really have any vested interest one way or the other in the Washington Times. Wasn't even aware they had a reputation for spinning or whatever, and can't recall the last time I read anything from them. I picked them because it was the first source I came across on Google News for the story.

I just was pointing out that your comment came across as "we shouldn't believe it because it was in X publication," which definitely qualifies as ad hominem in my opinion.

biliruben

No sweat, Tim. I can certainly see that, though that isn't what I meant. I was just giving what I thought was a light-hearted push to use more credible links, mainly because I'm generally too busy or lazy to read the primary source.

As for the meat of the article - yes, our debt will be somewhat of a burden in the future, but this misses the other side of the story, which is we are quite possibly on the brink of another great depression. Our economic and financial engine is sputtering, and without keeping it wet with a bit of government diesel, we may well be is some serious, serious shiznet. I don't know if you've tried to get a car going after running out of gas. It can sometimes be really, really hard. You tend to wish you'd borrowed that 10 bucks to make it through death valley, as you walk along with a gas can in 120 degree heat.

biliruben

For the other side of the story, Here is the testimony of the director of the CBO before Congress:

The economy is currently enduring a recession that started more than a year ago. The
Congressional Budget Office (CBO) projects that, in the absence of any changes in
fiscal policy, economic activity will contract more sharply in 2009 than it did in 2008
and the economy will grow at only a moderate pace in 2010. Under that projection,
the shortfall in the nation's output relative to its potential would be the largest—in
terms of both length and depth—since the Depression of the 1930s.

So I guess it depends on whether you want to risk a decade or two of a deflationary trap and depression levels of unemployment. I don't.

The_Tim

Obama again:

[url=http://www.google.com/hostednews/ap/article/ALeqM5gdDrWnoMueqVFI-Uo1ClxVZur22AD9662LDO0]Barack Obama[/url] wrote:

So then you get the argument, well, 'this is not a stimulus bill, this is a spending bill.' What do you think a stimulus is? That's the whole point.

Isn't decades of spending giant piles of money we don't have—by individuals, corporations, and the government—exactly what got us into this mess in the first place?

I guess you can color me unconvinced that the solution is "just throw another $1T at the problem and it will probably go away."

biliruben

I'm all ears as to what your solution is.

I think investment of 2 trillion in infrastructure and jobs programs to build a base for our future economic growth might just get us to avoid the most dire result. Maybe.

We aren't spending enough, in the current plan. And it's only 2 years, not decades.

The_Tim

I will at least agree that infrastructure spending has a chance of softening the blow. Unfortunately, it doesn't sound to me like this bill has much of that in it.

I don't know if you consider the Boston Globe to be a reliable source, but here you go: Only 5 percent of $819b plan would go toward infrastructure

But the bill passed by the House yesterday dedicates only about 5 percent of the $819 billion measure to highway, mass transit, and rail projects, analysts said. That has prompted even some Democratic supporters to complain that the transportation spending was gutted by Republicans who insisted on more tax cuts - none of whom voted for the measure anyway - and by Obama advisers who shifted priorities to advance policy goals.

I can't shake the feeling that these dire warnings of impending irreversible economic doom are basically nothing more than a front to rapidly push through a massive policy bill with as little debate as possible.

If they want to make sweeping policy changes, that should be in a separate bill that can be debated on its own merits. Instead, we've got everything and the kitchen sink thrown and called "stimulus," and anyone that questions it is met with the refrain that "we won the election, deal with it."

Just because they're calling it "stimulus" doesn't mean that's the real goal.

The_Tim

Of course, I should point out that it doesn't really matter anyway. I'm sure this is going to be shoved through just like TARP was.

biliruben

I can't shake the feeling that these dire warnings of impending irreversible economic doom are basically nothing more than a front to rapidly push through a massive policy bill with as little debate as possible.

I'm not sure how to constructively respond to that level of distrust and paranoia. You think the majority of economists are all in cahoots to dupe the American public? I'll try, nonetheless.

