Yes, well, we had all that in 1929 -- and we've got all that now. It ain't enough all by itself.
Stimulus Package - Debate & Discussion
- Thread starter RightField
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Yes, well, we had all that in 1929 -- and we've got all that now. It ain't enough all by itself.
Ham Murabi
Plumbing the Depths
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So the smart thing is to take money out of the economy so government can spend it?
RightField
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RightField
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I think I can see it rising now!
Medikated
Ask, and it is given
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No layoffs at Trojan.....
tmleadr03
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"I won"
Keynesian economics have never been discredited (even though that seems for some reason to be an article of faith in some circles).
RightField
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Is the $4B going to ACORN in the stimulus bill part of Kenysian economics?
RightField
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Minority Leader John Boehner released a list of the--
Top 20 Fast Facts About the House Democrats' Trillion Dollar Spending Plan
You won't be hearing any of this from the Obamedia so pay particular attention. Your children and grandchildren will be paying for this:
1. The $825 billion package slated for a House vote later this week will exceed more than $1.1 trillion when adding in the interest ($300 plus billion) between 2009-2019 to pay for it.
2. The Capitol Hill Democrats’ plan includes funding for contraceptives; regardless of where anyone stands on taxpayer funded contraception, there is no question that it has NOTHING to do with the economy.
3. The legislation could open billions of taxpayer dollars to left-wing groups like the Association of Community Organizations for Reform Now (ACORN), which has been accused of voter fraud, is reportedly under federal investigation; and played a key role in the housing meltdown.
4. Here are just a few of the programs and projects that have been included in the House Democrats’ proposal:
· $650 million for digital TV coupons.
· $600 million for new cars for the federal government.
· $6 billion for colleges/universities – many which have billion dollar endowments.
· $50 million in funding for the National Endowment of the Arts.
· $44 million for repairs to U.S. Department of Agriculture headquarters.
· $200 million for the National Mall, including $21 million for sod.
5. The plan establishes at least 32 new government programs at a cost of over $136 billion. That means more than a third of this plan’s spending provisions are dedicated to creating new government programs.
6. The plan provides spending in at least 150 different federal programs, ranging from Amtrak to the Transportation Security Administration. Is this the “targeted” plan Democratic leaders promised?
7. Even though the legislation contains at least 152 separate spending proposals, the authors of the plan can only say that 34 have any chance at keeping or growing jobs.
8. Just one in seven dollars of an $18.5 billion expenditure on “energy efficiency” and “renewable energy programs” would be spent within the next 18 months.
9. The total cost of this one piece of legislation is almost as much as the annual discretionary budget for the entire federal government.
10. The House Democrats’ bill will cost each and every household $6,700 in additional debt, paid for by our children and grandchildren.
11. The bill provides enough spending – $825 billion – to give every man, woman, and child in America $2,700. $825 billion is enough to give every person in Ohio $72,000.
12. $825 billion is enough to give every person living in poverty in the United States $22,000.
13. Although the House Democrats’ proposal has been billed as a transportation and infrastructure investment package, in actuality only $30 billion of the bill – or three percent – is for road and highway spending. A recent study from the nonpartisan Congressional Budget Office found that only 25 percent of infrastructure dollars can be spent in the first year, making the one year total less than $7 billion.
14. Much of the funding within the House Democrats’ proposal will go to programs that already have large, unexpended balances. For example, the bill provides $1 billion for Community Development Block Grants (CDBG) – a program that already has $16 billion on hand. States also are sitting on some $9 billion in unused highway funds – funds that Congress is prepared to rescind later this year.
15. All board members of the “Accountability and Transparency Board” created by this legislation are appointees of the President; none will be appointed by Congress.
16. A scant 2.7 percent, or $22.3 billion of the overall package, is dedicated to small business tax relief.
17. The Joint Committee on Taxation estimates that the legislation increases by seven million the number of people who get a check back from the IRS that exceeds what they paid in payroll and income taxes.
18. The “Making Work Pay” tax credit at the center of the plan amounts to $1.37 a day, or about the price of a cup of coffee.
19. Almost one-third of the so-called “tax relief” in the House Democrats’ bill is spending in disguise, meaning that true tax relief makes up only 24 percent of the total package – not the 40 percent that President Obama had requested.
20. $825 billion is just the beginning – many Capitol Hill Democrats want to spend even more taxpayer dollars on their “stimulus” plan. In fact, the Chairman of the House Appropriations Committee, Rep. David Obey (D-WI), told Roll Call earlier this month, “I would not be surprised to see us go further on some of these programs down the line.”
Top 20 Fast Facts About the House Democrats' Trillion Dollar Spending Plan
You won't be hearing any of this from the Obamedia so pay particular attention. Your children and grandchildren will be paying for this:
1. The $825 billion package slated for a House vote later this week will exceed more than $1.1 trillion when adding in the interest ($300 plus billion) between 2009-2019 to pay for it.
2. The Capitol Hill Democrats’ plan includes funding for contraceptives; regardless of where anyone stands on taxpayer funded contraception, there is no question that it has NOTHING to do with the economy.
3. The legislation could open billions of taxpayer dollars to left-wing groups like the Association of Community Organizations for Reform Now (ACORN), which has been accused of voter fraud, is reportedly under federal investigation; and played a key role in the housing meltdown.
4. Here are just a few of the programs and projects that have been included in the House Democrats’ proposal:
· $650 million for digital TV coupons.
· $600 million for new cars for the federal government.
· $6 billion for colleges/universities – many which have billion dollar endowments.
· $50 million in funding for the National Endowment of the Arts.
· $44 million for repairs to U.S. Department of Agriculture headquarters.
· $200 million for the National Mall, including $21 million for sod.
5. The plan establishes at least 32 new government programs at a cost of over $136 billion. That means more than a third of this plan’s spending provisions are dedicated to creating new government programs.
6. The plan provides spending in at least 150 different federal programs, ranging from Amtrak to the Transportation Security Administration. Is this the “targeted” plan Democratic leaders promised?
