The Obama Administration, seeing momentum slip away from the stimulus package, has launched a political offensive to try to regain the high ground in this debate. The President has been wheeled out repeatedly and is now taking on Republican arguments more forcefully. Here he is at the Energy Department, where he slammed the failed and discredited Republican theory that the panacea for all problems are tax cuts. Can you imagine Republican Senators now decrying pork, when they have been larding the system up for eight years. Hypocrisy has risen to new heights within the Republican caucus. The Democratic leadership will push to pass a bill tonight. The bill can be improved in several ways, but I cannot remember the last “perfect” bill that Congress passed.
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Bill Manzi.com 
Your Honor,
I admire your outrage at us hypocritical Republicans. I said, during the Bush administration, the republicans have failed in many areas. The big one was trying to act like Democrats; tax and spend, power grab,give away and hypocritical.
Geeze, I thought you guys would have been jumping with joy at your win so you would not have to put up with those Bush years.
But, lets work on the merits of this bill instead of living in the Bush era.
I am going to list a few of the items in this bill. Please tell me how money gets into consumer pockets so the can go back to be consumers.
1. 50 million for NEA
2. 15 billion for boosting Pell Grants.
3. 4 billion for job training programs
4. 1 billion for community-development block grants
5. 4.2 billion for “neighborhood stabilization activities” (think ACORN)
6. 650 million for digital tv coupons;
7. 90 million to educate “vulnerable populations”?????
8. 462 million Center for Disease Control for renovation.
9. 357 million National Institute of Standards for renovations
10. 427 million for The Oceanic and Atmospheric Administration for…you guessed it renovation.
Just describe a path so it gets into the pocket of workers.
There is more. But, that’s for later.
The point is if the “stimulus bill doesn’t stimulate where do you get more?
Jules
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Your Honor,
Another input from the CBO.
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.”
So what’s the rush. Congress has to make this pig into a silk purse. (If that is possible)
Jules
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Mr. Mayor:
Amazing that the President is the only one who appears able to put a forceful voice to the subject. Especially with all the arguments that have been handed them by the Republicans.
Maybe he should take time out of his schedule and teach a public speaking class to the rest of the Democratic caucus …
-FM
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I would have proposed two rates, but check out this economic patriot.
From the NY Times OpEd, “Please Raise My Taxes”
-FM
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Jules:
The CBO letter is being misinterpreted by multiple news sources (I know you’re surprised). It suggests that GDP goes up in the early years, drops off, then goes negative in the later years (because the stimulus spending is over), but they haven’t really attempted to estimate the investment sides of the House / Senate proposals to see if GDP picks up in those later years. At least, that’s my read. See if you come to the same conclusion.
Click to access Gregg.pdf
Excerpts below …
“CBO has developed a range of estimates of the effects of the Senate legislation on
GDP and employment that encompasses a majority of economists’ views.
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. By the end of 2011, the Senate
legislation would increase GDP by 0.4 percent to 1.2 percent, would raise
employment by 0.6 million to 1.9 million jobs, and would lower the
unemployment rate by 0.3 percentage points to 1.0 percentage point.”
“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.”
“CBO has not estimated the
macroeconomic effects of the stimulus proposals year by year beyond 2011.”
-FM
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Fred,
No one knows how to end this thing. There are “experts” to support any view, pro or con.
Your long explaination above does not address the make up of the “stimulus” plan. What will provide money to the population so they feel confident to return to the markets. Success here would resuscitate business to expand again, hiring people back. Etc.
Now what I want to know is what in the “stimulus” bill would provide the requisite flow of money to the population and eventually business?
The items in my first entry do not appear to meet the immediate needs.
So I ask again, is there anything in line items in the bill to provide immediate flow of cash to the folks?
As I write this there may be a compromise in the works.
Your entry from the OMB is incomprehensible to me.
Our discussion may be better continued after we see what’s in the final Senate bill.
Have a good weekend.