I agree that I would like to see more stimulus go towards infrastructure, and less (or nothing, preferably) to tax-cuts and bank bailouts. Unfortunately the Republicans keep insisting on cutting infrastructure, and doubly-unfortunately, Obama is willing to listen and compromise.

But that 5% number is pure bunk. Just because only 5% is "dedicated" to roads and transit, doesn't mean that's all that's going to be spent on infrastructure in general. There just aren't many earmarks, which haters of pork should be applauding, not twisting to their own attack-lines.

Because the States will be given discretion on how to spend the bill it's impossible to give an exact number, but my guess is that far more than 50% of the non-tax-cut portion (~half a trillion) will go towards infrastructure. The other big segment will be unemployment benes and food stamps, which will inject money quickly into the economy.

I have no idea what sort of "policies" you refer to, that this stimulus plan is supposed to be furthering. Education? Health care? What? These aren't particularly controversial policies, given that Obama ran on them and was elected to carry them out.

If anything, he's moving far too slow on the health care issue, and I would have preferred he put that as a center-piece of the stimulus, as that is a major reason for bankruptcy and foreclosure.

jon

These stories of worst crash since XXXX sound an awful lot like the baby incubators of Kuwait and the chemical weapons stockpiles of Iraq. More stories to sell newspapers and push through earmarks.

And while the money will mostly be spent in 2 short years, the debt will be piled up and compounding for many decades while we have to pay increased taxes while buying products at inflated prices.

Most of the stimulus bill seems to be extra entitlements that will never be reduced. I am surprised I haven't seen pictures of how the spending is broken down by type. Just anecdotes of this and that. It is almost like no one has any real idea of what is being rushed through by a President who has never held a real job in his life.

biliruben

I am surprised I haven't seen pictures of how the spending is broken down by type.

Well you haven't looked then.

Again, this complete distrust of the vast majority of economists from all over the political spectrum is flabbergasting. The data is there for anyone to see, and those who are trained to analyze it are pretty much speaking with one voice.

I guess this what you get when you have a president who lies to his constituents for 8 years. Nobody believes anyone anymore.

The_Tim

biliruben wrote:

I'm not sure how to constructively respond to that level of distrust and paranoia. You think the majority of economists are all in cahoots to dupe the American public?

Would you mind sourcing the claim that the "majority of economists" support the current stimulus package? The relatively even-handed Cato Institute seems to disagree (pdf).

biliruben wrote:

I have no idea what sort of "policies" you refer to, that this stimulus plan is supposed to be furthering. Education? Health care? What? These aren't particularly controversial policies, given that Obama ran on them and was elected to carry them out.

It is totally expected that he will attempt to push through education and health care policies that he ran on. I don't have a problem with him doing that at all. What I have a problem with is all of it being lumped into a giant "stimulus" bill and being rushed through with dire threats of irreversible economic armageddon.

If their plans are so great, why can't we give them a chance to be debated individually on their own merits? Is the economy really going to fall into total chaos if education and/or health care changes don't get passed this week?

This just has the same feel as the rush to the Iraq war. Scare tactics being used to push an agenda through as rapidly as possible, with little to no debate, and we'll deal with the consequences later.

biliruben

Cato is generally anti-government intervention. It ain't a shock that they disagree with government intervention. They wouldn't be non-partisan if libertarians had more than a handful of viable candidates.

What education and health care changes are you referring to? Upgrading Schools? Providing healthcare for kids?

The_Tim

biliruben wrote:

Cato is generally anti-government intervention. It ain't a shock that they disagree with government intervention. They wouldn't be non-partisan if libertarians had more than a handful of viable candidates.

Okay but your claim was that the "the vast majority of economists from all over the political spectrum" support this stimulus. I searched for a source on that and the top results were all pointing to the Cato Institute's full-page ad in the New York Times.

biliruben wrote:

What education and health care changes are you referring to? Upgrading Schools? Providing healthcare for kids?

Any / all of the health care, education, and other policy-related stuff that has been crammed into this bill and labeled "stimulus."