7. Even though the legislation contains at least 152 separate spending proposals, the authors of the plan can only say that 34 have any chance at keeping or growing jobs.
8. Just one in seven dollars of an $18.5 billion expenditure on “energy efficiency” and “renewable energy programs” would be spent within the next 18 months.
9. The total cost of this one piece of legislation is almost as much as the annual discretionary budget for the entire federal government.
10. The House Democrats’ bill will cost each and every household $6,700 in additional debt, paid for by our children and grandchildren.
11. The bill provides enough spending – $825 billion – to give every man, woman, and child in America $2,700. $825 billion is enough to give every person in Ohio $72,000.
12. $825 billion is enough to give every person living in poverty in the United States $22,000.
13. Although the House Democrats’ proposal has been billed as a transportation and infrastructure investment package, in actuality only $30 billion of the bill – or three percent – is for road and highway spending. A recent study from the nonpartisan Congressional Budget Office found that only 25 percent of infrastructure dollars can be spent in the first year, making the one year total less than $7 billion.
14. Much of the funding within the House Democrats’ proposal will go to programs that already have large, unexpended balances. For example, the bill provides $1 billion for Community Development Block Grants (CDBG) – a program that already has $16 billion on hand. States also are sitting on some $9 billion in unused highway funds – funds that Congress is prepared to rescind later this year.
15. All board members of the “Accountability and Transparency Board” created by this legislation are appointees of the President; none will be appointed by Congress.
16. A scant 2.7 percent, or $22.3 billion of the overall package, is dedicated to small business tax relief.
17. The Joint Committee on Taxation estimates that the legislation increases by seven million the number of people who get a check back from the IRS that exceeds what they paid in payroll and income taxes.
18. The “Making Work Pay” tax credit at the center of the plan amounts to $1.37 a day, or about the price of a cup of coffee.
19. Almost one-third of the so-called “tax relief” in the House Democrats’ bill is spending in disguise, meaning that true tax relief makes up only 24 percent of the total package – not the 40 percent that President Obama had requested.
20. $825 billion is just the beginning – many Capitol Hill Democrats want to spend even more taxpayer dollars on their “stimulus” plan. In fact, the Chairman of the House Appropriations Committee, Rep. David Obey (D-WI), told Roll Call earlier this month, “I would not be surprised to see us go further on some of these programs down the line.”
the economic k.i.s.s. therum
the economic k.i.s.s. therum goes pretty much like this give me back my fucking tax dollars and ill decide how to spend it, not some fucking buracrat in washington dc or name your state capitol here. i dont want my money wastedon the national arts endowment fund that gave us such great works jesus coverd in shit, or a cow cut in thirds and put on display.
the economic k.i.s.s. therum goes pretty much like this give me back my fucking tax dollars and ill decide how to spend it, not some fucking buracrat in washington dc or name your state capitol here. i dont want my money wastedon the national arts endowment fund that gave us such great works jesus coverd in shit, or a cow cut in thirds and put on display.
RightField
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Economic Cures Are Like Booze for an Alcoholic: Caroline Baum
Commentary by Caroline Baum
Jan. 27 (Bloomberg) -- Someone returning to Earth from a yearlong sojourn in outer space could be excused for feeling disoriented.
After all, when said space traveler departed our fair planet, the U.S. economy was buckling under the weight of the burst housing bubble. The blame game was in full swing, with the villains ranging from Alan Greenspan and his easy money policies to consumers borrowing and spending beyond their means to financial institutions enabling profligate spending to a misallocation of capital to housing.
Fast forward one year, the crisis is still going strong, the villains are still under attack, yet something curious has happened: The policies and actions responsible for the economy’s illness are now being prescribed as cures.
How can that be?
Commentary by Caroline Baum
Jan. 27 (Bloomberg) -- Someone returning to Earth from a yearlong sojourn in outer space could be excused for feeling disoriented.
After all, when said space traveler departed our fair planet, the U.S. economy was buckling under the weight of the burst housing bubble. The blame game was in full swing, with the villains ranging from Alan Greenspan and his easy money policies to consumers borrowing and spending beyond their means to financial institutions enabling profligate spending to a misallocation of capital to housing.
Fast forward one year, the crisis is still going strong, the villains are still under attack, yet something curious has happened: The policies and actions responsible for the economy’s illness are now being prescribed as cures.
How can that be?
RightField
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Starting Over
Now that we’re here, with more homes for sale than buyers at the current price, what’s the government’s solution? Why, make it easier -- and cheaper -- to buy homes. The Fed has embarked on a program to buy $500 billion of mortgage bonds in the first half of 2009 in an attempt to lower actual mortgage lending rates, which fell to an all-time low of 5 percent earlier this month.
Rather than let the market “clear” -- or let prices seek their own level -- policy makers are stimulating artificial demand for housing to prevent prices from falling.
Welcome back to square one.
Then there’s the over-indebted consumer. From 1952 to 1998, the U.S. household sector was a net supplier of funds to the rest of the economy, acquiring more financial assets than debt, according to Paul Kasriel, chief economist at the Northern Trust Corp. in Chicago.
That changed in 1999, when the household sector’s “net acquisition of financial assets,” as it’s called in the Fed’s Flow of Funds Report, turned negative. Households were “net demanders of funds” until 2008, at which point the gap turned positive again, Kasriel says. “It wasn’t because they were acquiring more assets. It was because they couldn’t acquire as much debt.”
More Leverage
Banks, burned by their former excesses, have shut the spigots so even good credits are having trouble getting loans.
The government wants to ensure that consumers, whose spending accounts for about 70 percent of gross domestic product, can borrow and spend. This makes as little sense as using easy money and housing incentives to cure the effects of easy money and over-investment in housing.
“What policy makers on both sides of the Atlantic desire is to sustain household leverage and consumption at any price, when the only exit from the credit crisis involves a return to thrift by the overleveraged,” writes David Roche, president of Independent Strategy, a London consulting firm, in a Jan. 22 Wall Street Journal op-ed. “That cannot be achieved painlessly.”
