Stimulus proof?
Talking to conservatives, I often hear about Obama’s “failed stimulus.” They say it’s obviously failed because he, the president, promised that unemployment would stay below 9%. And it has subsequently reached 9% and more. Ergo, it is a failure. And also bankrupting us through debt, yadda, yadda. Worst president ever, etc.,etc. If you talk to your conservative friends (or just watch Fox News) you’ve no doubt heard the same thing.
And of course I think it’s totally wrong.
First of all, this “promise” wasn’t a promise; it was a projection. The difference is outlined here.
Second, just because the projection was wrong doesn’t mean the stimulus didn’t work. The CBO says it did. Noteworthy economists say it did. I just read about a couple more economists who say they can prove it–including one who was John McCain’s economic advisor.
The stimulus wasn’t big enough and contained too many tax cuts and not enough direct spending. That’s why we’re still struggling more than we should be at this point in the economic recovery. And it’s ironic that the very people who are so eager to say that it’s a failure are the very people who prevented it from working better in the first place.
July 30th, 2010
No irony that I see. Repukes have made it their mission to block the success of anything the government may try to do, so that theymay claim it’s failing and regain power. They love power more than they love the country. It really is that simple.
And the facts will not matter to them, another feature of your modern Repuke party.
July 30th, 2010
A stimulus package has two objectives it must meet in order to qualify as successful: First, it must generate quick economic recovery. Second, that recovery must lead to sustained economic growth.
As I stated before, FDR programs did not create sustained economic growth or reduce unemployment long-term. Neither did Japan’s years of stimulus spending in the 1990s bring Japan’s economy out of a recession.
There are very practical reason why this stimulus package, either cash distribution or spending projects, don‘t work the way they are projected. For example:
The federal government, with its limited knowledge and lack of economic signals represented in a market economy, can’t always know how best to spend the money.
Often, the package misdirects the spending to short-term projects, such as, expanding a road, or fixing a school, but pulls away from projects based on what the market demands.
In order to inject money into the economy, the government has to take money out of it. This premise indicates the government has to damage long-term wealth in order to provide short-term economic activity.
Stimulus packages do not encourage long-term jobs. For example, you need a construction workers to build roads. But when the job is complete – the jobs go away. When does the next job occur? The worker does not know, and will likely limit there spending until the next job is attainable. This reduces economic growth overall.
The stimulus package increases debt overall. This debt will be passed along to our children, and their children. While there may be short-term activity – the weight of the debt will limit economic growth in the future.
Also, the money goes on a national “wish list”, firms and industries will line up to try to get there piece of the pie. This will create federal bureaucracy abound. Tax cuts are a better way to stimulate growth. Permitting companies to keep more – thus promote economic growth.
Note:
Some of the tax cuts Obama has proposed will be helpful. Letting firms write down their losses to reduce tax bills will allow firms to keep much needed capital in the economic downturn. And any tax incentive to help employers keep or add jobs will be beneficial.
July 30th, 2010
Wow Snabby, generalize much? Someone spit in your oatmeal this morning?
Seriously? The Republicans (Repukes. Heh, that’s funny) love power more than the country? Don’t you think that’s the case with just about every politician?
You think Charlie Rangel loves the country more than his tax free offices and excursions in the Bahamas?
You think William Jefferson loves his country more than the money in his freezer?
You think Eliot Spitzer loved his state and country more than he did boffing Ashley Dupre?
The list goes on. Yes I’m cherry picking but at least I’m honest enough to admit it. Snabby is all just “Blah blah blah Repukes Blah blah blah loves power blah blah facts don’t matter.”
Whatever.
Scott, I can’t really disagree with you too much here. I’m pretty sure what’s going on is the Republicans are grabbing an issue that they think might carry water into the elections this fall. Are they bending what was said? Yeah, probably a bit but they really aren’t bending what was presented.
The facts are that Obama got in front of the US people and presented the Stimulus in a way that was mostly interpreted by the unread masses as the saving of the economy. If you want to now, a year later, put a fine point on it and distinguish between the differences of a projection vs. a promise than have at it. Technically you are right but I’m guessing that if that kind of tactic was used against you with something a Republican said you would point it out the same as I am.
Overall though I would like to see a little more truth and plain speak in politics. I think both parties couch their words in such a way that it can be spun however they want to be positive, despite whatever outcome occurs.
July 30th, 2010
In order to inject money into the economy, the government has to take money out of it
Not sure I understand the point you’re making here.