[url=http://www.jsonline.com/news/statepolitics/38842092.html]The Milwaukee Journal Sentinel[/url] wrote:

One possible byproduct of the economic crisis and the stimulus plans it is spawning: significant health care reform.

"It's probably the best window we've had for a long time," said Susan Giaimo, a political science professor at Marquette University, as the House of Representatives debated a recovery plan last week that would provide tens of billions of dollars in spending on health care programs.

The $819 billion package approved by the House included:

• $20 billion for electronic health records.
• $1.1 billion to establish a research center to evaluate the effectiveness of medical treatments.
• $1.5 billion for community health centers.
• Billions of dollars for preventive care and other health programs.

[url=http://www.washingtonpost.com/wp-dyn/content/article/2009/01/28/AR2009012803261.html]The Washington Post[/url] wrote:

The plan shaped by President Obama and congressional Democrats proposes to more than double the current budget of the Education Department, with $150 billion of new federal spending over two years. States facing budget shortfalls would be able to tap into $79 billion to avoid layoffs and other education cuts. There would, as the New York Times reported, be big boosts in Title I grants to help educate poor children and for students in special education. For the first time, the federal government would play a significant role in the repair and construction of schools. Money also would be expended to strengthen Head Start and shore up Pell grants for college students. The House passed its version yesterday, and the Senate is likely to act soon. Critical work will have to be done in conference.

Why not debate the merits of these things on their own, in separate health care and education bills? I'm not saying they should or shouldn't pass, I just don't see the point in lumping it all together under the big giant "stimulus" umbrella unless the goal is to push it through as quickly as possible with little to no debate on the specifics.

Whether they've got an R or a D next to their name, politicians continue to employ the same tactics as always. IMO, Congress should have some form of the single-subject rule, and/or something like the Read the Bills Act.

sniglet

biliruben wrote:

Again, this complete distrust of the vast majority of economists from all over the political spectrum is flabbergasting. The data is there for anyone to see, and those who are trained to analyze it are pretty much speaking with one voice.

These same economists who are of "one voice" about the stimulus were the same ones who were saying that all was well with the universe only a couple years ago. If these guys couldn't see the writing on the wall then, why should we have any confidence in their oppinions now? I put FAR more stock in the oppinions of people who accurately foresaw the debacle that was coming.

Even guys like Roubini (who has his head half screwed on correctly), who support government stimulus do so in an uninspiring fashion, making it sound like a hail-Mary pass, or desperate measure. Why then should we have confidence in the efficacy of massive stimulus when the very architects of the stimulus themselves admit they don't know it will work? We are just supposed to take their word that "we MUST do something"?

Unfortunately, we have evidence from past attempts at stimulus to raise at least some skepticism around current efforts. Japan, for example, has been gorging on stimulus for 20 years, yet that hasn't prevented a massive drop in asset prices.

By the way, I posted an article about "doing nothing" on my blog.

http://www.surkan.com

I also created a podcast, going into GREAT depth, about why governments are incapable of preventing severe deflation.

http://msurkan.podbean.com

biliruben

I generally only give significant credence to economists that that had some inkling that the crash was coming; Roubini, CR, The Economist, Krugman, MISH (who's in sniglet's camp), angry bear and the like. The vast majority think deflation and depression are a strong possibility.

I don't recall Cato or Tyler Cowen or any other libertarian who was pleading for more intervention and regulation of the mortgage and banking industry. They therefore deserve only my scorn, and I discount them out of hand. Libertarians occasionally have some good ideas, particularly on the social side, but their economics suck beans, imho.

biliruben

Tim - I read the relatively small provisions he put in this bill as either strongly related to jobs or infrastructure or both, and relatively uncontroversial. It's not like he's trying to jam universal health care in there (I can dream).

What in there do you disagree with?

The_Tim

biliruben wrote:

What in there do you disagree with?

Frankly I don't have the time to pick apart the thousands of line-items in the bill and figure out which ones are pushing policies that I agree or disagree with.