And yet the federal government is seeking ways to make mortgage and other credit cheaper and more readily available, going further into debt in the process. Institutions deemed too big to fail, such as mortgage-finance giants Fannie Mae and Freddie Mac, were recruited in that effort. (That was after they were told to curb the growth of their portfolios and before they became wards of the state.)
Trade-Offs
These are short-sighted, short-term solutions being orchestrated at the expense of the economy’s long-term health, and I suspect most economists know it. (Politicians are a different story. Their knowledge of economics is generally confined to the area of trade: providing favors in return for campaign contributions.)
President Barack Obama’s crack economics team, including Larry Summers and Christina Romer, and Fed officials from Ben Bernanke on down have to understand that the problem of too much leverage can’t be fixed with more borrowing; that a misallocation of capital to housing can’t be cured with incentives to buy more homes; that consumers (and the nation) can’t spend their way to prosperity.
At least I hope they do.
Now that we’re here, with more homes for sale than buyers at the current price, what’s the government’s solution? Why, make it easier -- and cheaper -- to buy homes. The Fed has embarked on a program to buy $500 billion of mortgage bonds in the first half of 2009 in an attempt to lower actual mortgage lending rates, which fell to an all-time low of 5 percent earlier this month.
Rather than let the market “clear” -- or let prices seek their own level -- policy makers are stimulating artificial demand for housing to prevent prices from falling.
Welcome back to square one.
Then there’s the over-indebted consumer. From 1952 to 1998, the U.S. household sector was a net supplier of funds to the rest of the economy, acquiring more financial assets than debt, according to Paul Kasriel, chief economist at the Northern Trust Corp. in Chicago.
That changed in 1999, when the household sector’s “net acquisition of financial assets,” as it’s called in the Fed’s Flow of Funds Report, turned negative. Households were “net demanders of funds” until 2008, at which point the gap turned positive again, Kasriel says. “It wasn’t because they were acquiring more assets. It was because they couldn’t acquire as much debt.”
More Leverage
Banks, burned by their former excesses, have shut the spigots so even good credits are having trouble getting loans.
The government wants to ensure that consumers, whose spending accounts for about 70 percent of gross domestic product, can borrow and spend. This makes as little sense as using easy money and housing incentives to cure the effects of easy money and over-investment in housing.
“What policy makers on both sides of the Atlantic desire is to sustain household leverage and consumption at any price, when the only exit from the credit crisis involves a return to thrift by the overleveraged,” writes David Roche, president of Independent Strategy, a London consulting firm, in a Jan. 22 Wall Street Journal op-ed. “That cannot be achieved painlessly.”
And yet the federal government is seeking ways to make mortgage and other credit cheaper and more readily available, going further into debt in the process. Institutions deemed too big to fail, such as mortgage-finance giants Fannie Mae and Freddie Mac, were recruited in that effort. (That was after they were told to curb the growth of their portfolios and before they became wards of the state.)
Trade-Offs
These are short-sighted, short-term solutions being orchestrated at the expense of the economy’s long-term health, and I suspect most economists know it. (Politicians are a different story. Their knowledge of economics is generally confined to the area of trade: providing favors in return for campaign contributions.)
President Barack Obama’s crack economics team, including Larry Summers and Christina Romer, and Fed officials from Ben Bernanke on down have to understand that the problem of too much leverage can’t be fixed with more borrowing; that a misallocation of capital to housing can’t be cured with incentives to buy more homes; that consumers (and the nation) can’t spend their way to prosperity.
At least I hope they do.
RightField
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What's the news today?
IrezumiKiss
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We're waiting for you to tell us. Or I should say, to cut and paste for us.
RightField
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OK...
I wish to delegate some of this responsibility. Any passionate people out there who want to make sure our country goes in the right direction out there who are willing to lend a hand?
phrodeau
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And if so, what the hell were you doing the past eight years?
M
miles
Guest
IrezumiKiss
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M
miles
Guest
IrezumiKiss
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M
miles
Guest
IrezumiKiss
What's it like going through life knowing you're a waste of skin?
Post your kewl graphic again.
What's it like going through life knowing you're a waste of skin?
Post your kewl graphic again.
RightField
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OK....for Miles...this will make him smile...just the wisdom of it alone.
Good Morning, Suckers
By Peter Ferrara on 1.28.09 @ 6:10AM
Barack Obama and Congressional Democrats are playing the voters for fools with the so-called stimulus package. The massive $825 billion package is not even targeted on programs to stimulate the economy. Instead, it is laced with runaway government spending for increased welfare, overgrown bureaucracy, pork, political payoffs, and other waste. That runaway spending is causing record smashing deficits of $1.5 trillion or more, equivalent to over 50% of the entire federal budget for fiscal 2008.
For example, the "stimulus" package includes $50 million for the National Endowment of the Arts to help "the arts community throughout the United States." Wouldn't want our economy to get behind in the international arts competition. The government is going to borrow $50 million out of the private economy to spend on this, which will result in a net loss of economic output rather than a net gain.
Another $2.1 billion is for Head Start, another program not previously known for stimulating the economy. A further $2 billion is to be spent on Child Care Development Block Grants, which provide day care. We are going to revive economic growth through the federal government spending billions on babysitting, rather than tax cuts for capital investment. A similar initiative involves $120 million to finance part-time work for seniors in community service agencies.
Then there is $500 million to speed the processing of applications for Social Security disability claims. This has already created one net new job in the employment of a person within the Obama Administration assigned to figure out what this has to do with stimulating the economy.
Another $6 billion goes to college and universities. We already spend hundreds of billions on these schools, and such education provides valuable long-term benefits. But this is not a means to spark a booming economy in the short term. The same is true of the $13 billion in Title I grants "to provide extra academic support to help raise the achievement of students at risk of educational failure or to help all students in high-poverty schools meet challenging State academic standards," as the congressional report accompanying the bill explains. Ditto that for the $13 billion in IDEA, Part B State grants to help pay for "the excess costs of providing special education and related services to children with disabilities."