Jules
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Jules:
To address your list …
All the items that list “renovation” will employ architects, construction workers, and materials suppliers to upgrade facilities.
DTV Coupon program provides a $40 subsidy for people to run to Best Buy and pick up a $60 digital TV converter box for the now June 17 analog shutoff date.
Job training/Pell grants are future investments, with the hope that graduates get jobs that will either pay taxes or pay higher taxes, while stimulating the employment of teachers and the rest of the education chain.
Anything that doesn’t get saved or employed for debt reduction by consumers is spent.
It’s going to be a long time before your resuscitation of business: you probably wouldn’t want to spend the amount of money it will take to do that (and not be socialism).
This is a stabilizing action with some near term GDP growth potential. That’s what the incomprehensible CBO letter says. This is an attempt to stabilize the patient.
If we do nothing, GDP falls with the shrinking economy, more people go unemployed, stop paying taxes and buying goods, and we enter 1930 all over again.
-FM
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Fred,
There is nothing that will inject substantial money into the general population to be meaningful.
Those explanations above are bogus and in them selves will not contribute anything to the injection needed.
Anything that may help is far down the line.
Pell grants will generate a population with substantial school debt. Can you imagine graduating, getting married and beginning life with combined school debt of 60 to 100 thousand dollars. What do you buy cars, houses and refrigerators with at that debt?
The renovations are very local and will not contribute to the country wide problem. Beside these are renovations only.
If this thing gets over-larded there might not be enough to change the economy.
Can we afford a third trillion dollar bailout?
Besides, Fred, what happens when inflation catches up with us?
Jules
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Jules:
You’re a funny guy sometimes: at times, you say that we’re not spending enough money to be meaningful, and if we try and spend too much, we’re socialists. Which is it, my right honorable friend?
Let me try and repeat: in my opinion, only backed up by my extensive training in economics and 30’s history (consisting of reading for the last two months, so take it as a complete amateur’s opinion) there is no amount of stimulus money that will be applied by this bill or combination of succeeding bills that will replace what has been lost so far in this downturn. That would be close to 3 trillion right now, and we’re not done with booking the losses. Did you know, for instance, that 8 banks have failed so far this year?
You’re picking on decimal points, as are your right honorable friends. The choice is to do something, or nothing. Your friends have tried the tax cut route, twice, with little to no effect. I’ve tried to explain why that is: most economists suggest that if you give direct tax cuts, it will either be saved, or applied to debt. Both actions are reasonable consumer actions, good for the economy in the long term. But not so good in the short term, because the money doesn’t stimulate anything. Consumers are already deeply in debt, and the evidence is that they will not take on more debt, because the ATM that used to be their home equity has closed for renovations, along with job losses and general job market instability.
So, consumers won’t spend us out of this on their own. Companies won’t expand and start building goods again until there is demand (hey, a return to demand side instead of supply side economics … who would have thought?). Who, pray tell, is left?
Yep. Good old Uncle Sam. Just like in Iraq, he’s going to swoop in with C-130s loaded with pallets stacked with C-notes, and drop them around the economy. Construction, infrastructure, science, etc. Direct spending on private sector jobs to make sure the money is SPENT, not SAVED. The wider the spread, the better the stimulus. As long as it creates jobs or save ones that would be lost. Keynes suggested in the 30’s that it would be a valid stimulus to pay people to dig holes, and then pay them to fill them in. Whatever it takes to get some work flowing again, people paying for food and housing, and living.
In fact, just to put in a plug, this is the vast danger of tax cuts that concentrate wealth at the top: the wealthy cannot or will not spend enough to make up for what the rest of us collectively can spend, so when you hear economists talk about wealth being concentrated at levels not seen since 1928, you can give yourself a big wet sloppy kiss for supporting the party that made it happen.