Which is my whole point... how many senators or representatives do you think really understand everything that has been shoved into this massive bill? I just think that it shouldn't be all crammed into one giant so-called "stimulus" bill and shoved down our throats under the specter of total financial destruction.

Charles Dean

Here is the thing though, is that if you don't cram it all into one bill and make a dramatic move, you then end up having 10-12 bills that take months in committees to move to the floor, then there's also much more pork added to each one.

The other thing is that if you make it one large package, then there are usually enough positive things in it that it is much more likely to pass. If an individual senator is happy with say, 70%, then the 30% they don't like is treasured by another senator. Then you end up debating everything on a micro level when we have a macro problem.

I would venture to guess that if you did a dozen different small bills it would cost us far more and it would also take 6 months to get them all passed. If that quickly even.

deejayoh

I heard one of the sponsors of the bill on NPR this morning (U.S. Rep. David Obey (D-WI), the chairman of the House Appropriations Committee) - they were asking him about the implications of not having any earmarks in there, and wasn't he concerned about misuse/poor use of the funds.

His responses were so snarky and unconcerned it floored me. He used the phrase "with all due respect" so many times it was clear he intended no respect at all.

http://www.npr.org/templates/story/stor ... =100304449

"We simply made a decision, which took about three seconds, not to have earmarks in the bill," he says. "And with all due respect, that's the least important question facing us on putting together this package."

Leaving out the earmarks does mean Congress will have less control over how the money is spent. But, Obey says, "So what? This is an emergency. We've got to simply find a way to get this done as fast as possible and as well as possible, and that's what we're doing."

That doesn't mean Congress will be responsible if the money is spent badly, he says.

"The person who spends the money badly will be responsible. We are simply trying to build as many protections in as possible," Obey says. "We have more oversight built into this package than any package in the history of man. If money is spent badly, we want to know about it so we can hold accountable the people who made that choice. And guess what? Regardless of what we do, there will be some stupid decisions made."

jon

There are numerous well regarded economists who disagree with the stimulus plan.

http://www.cbsnews.com/stories/2009/01/ ... 9532.shtml

"An unusual aspect of the recent debate in Washington is the lengths that supporters have gone to marginalize anyone who questions the so-called stimulus plan."

There seems to be a consistent pattern now to how debate is constructed now.

7. Keep the pressure on, with different tactics and actions, and utilize all events of the period for your purpose.

8. The threat is usually more terrifying than the thing itself.

9. The major premise for tactics is the development of operations that will maintain a constant pressure upon the opposition.

10. The price of a successful attack is a constructive alternative.

11. Pick the target, freeze it, personalize it, and polarize it.

http://blog.tonystruth.com/2008/10/07/s ... izers.aspx

Obama and Hillary Clinton both studied Alinsky closely, so it is no surprise that his tactics are being used to guide the national debates now.

biliruben

We've had over 2 trillion in tax-cuts over the last 8 years, and it's led us to the brink of disaster, with no cushion to soften to blow.

Anyone who claims more of the same is the solution, has to explain why tax cuts were an appalling failure so far, but will work in the future. Otherwise I take their recommendation as already proven to fail.

sniglet

biliruben wrote:

Anyone who claims more of the same is the solution, has to explain why tax cuts were an appalling failure so far, but will work in the future. Otherwise I take their recommendation as already proven to fail.

I completely agree. The policy of low central bank interest rates and unrestrained government spending was a big factor in causing this crisis, and continuing with more of the same is unconscionable. The government has been bailing out financial institutions, and taking on "toxic assets", for a year now to no avail (Fed rates have been extraordinarly low for a DECADE), yet this is precisely what the new administration proposes doing MORE of!

As I explain in my podcast on deflation, there is NOTHING the policy makers can do that will help, and the only thing they are accomplishing through increased spending and bail-outs is to prolong the crisis. Even doctors must sometimes recognize that they have reached the limits of their abilities, and let an ailment run its course.

P.S. My podcast outlining why deflation is inevitable is here:
http://msurkan.podbean.com