Then there is the effort to stimulate the economy by increasing welfare spending. There is $20 billion for increased food stamps, including lifting restrictions on how long welfare dependents can receive food stamp benefits. Another $1.7 billion is to be spent to help the homeless, not previously in our history a significant source of economic growth. Another $1 billion goes for the Low Income Home Energy Assistance program, to help low income families pay their heating bills, a worthy objective that has nothing to do with stimulating the economy. Still another billion goes to the Community Services Block Grant to support "employment, food, housing, health, and emergency assistance to low-income families and individuals." Another $200 million goes for senior nutrition programs, such as Meals on Wheels. Then there is an additional $200 million for AmeriCorps, to help satisfy "increased demand for services for vulnerable populations to meet critical needs in communities across the U.S." Another $5 billion is devoted to public housing. None of this increased welfare spending has anything to do with promoting economic growth. Rather, it retards growth by inducing more dependency on government.
Another $87 billion is to be spent on Medicaid, a welfare program already costing roughly $400 billion per year. Those funds would be spent in part on "family planning services," meaning contraception. Reagan created a 25-year economic boom in part by cutting top marginal income tax rates. Liberal Democrats are now going to try to do it by passing out condoms.
Medicaid is one of the major entitlement programs projected to explode to overwhelming costs in the future. Obama is assuring the more conservative Blue Dog Democrats that he will address runaway entitlement costs as soon as next month. But to start let's increase those costs by almost $100 billion right now.
Then there is the funding to maintain and expand bureaucracy and overall big government spending. The "stimulus" package includes $2.5 billion for the National Science Foundation, $2.0 billion for the National Park Service, $650 million for the U.S. Forest Service, $600 million for NASA, $800 million for AMTRAK, $276 million to the State Department to upgrade and modernize its information technology, $150 million for maintenance work at the Smithsonian Institution, $209 million for maintenance work for the Federal Agricultural Research Service, $44 million for repairs and improvements at the Washington, D.C. headquarters of the Department of Agriculture, and $245 million to upgrade the information technology of the Farm Service Agency. Borrowing money from the private sector to spend on these bureaucracies will not provide a boost to the economy. It will likely again produce a net loss of output.
A shocking provision provides $1.1 billion for so-called federal comparative effectiveness research in regard to health-care services. The congressional report explaining the stimulus bill says:
By knowing what works best and presenting this information more broadly to patients and healthcare professionals, those items, procedures, and interventions that are most effective to prevent, control, and treat health conditions will be utilized, while those that are found to be less effective and in some cases, more expensive, will no longer be prescribed.
But a government bureaucracy in Washington is never going to know what "items, procedures and interventions are most effective to prevent, control and treat health conditions" for each patient, regardless of how much federal research is done. This is what doctors are for. This bureaucratic initiative is really laying the foundation for the eventual health care rationing to be imposed under the new Obama "universal" health care entitlement program, which is coming soon. I told you so, in previous columns.
To call this spending economic recovery stimulus, however, is an abuse of the English language.
Another abuse is to be found in the $4.2 billion provided to the Neighborhood Stabilization Fund, which provides the funds to local governments to purchase and rehab vacant housing due to foreclosure. The congressional report accompanying the stimulus bill states, "Up to $750 million may be used for a competition for nonprofit entities to enhance the funding included under this heading through capitalization of the funds." Reportedly, this funding is intended to be siphoned off to ACORN, the far-left, rogue, lawbreaking organization prosecuted across the country in the past couple of years for voter fraud. ACORN has also used violent intimidation tactics in the past to pursue its goals, and was heavily involved in housing programs in the past that led to widespread bad loans.
Another $79 billion is to go the states to maintain their runaway government spending, particularly for such spendthrift jurisdictions as California, New York, New Jersey, and Massachusetts. High state government spending is also not a source of economic growth.
Then there are other items in the "stimulus" package that may involve desirable government spending, but do not involve stimulating the economy, and should be subject to the normal budget process. These include $3 billion for health care prevention and wellness programs, such as childhood immunizations and other state and local public health programs, $2.4 billion for projects demonstrating carbon capture technology, $17 billion for Pell Grants, $1 billion for Technology Education, $1.9 billion for the Energy Department for "basic research into the physical sciences," $650 million for digital TV coupons to help Americans upgrade to digital cable television, $100 million to reduce lead-based paint hazards for children in low income housing, $400 million for "habitat restoration projects" of the National Oceanic and Atmospheric Administration, $1.2 billion for summer jobs for youth, $2 billion for Superfund cleanup, and others.
Even the infrastructure spending in the stimulus bill will not produce economic recovery. When President Roosevelt directly employed workers in construction projects in the 1930s, unemployment had been as high as 25% for several years, and this seemed like the only way for some to get jobs. But unemployment today at 7.6% is below average for all postwar recessions, and it has only been over 7% for a few months.
The Congressional Budget Office recently estimated that only $26 billion of the $355 billion in the stimulus bill would be spent this year, and only $110 billion by the end of 2010. But that is not the real problem with infrastructure spending as a stimulus strategy. The bigger problem is that the government finances the spending by first borrowing the funding from the private sector, taking out of the economy what it later puts in, for no net gain overall. In the process, there is no change in the basic incentives governing economic activity, which do have the power to revive growth. And after the government make-work project ends, then what? Steve Entin best explained the fundamental economics of the problem yesterday in the Wall Street Journal, saying that to end a recession:
Ultimately, labor and capital must shift from declining industries and areas to expanding ones -- but intercepting people as they make the shifts and parking them in government projects for a year just delays the adjustment. And the debt and future taxes raised in the process become permanent burdens that shrink private output and income forever after.
A couple of weeks ago, I went over the data showing that even assuming Obama's claim that the stimulus package will create "or save" 3.7 million jobs, the cost would be over $200,000 per job. The government could just pay each worker $50,000 a year directly, and save taxpayers the rest. If we just count jobs actually created by the plan, then the cost is almost $400,000 per job. But under the analysis above, actually no new jobs will be created by this Keynesian stimulus bill on net.