When does the next job occur? The worker does not know, and will likely limit there spending
I’m skeptical of this point. Someone working construction in this economy is likely to be living paycheck to paycheck, or close to it. They’re not going to bank the check from the stimulus-created job because they don’t know what next year will bring–they are going to spend it, just the way they spend any other income.
You think Eliot Spitzer loved his state and country more than he did boffing Ashley Dupre?
Unlikely! I mean, dayum.
Republicans are grabbing an issue that they think might carry water into the elections this fall.
Yes, politics is what it is. But in terms of actually being truthful, saying that the stimulus didn’t work or didn’t help is just wrong. No politicking can change that.
I would like to see a little more truth and plain speak in politics.
Agreed. But that’s not going to happen so long as voters respond the same way they always have.
July 30th, 2010
In order to inject money into the economy, the government has to take money out by increasing taxes, increase national debt, or print money.
July 30th, 2010
I don’t see how printing money or issuing treasury bonds doesn’t take money out of the economy.
July 30th, 2010
Printing money can cause inflation. This reduces the value of money – causing prices to increase, and taking more money out of the pockets of the people.
July 30th, 2010
DirkB, thing is that yes, there are some Dems, and more than enough of them, who are assholes, but as a general rule, the Democrats in office are more serious about actual governance. And nope, not going to cite chapter and verse, because it’s a waste of time. The Republican Party is to be mocked until it decides to be a legitimate actor. I have my doubts about whether that will ever happen. From the birthers to the teabaggers who are not just freakish Glenn Beck viewers but actual elected members of Congress, the party has become a toxic mixture of fail.
And seriously, when you have people in office like Michelle Bachman, Virginia Foxx, Peter King, Pete Hoekstra, well, there’s really no point in getting into substantive discussion about them.
Fact is that Repuke lying on any issue that would give the government a win is a guaranteed event.
I agree with you about the need for truth and plain speak in politics. We can’t know where employment would be without the stimulus, and no one in this climate can admit they were wrong about anything, which is a real shame, because it seems to me the only way we’re going to have a chance of success at climbing out of these holes is to acknowledge what is happening (i.e., the era of cheap oil is over, and our economy is going to contract) and make rational plans for it.
July 30th, 2010
Printing money can cause inflation
Sure. But not always.
as a general rule, the Democrats in office are more serious about actual governance.
I’m betraying my partisanship, but I do agree.
July 30th, 2010
The stimulus wasn’t big enough and contained too many tax cuts and not enough direct spending.
The stimulus was pure deficit spending, so tax cuts/increases don’t actually play a part of the dollar amount of the bill. Would you care to cite which tax cuts in the stimulus bill were “too many”?
July 30th, 2010
“DirkB, thing is that yes, there are some Dems, and more than enough of them, who are assholes…”
Starting off with Scott Feldstein.
July 30th, 2010
Where are you, Scott? Please answer David’s question.
July 30th, 2010
I”m stating a general principle, not citing specific tax cuts. The idea is that tax cuts can be banked, used to pay off debt, etc., while direct spending is, well, directly spent. Every dollar directly spent increases demand by one dollar (and increases GDP by more than a dollar by some estimates). Whereas every dollar of tax cuts increase demand by less than a dollar as not all of it is spent.
July 30th, 2010
Where are you, Scott?
Incidentally, I’ve received threats to my life as well as ethnic epithets in the pages of this blog over the last few days. Where are the other, more reasonable commenters to condemn them? It’s eerie to be called an asshole or to have it suggested that I should be murdered or that I’m a “kike” and have nobody say anything against it. The other day it was suggested that I’m exhibit A on why Hitler “lacked ambition.” (Although that one was on another blog, to be fair.)
July 30th, 2010
I forgot to mention that I’m regularly (and seriously) called a communist.
July 30th, 2010
I’m sorry. I don’t believe that these comments are necessary, EVER.
July 30th, 2010
And of course I know almost everyone who comments here agrees with that. It’s just nice to have people write it. Thanks
July 30th, 2010
Scott… Forgive me silence on the matter. Name-calling is one thing (nature of the Internet), but the threats and anti-Semitic stuff is far beyond that. People who do that are sick. They’re cowards. They’re mentally unstable and a threat to society.
July 30th, 2010
Thanks, friends. Let us say no more about it. I feel a lot better already and not inclined to whine further about it.