There are economists out there right now saying that the amount that is proposed is not enough, so you’re right, in my opinion, this will not be the last stimulus bill we see. But to say it’s “overlarded”, without measuring what the content does, is simply silly. And that’s what your good friends in Congress are doing. They suggest that many more jobs can be created for half as much, if only we got tax cuts as the only stimulus. I don’t think they even submitted that one to CBO for a score, did they? Can you guess why?
The CBO letter that you didn’t penetrate tells you approximately what is expected to happen: a bump in GDP, a creation of a few millions of jobs, for a few years running. That’s what 800 billion buys in a economy as large as ours. In fact, if you can only understand the first table presented in that letter, you’ll see how “stimulative” dollars spent in certain areas are. Go ahead, I’ll wait.
Don’t worry about inflation, my friend. Deflation is far, far more serious, and if not controlled, will tip us into a depression that might make the ’30s look like a picnic. Once that’s stabilized, if inflation occurs, the standard measure is to raise interest rates (convenient, since right now, they’re sitting at zero, and there’s nowhere to go but up). The Fed has already emptied its chambers. Anyway, the same Volcker that made it work for Reagan in ’82 is now advising Obama, if we ever get to that point.
If we decide to stop stimulating, then I think we simply tip into Depression and maybe a larger one than the last one, since the economy is so much bigger, and so much more interconnected. I hope it doesn’t take a world war to get us out again. It’s beyond credibility to suggest we take the risk. But don’t worry. There’s still a decent chance we’ll end up there, even after stimulus is tried, so your party’s role in history will be assured. Again.
You ask decent questions for someone who hasn’t studied the situation, and I may have asked some of the same questions two months ago. But after reading, I’m beginning to understand what the various parties are saying, and where the flaws in the arguments are. You should, too.
-FM
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Jules:
By the way, since you didn’t answer on the last thread about what the “stimulus” we applied to Iraq bought us, here’s a nice article from the NY Times for you.
-FM
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Fred,
To borrow from Jules:
Your long explanation above does WAY TOO MUCH to address the make up of the “stimulus” plan and is WAY too descriptive for the bush cling-ons (not to be confused with used toilet paper) to follow…
Please dumb down your rhetoric so that the silent majority honorable right (that Jules speaks so eloquently on behalf of) may join us in un-intelligent foxsnooze type of sound bites discussion….
We now return you to your regular broadcast. 🙂
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Jim:
There’s a level I find it hard to get under, that’s fer shure. Damn that public school edumacation.
But don’t pick too much on my new friend Jules, he’s helping us all sharpen our arguments, and he’s got his sane moments, too.
-FM
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Interesting read on what the hypocritical Republicans seemed to have forgotten. I wonder if weeping/whining Linsey Graham voted for this budget…
“Republicans Indulging in Pork Along With Power”
http://74.125.47.132/search?q=cache:w1EI1i03pXwJ:www.commondreams.org/headlines03/1208-11.htm+%22list+of+republican+earmarks%22&hl=en&ct=clnk&cd=1&gl=us
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FM,
I should clarify my earlier statement: I have no doubts about Jules’ eloquence and education. It’s just those attributes combined with his politics that I just can’t grasp… 😉
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Hey,
Talk about piling it on. If I remove the insult and incomprehensible commentary, there is nothing left.
So let’s get back on track here. What should the stimulus bill contain to save the economy.
A couple of rules. Boil down the on-line stuff and summarize.
Keep it short. 30 lines down loaded from the net doesn’t present comprehensive logic. I know you guys are working on the BS baffles brains theory.
Bush is gone. Let’s move on. I say this knowing that this fact may leave you guys without any ammunition.
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Jules:
I don’t know how to move on under your ruleset. If I try to remove the thinking parts, I’ll just start signing blank posts “-FM”.
-FM
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Jim:
I understand: it’s always baffled me how anyone that isn’t in the top 10% income bracket votes Republican, either. That’s one of the things I’m still trying to figure out. And just when I think I have it close to pinned down, Jules throws me a spitter.
-FM
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