What we want is private sector jobs privately financed in a booming economy, not make-work jobs financed by the public sector that end when the government gravy train ends. I have previously discussed what policies would get the economy booming again. Cuts in corporate tax rates, and in the tax rates on capital. Deregulation to allow the market to produce oil, natural gas, nuclear power, and more electricity, providing a low cost reliable energy supply for the rest of the economy, and a booming energy industry. A new strict price rule to guide monetary policy, focusing it only on maintaining stable prices rather than discretionary policy to guide the economy, which has only led to stock market and housing bubbles causing the current chaos. And restrained government spending to reduce government burdens on the economy.
These are the policies that Reagan adopted so successfully. But Obama does not include any of these proven policies in his stimulus bill, even though he claims he is only interested in what works, and not ideology, a dishonest spin.
Now what we have is not only a stimulus bill that will not work. What we have is a fraudulent bill that is not even focused on stimulus at all, but on runaway spending for liberal, big government spending programs, meaning more welfare, overgrown bureaucracy, pork, political payoffs, and waste.
Good Morning, Suckers
By Peter Ferrara on 1.28.09 @ 6:10AM
Barack Obama and Congressional Democrats are playing the voters for fools with the so-called stimulus package. The massive $825 billion package is not even targeted on programs to stimulate the economy. Instead, it is laced with runaway government spending for increased welfare, overgrown bureaucracy, pork, political payoffs, and other waste. That runaway spending is causing record smashing deficits of $1.5 trillion or more, equivalent to over 50% of the entire federal budget for fiscal 2008.
For example, the "stimulus" package includes $50 million for the National Endowment of the Arts to help "the arts community throughout the United States." Wouldn't want our economy to get behind in the international arts competition. The government is going to borrow $50 million out of the private economy to spend on this, which will result in a net loss of economic output rather than a net gain.
Another $2.1 billion is for Head Start, another program not previously known for stimulating the economy. A further $2 billion is to be spent on Child Care Development Block Grants, which provide day care. We are going to revive economic growth through the federal government spending billions on babysitting, rather than tax cuts for capital investment. A similar initiative involves $120 million to finance part-time work for seniors in community service agencies.
Then there is $500 million to speed the processing of applications for Social Security disability claims. This has already created one net new job in the employment of a person within the Obama Administration assigned to figure out what this has to do with stimulating the economy.
Another $6 billion goes to college and universities. We already spend hundreds of billions on these schools, and such education provides valuable long-term benefits. But this is not a means to spark a booming economy in the short term. The same is true of the $13 billion in Title I grants "to provide extra academic support to help raise the achievement of students at risk of educational failure or to help all students in high-poverty schools meet challenging State academic standards," as the congressional report accompanying the bill explains. Ditto that for the $13 billion in IDEA, Part B State grants to help pay for "the excess costs of providing special education and related services to children with disabilities."
Then there is the effort to stimulate the economy by increasing welfare spending. There is $20 billion for increased food stamps, including lifting restrictions on how long welfare dependents can receive food stamp benefits. Another $1.7 billion is to be spent to help the homeless, not previously in our history a significant source of economic growth. Another $1 billion goes for the Low Income Home Energy Assistance program, to help low income families pay their heating bills, a worthy objective that has nothing to do with stimulating the economy. Still another billion goes to the Community Services Block Grant to support "employment, food, housing, health, and emergency assistance to low-income families and individuals." Another $200 million goes for senior nutrition programs, such as Meals on Wheels. Then there is an additional $200 million for AmeriCorps, to help satisfy "increased demand for services for vulnerable populations to meet critical needs in communities across the U.S." Another $5 billion is devoted to public housing. None of this increased welfare spending has anything to do with promoting economic growth. Rather, it retards growth by inducing more dependency on government.
Another $87 billion is to be spent on Medicaid, a welfare program already costing roughly $400 billion per year. Those funds would be spent in part on "family planning services," meaning contraception. Reagan created a 25-year economic boom in part by cutting top marginal income tax rates. Liberal Democrats are now going to try to do it by passing out condoms.
Medicaid is one of the major entitlement programs projected to explode to overwhelming costs in the future. Obama is assuring the more conservative Blue Dog Democrats that he will address runaway entitlement costs as soon as next month. But to start let's increase those costs by almost $100 billion right now.
Then there is the funding to maintain and expand bureaucracy and overall big government spending. The "stimulus" package includes $2.5 billion for the National Science Foundation, $2.0 billion for the National Park Service, $650 million for the U.S. Forest Service, $600 million for NASA, $800 million for AMTRAK, $276 million to the State Department to upgrade and modernize its information technology, $150 million for maintenance work at the Smithsonian Institution, $209 million for maintenance work for the Federal Agricultural Research Service, $44 million for repairs and improvements at the Washington, D.C. headquarters of the Department of Agriculture, and $245 million to upgrade the information technology of the Farm Service Agency. Borrowing money from the private sector to spend on these bureaucracies will not provide a boost to the economy. It will likely again produce a net loss of output.
A shocking provision provides $1.1 billion for so-called federal comparative effectiveness research in regard to health-care services. The congressional report explaining the stimulus bill says:
By knowing what works best and presenting this information more broadly to patients and healthcare professionals, those items, procedures, and interventions that are most effective to prevent, control, and treat health conditions will be utilized, while those that are found to be less effective and in some cases, more expensive, will no longer be prescribed.
But a government bureaucracy in Washington is never going to know what "items, procedures and interventions are most effective to prevent, control and treat health conditions" for each patient, regardless of how much federal research is done. This is what doctors are for. This bureaucratic initiative is really laying the foundation for the eventual health care rationing to be imposed under the new Obama "universal" health care entitlement program, which is coming soon. I told you so, in previous columns.
To call this spending economic recovery stimulus, however, is an abuse of the English language.
Another abuse is to be found in the $4.2 billion provided to the Neighborhood Stabilization Fund, which provides the funds to local governments to purchase and rehab vacant housing due to foreclosure. The congressional report accompanying the stimulus bill states, "Up to $750 million may be used for a competition for nonprofit entities to enhance the funding included under this heading through capitalization of the funds." Reportedly, this funding is intended to be siphoned off to ACORN, the far-left, rogue, lawbreaking organization prosecuted across the country in the past couple of years for voter fraud. ACORN has also used violent intimidation tactics in the past to pursue its goals, and was heavily involved in housing programs in the past that led to widespread bad loans.
Another $79 billion is to go the states to maintain their runaway government spending, particularly for such spendthrift jurisdictions as California, New York, New Jersey, and Massachusetts. High state government spending is also not a source of economic growth.
Then there are other items in the "stimulus" package that may involve desirable government spending, but do not involve stimulating the economy, and should be subject to the normal budget process. These include $3 billion for health care prevention and wellness programs, such as childhood immunizations and other state and local public health programs, $2.4 billion for projects demonstrating carbon capture technology, $17 billion for Pell Grants, $1 billion for Technology Education, $1.9 billion for the Energy Department for "basic research into the physical sciences," $650 million for digital TV coupons to help Americans upgrade to digital cable television, $100 million to reduce lead-based paint hazards for children in low income housing, $400 million for "habitat restoration projects" of the National Oceanic and Atmospheric Administration, $1.2 billion for summer jobs for youth, $2 billion for Superfund cleanup, and others.
Even the infrastructure spending in the stimulus bill will not produce economic recovery. When President Roosevelt directly employed workers in construction projects in the 1930s, unemployment had been as high as 25% for several years, and this seemed like the only way for some to get jobs. But unemployment today at 7.6% is below average for all postwar recessions, and it has only been over 7% for a few months.
The Congressional Budget Office recently estimated that only $26 billion of the $355 billion in the stimulus bill would be spent this year, and only $110 billion by the end of 2010. But that is not the real problem with infrastructure spending as a stimulus strategy. The bigger problem is that the government finances the spending by first borrowing the funding from the private sector, taking out of the economy what it later puts in, for no net gain overall. In the process, there is no change in the basic incentives governing economic activity, which do have the power to revive growth. And after the government make-work project ends, then what? Steve Entin best explained the fundamental economics of the problem yesterday in the Wall Street Journal, saying that to end a recession:
Ultimately, labor and capital must shift from declining industries and areas to expanding ones -- but intercepting people as they make the shifts and parking them in government projects for a year just delays the adjustment. And the debt and future taxes raised in the process become permanent burdens that shrink private output and income forever after.
A couple of weeks ago, I went over the data showing that even assuming Obama's claim that the stimulus package will create "or save" 3.7 million jobs, the cost would be over $200,000 per job. The government could just pay each worker $50,000 a year directly, and save taxpayers the rest. If we just count jobs actually created by the plan, then the cost is almost $400,000 per job. But under the analysis above, actually no new jobs will be created by this Keynesian stimulus bill on net.
What we want is private sector jobs privately financed in a booming economy, not make-work jobs financed by the public sector that end when the government gravy train ends. I have previously discussed what policies would get the economy booming again. Cuts in corporate tax rates, and in the tax rates on capital. Deregulation to allow the market to produce oil, natural gas, nuclear power, and more electricity, providing a low cost reliable energy supply for the rest of the economy, and a booming energy industry. A new strict price rule to guide monetary policy, focusing it only on maintaining stable prices rather than discretionary policy to guide the economy, which has only led to stock market and housing bubbles causing the current chaos. And restrained government spending to reduce government burdens on the economy.
These are the policies that Reagan adopted so successfully. But Obama does not include any of these proven policies in his stimulus bill, even though he claims he is only interested in what works, and not ideology, a dishonest spin.
Now what we have is not only a stimulus bill that will not work. What we have is a fraudulent bill that is not even focused on stimulus at all, but on runaway spending for liberal, big government spending programs, meaning more welfare, overgrown bureaucracy, pork, political payoffs, and waste.
RightField
Literotica Guru
- Joined
- Jun 30, 2003
- Posts
- 9,359
Here's another:
The European Social Welfare State Bill [Jim Manzi]
Let’s start with some basics about the stimulus bill (H.R. 1: the American Recovery and Reinvestment Act of 2009). According to my quick read (so all numbers here are subject to revision) of the Congressional Budget Office (CBO) analysis, the total estimated cost of the proposal is $816 billion over ten years. This is composed of $604 billion of extra spending, plus $212 billion of less money collected in taxes than had been planned. That’s a whole lot of money, even for the U.S. economy.
First, consider when the $604 billion is projected to be spent over the next ten years (all spending timing in Fiscal Years):
Only about 1/7th of the outlays occur in the current fiscal year. Substantially more of the outlays occur in 2012 or later than occur in 2009. How is this stimulus spending?
One argument is that we expect this to be a very long-lasting recession, so we’re going to need this stimulus spending in 2011, 2012, and so on. But, consider that if we’re heading into a Japan 1990s style decade-long slowdown, this kind of spending is exactly what they tried, and it sure didn’t work in that case.
So, if this is a “normal” length recession, the spending bill will have the classic problem that fiscal stimulus does—namely, it comes too late to do much good, but right on time to help stoke inflation and mis-allocation of resources that are suddenly in high demand as the economy enters a recovery. And if this is a very long-lasting recession, more like a U.S. 1930s Depression or Japan 1990s “lost decade”, then the problem is so long-lasting that we’re not really debating a stimulus bill, we’re debating a near-permanent shift of control of resources to the government, which doesn’t exactly have a sterling track record of success. Only if this is a “Goldilocks-length” recession of more than 1-2 years, but less than a decade (which is a pretty hard beast to find in modern American history) would this temporal spending pattern turn out to be wise.
Compare this to the projected temporal distribution of proposed tax reductions:
There is a huge debate among economists about the “multiplier,” which is basically an estimate of how much economic growth bang we get per buck of deficit spending in a recession, and about the effectiveness of fiscal stimulus generally. Keynesian theory is that the multiplier should be greater for government spending than for tax reductions. The debate about this question among economists has a lot more in common with a debate at a meeting of the Modern Language Association (if you were to just add a bunch of data and subtract the intermittent urbane charm) than it does with a meeting of the American Physical Society; which is to say that it’s long on theory and the use of analysis as rhetoric, but pretty short on empirical demonstrations of causal models that can reliably predict the impact of any of these proposals.
That said, at least the tax reductions occur pretty early, and it’s hard to see a whole of multiplying going on for spending that happens several years from now. Of course, these tax cuts weren’t exactly developed with a copy of Hayek in one hand and a calculator in the other. They are mostly a combination of disguised redistribution, social welfare and environmental spending disguised as tax credits, and the kind of rigged changes to investment expensing that have made the U.S. corporate tax the shining model of effectiveness and fairness that it is today. And for whatever it’s worth, academic economists seem to agree with the everyday observation that the 2008 tax rebates didn’t seem to head off many problems at the pass.
Next, consider how the $604 billion of outlays would be spent.
It’s easy to go through a huge proposal and find what seem like fairly ridiculous line items, so I’ll focus on as comprehensive a view as I can of the spending. The CBO reviews each Title (basically, spending area) of the bill, and calls out major items within each Title. Here are all the items that I saw them identify as individual programs with more than $10 billion of projected outlays, in the order that they call them out:
I tried to go quickly through the spending for all categories and crudely map them to the OECD classification system that allows for the comparison of spending across governments in the developed world. The huge categories of spending under this bill that I could map to categories other than “General Spending” are in Social Protection (~$90 billion), Education (~$90 billion) and Environment (~$55 billion). Interestingly, Defense represents only about 3% of the spending in the bill (as opposed to 12% of U.S. government spending overall, or about 3% of French overall government spending as a point of comparison) and Public Safety represents only about 1% of spending in the bill (as opposed to about 6% of U.S. government spending overall, or about 2% of French government spending overall). In other words, the net effect of this bill is to shift the distribution of U.S. government spending as a whole away from defense and public safety and toward social programs: for good or ill, to make the U.S. into more of a European-style social welfare state. Because the amount of spending is so huge, this will be a material, not notional, shift. Eventually, we will emerge from this recession/depression/whatever it’s going to be. When that happens, is this really the kind of government we’re going to want?
And this change is unlikely to be temporary. Imagine two illustrative scenarios. First, the U.S. goes through a fairly standard recession and emerges by about late 2010 into a recovery. The government, subject to normal grumbling, is mostly given credit for handling things the right way. Obama is reelected in 2012 and Democrats retain control of Congress. Or second, we enter and new Depression, or more likely, a Japan of the 1990s long-term recession. Unemployment is stuck well above 10%. The mood of the country is deeply pessimistic, and government programs are a lifeline for a good chunk of the population. In which of these two scenarios is it realistic to expect that the 2009 increases to food stamps, unemployment compensation, healthcare benefits or HUD housing assistance will really be rolled back in 2012-2015? Neither, as far as I can see.
And it is this kind of spending that will happen first, and be so locked in, even if we change course in the next couple of years. It’s hard to spend money on roads and bridges extremely quickly unless you get really reckless and inefficient (and we’ll be seeing a bunch of that, too). After cutting taxes the next-fastest thing to do is cut checks. As an illustration, compare the projected timing of outlays for two categories of proposed spending, each of which is projected to be about $45 billion: (1) “Highway Construction” plus “Other Transportation”, which I’ve labeled as Infrastructure, and (2) “Assistance for Unemployed Workers and Struggling Families”, which I’ve labeled as Unemployment:
Or consider the gigantic—as in close to $100 billion—amount of extra federal money these guys are proposing to spend on education. Study after study has shown that, at a minimum, there is no clearly demonstrable educational benefit from more aggregate spending on schools. Unless you adopt the hard-core Keynesian doctrinaire perspective that it literally doesn’t matter what we spend money on, this will be wasted. We will spend $100 billion on schools and not expect kids to read, write or do math any better. How can this be wise? Do we really want to borrow (because that’s where 100% of this money is going to come from) this much money from our kids for that?
Nobody wants to repeat the mistakes of Herbert Hoover. This is a healthy concern. Hopefully we will be able to restrain ourselves from passing trade restrictions. Trying to balance the budget or restrict the money supply right now is almost certainly a fairly crazy experiment to run. We’re going to be running a big deficit. But this proposal is a disaster.
The European Social Welfare State Bill [Jim Manzi]
Let’s start with some basics about the stimulus bill (H.R. 1: the American Recovery and Reinvestment Act of 2009). According to my quick read (so all numbers here are subject to revision) of the Congressional Budget Office (CBO) analysis, the total estimated cost of the proposal is $816 billion over ten years. This is composed of $604 billion of extra spending, plus $212 billion of less money collected in taxes than had been planned. That’s a whole lot of money, even for the U.S. economy.
First, consider when the $604 billion is projected to be spent over the next ten years (all spending timing in Fiscal Years):
Only about 1/7th of the outlays occur in the current fiscal year. Substantially more of the outlays occur in 2012 or later than occur in 2009. How is this stimulus spending?
One argument is that we expect this to be a very long-lasting recession, so we’re going to need this stimulus spending in 2011, 2012, and so on. But, consider that if we’re heading into a Japan 1990s style decade-long slowdown, this kind of spending is exactly what they tried, and it sure didn’t work in that case.
So, if this is a “normal” length recession, the spending bill will have the classic problem that fiscal stimulus does—namely, it comes too late to do much good, but right on time to help stoke inflation and mis-allocation of resources that are suddenly in high demand as the economy enters a recovery. And if this is a very long-lasting recession, more like a U.S. 1930s Depression or Japan 1990s “lost decade”, then the problem is so long-lasting that we’re not really debating a stimulus bill, we’re debating a near-permanent shift of control of resources to the government, which doesn’t exactly have a sterling track record of success. Only if this is a “Goldilocks-length” recession of more than 1-2 years, but less than a decade (which is a pretty hard beast to find in modern American history) would this temporal spending pattern turn out to be wise.
Compare this to the projected temporal distribution of proposed tax reductions:
There is a huge debate among economists about the “multiplier,” which is basically an estimate of how much economic growth bang we get per buck of deficit spending in a recession, and about the effectiveness of fiscal stimulus generally. Keynesian theory is that the multiplier should be greater for government spending than for tax reductions. The debate about this question among economists has a lot more in common with a debate at a meeting of the Modern Language Association (if you were to just add a bunch of data and subtract the intermittent urbane charm) than it does with a meeting of the American Physical Society; which is to say that it’s long on theory and the use of analysis as rhetoric, but pretty short on empirical demonstrations of causal models that can reliably predict the impact of any of these proposals.
That said, at least the tax reductions occur pretty early, and it’s hard to see a whole of multiplying going on for spending that happens several years from now. Of course, these tax cuts weren’t exactly developed with a copy of Hayek in one hand and a calculator in the other. They are mostly a combination of disguised redistribution, social welfare and environmental spending disguised as tax credits, and the kind of rigged changes to investment expensing that have made the U.S. corporate tax the shining model of effectiveness and fairness that it is today. And for whatever it’s worth, academic economists seem to agree with the everyday observation that the 2008 tax rebates didn’t seem to head off many problems at the pass.
Next, consider how the $604 billion of outlays would be spent.
It’s easy to go through a huge proposal and find what seem like fairly ridiculous line items, so I’ll focus on as comprehensive a view as I can of the spending. The CBO reviews each Title (basically, spending area) of the bill, and calls out major items within each Title. Here are all the items that I saw them identify as individual programs with more than $10 billion of projected outlays, in the order that they call them out:
- $20.0 billion to increase the maximum benefit under the Supplemental Nutrition Assurance Program (i.e., Food Stamps)
- $18.5 billion for energy efficiency and renewable energy programs
- $20.4 billion for programs administered by the Department of health and Human Services
- $20.0 billion to renovate elementary and secondary schools
- $17.6 billion for Pell grants and other student financial assistance at post-secondary institutions
- $29.1 billion for other elementary and secondary educational programs
- $30.0 billion for highway construction
- $13.1 billion for other transportation programs
- $11.2 billion for housing assistance programs administered by HUD
- $19.5 billion (minimum, could be higher, as per Title XIII) for education grants to states
- $27.1 billion for increase unemployment benefits
- $13.3 billion to increase health insurance for unemployed workers
- $11.1 billion for “Other Unemployment Compensation”
- $20.2 billion for Medicaid and Medicare incentive payments to encourage providers to improve healthcare IT
I tried to go quickly through the spending for all categories and crudely map them to the OECD classification system that allows for the comparison of spending across governments in the developed world. The huge categories of spending under this bill that I could map to categories other than “General Spending” are in Social Protection (~$90 billion), Education (~$90 billion) and Environment (~$55 billion). Interestingly, Defense represents only about 3% of the spending in the bill (as opposed to 12% of U.S. government spending overall, or about 3% of French overall government spending as a point of comparison) and Public Safety represents only about 1% of spending in the bill (as opposed to about 6% of U.S. government spending overall, or about 2% of French government spending overall). In other words, the net effect of this bill is to shift the distribution of U.S. government spending as a whole away from defense and public safety and toward social programs: for good or ill, to make the U.S. into more of a European-style social welfare state. Because the amount of spending is so huge, this will be a material, not notional, shift. Eventually, we will emerge from this recession/depression/whatever it’s going to be. When that happens, is this really the kind of government we’re going to want?
And this change is unlikely to be temporary. Imagine two illustrative scenarios. First, the U.S. goes through a fairly standard recession and emerges by about late 2010 into a recovery. The government, subject to normal grumbling, is mostly given credit for handling things the right way. Obama is reelected in 2012 and Democrats retain control of Congress. Or second, we enter and new Depression, or more likely, a Japan of the 1990s long-term recession. Unemployment is stuck well above 10%. The mood of the country is deeply pessimistic, and government programs are a lifeline for a good chunk of the population. In which of these two scenarios is it realistic to expect that the 2009 increases to food stamps, unemployment compensation, healthcare benefits or HUD housing assistance will really be rolled back in 2012-2015? Neither, as far as I can see.
And it is this kind of spending that will happen first, and be so locked in, even if we change course in the next couple of years. It’s hard to spend money on roads and bridges extremely quickly unless you get really reckless and inefficient (and we’ll be seeing a bunch of that, too). After cutting taxes the next-fastest thing to do is cut checks. As an illustration, compare the projected timing of outlays for two categories of proposed spending, each of which is projected to be about $45 billion: (1) “Highway Construction” plus “Other Transportation”, which I’ve labeled as Infrastructure, and (2) “Assistance for Unemployed Workers and Struggling Families”, which I’ve labeled as Unemployment:
Or consider the gigantic—as in close to $100 billion—amount of extra federal money these guys are proposing to spend on education. Study after study has shown that, at a minimum, there is no clearly demonstrable educational benefit from more aggregate spending on schools. Unless you adopt the hard-core Keynesian doctrinaire perspective that it literally doesn’t matter what we spend money on, this will be wasted. We will spend $100 billion on schools and not expect kids to read, write or do math any better. How can this be wise? Do we really want to borrow (because that’s where 100% of this money is going to come from) this much money from our kids for that?
Nobody wants to repeat the mistakes of Herbert Hoover. This is a healthy concern. Hopefully we will be able to restrain ourselves from passing trade restrictions. Trying to balance the budget or restrict the money supply right now is almost certainly a fairly crazy experiment to run. We’re going to be running a big deficit. But this proposal is a disaster.
RightField
Literotica Guru
- Joined
- Jun 30, 2003
- Posts
- 9,359
Cover your asses, the government is coming to ream you.
