Can the market alone fix the economy?

[mheslep]

After following the debate for some time now on the "http://www.rules.house.gov/111/LegText/111_hr1_text.pdf" , that doubt this bill will do anything economically other than raise the federal debt by almost a trillion dollars.

At this point, the least that should be done is to follow former Clinton budget director Alice Rivlin's http://www.washingtonpost.com/wp-dyn/content/article/2009/01/27/AR2009012703655.html?hpid=topnews" to rip out all the baloney and leave only the true stimulus spending. The baloney can then go through a normal legislative process and be judged on its long term merits.

...Rivlin, who was President Bill Clinton's budget director, suggested splitting the plan, implementing its immediate stimulus components now and taking more time to plan the longer-term transformative spending to make sure it is done right. "Such a long-term investment program should not be put together hastily and lumped in with the anti-recession package. The elements of the investment program must be carefully planned and will not create many jobs right away," said Rivlin, a fellow at the Brookings Institution. The risk, she said, is that "money will be wasted because the investment elements were not carefully crafted."

 

[Astronuc]

After following the debate for some time now on the "http://www.rules.house.gov/111/LegText/111_hr1_text.pdf" , that doubt this bill will do anything economically other than raise the federal debt by almost a trillion dollars.

It might be correct to say that many/most of economists agree on the need for a stimulus, but I think there is great disagreement on the details. I would hope the administration and congressional leaders are consider all points of view - from liberal to centrist to conservative.

I would hope that the president would meet with executives and management of investment/financial/banking institutions and figure out the best way to stimulate the economy. In theory, the financial institutions have the analysts who can best analyze the conomic or various sectors and figure out how best to stimulate each sector. Renewable energy and more efficient products should seem worthy of priority, and infrastructure projects are another.

If people don't have jobs, and earn money, then they cannot buy goods and services, and those people (and companies) producing goods and providing services are unnecessary. About two-thirds of the economy is based on direct consumption.

Some interesting insight in - Our Love Affair With Malls Is on the Rocks
http://www.nytimes.com/2009/02/01/business/01mall.html

. . . . Here, ladies and gentlemen, is the crux of the problem: We are reliably informed that whatever part of the economic crisis can’t be pinned on Wall Street — or on mortgage-related financial insanity — can be pinned on consumers who overspent. But personal consumption amounts to some 70 percent of the American economy. So if we don’t spend, we don’t recover. Fiscal health isn’t possible until money is again sloshing into cash registers, including those at this mall and every other retailer.
. . . .

Maybe this is the way to regulate the economy -
American Express Kept a (Very) Watchful Eye on Charges
http://www.nytimes.com/2009/01/31/your-money/credit-and-debit-cards/31money.html

. . . .

In recent months, American Express has gone far beyond simply checking your credit score and making sure you pay on time. The company has been looking at home prices in your area, the type of mortgage lender you’re using and whether small-business card customers work in an industry under siege. It has also been looking at how you spend your money, searching for patterns or similarities to other customers who have trouble paying their bills.

In some instances, if it didn’t like what it was seeing, the company has cut customer credit lines. It laid out this logic in letters that infuriated many of the cardholders who received them. “Other customers who have used their card at establishments where you recently shopped,” one of those letters said, “have a poor repayment history with American Express.”

It sure sounded as if American Express had developed a blacklist of merchants patronized by troubled cardholders. But late this week, American Express told me that wasn’t the case. The company said it had also decided to stop using what it has called “spending patterns” as a criteria in its credit line reductions.

“The letters were wrong to imply we were looking at specific merchants,” said Susan Korchak, a company spokeswoman. The company uses hundreds of data points in making its decisions, she said, adding that the main factor in determining credit lines “has always been and still is the overall level of debt, relative to the card member’s financial resources.”
. . . .

So what is the best way to create jobs?

What is best way to stimulate the economy?

What should be do about health care? We can't afford $2+ trillion in health care annually.

What should we do about education?

What about taxes? Retirement?

How do we pay for it all, i.e. how does society live within its means?

 

[WhoWee]

Perhaps the real solution would be to focus the spending in a series of smaller initiatives...more manageable in size and scope.

If you want to "hit the nail on the head"...first you need a nail...then you have to aim and strike hard...if you hit a whole package of nails with a single blow...it doesn't work.

 

[WhoWee]

Has anyone seen any allocation for the Small Business Administration or other small business funding/support programs?

 

[Astronuc]

Has anyone seen any allocation for the Small Business Administration or other small business funding/support programs?

On page 77 of 647 of http://www.rules.house.gov/111/LegText/111_hr1_text.pdf (cited by mheslep)
TITLE VI—FINANCIAL SERVICES AND GENERAL GOVERNMENT
Subtitle B—Small Business
SMALL BUSINESS ADMINISTRATION
BUSINESS LOANS PROGRAM ACCOUNT
(INCLUDING TRANSFERS OF FUNDS)
For the cost of direct loans and loan guarantees authorized by sections 6202 through 6205 of this Act,
$426,000,000 (about 0.05% ):

Small Business gets loans (77-103).

This bill looks like an ominbus spending bill.

DIVISION A—APPROPRIATION PROVISIONS
TITLE I—GENERAL PROVISIONS
TITLE II—AGRICULTURE, NUTRITION, AND RURAL DEVELOPMENT
TITLE III—COMMERCE, JUSTICE, AND SCIENCE
TITLE IV—DEFENSE
TITLE V—ENERGY AND WATER
TITLE VI—FINANCIAL SERVICES AND GENERAL GOVERNMENT
TITLE VII—HOMELAND SECURITY
TITLE VIII—INTERIOR AND ENVIRONMENT
TITLE IX—LABOR, HEALTH AND HUMAN SERVICES, AND EDUCATION
TITLE X—MILITARY CONSTRUCTION AND VETERANS AFFAIRS
TITLE XI—DEPARTMENT OF STATE
TITLE XII—TRANSPORTATION, AND HOUSING AND URBAN DEVELOPMENT
TITLE XIII—STATE FISCAL STABILIZATION FUND

DIVISION B—OTHER PROVISIONS
TITLE I—TAX PROVISIONS
TITLE II—ASSISTANCE FOR UNEMPLOYED WORKERS AND STRUGGLING FAMILIES
TITLE III—HEALTH INSURANCE ASSISTANCE FOR THE UNEMPLOYED
TITLE IV—HEALTH INFORMATION TECHNOLOGY
TITLE V—MEDICAID PROVISIONS
TITLE VI—BROADBAND COMMUNICATIONS
TITLE VII—ENERGY

So I wonder how much will go to lobbyist fees.

 

[mheslep]

Astronuc's name 'omnibus spending bill' is far more accurate. The Omnibus Spending Bill of 2009 also includes some nice Depression Era retro think. Per the http://www.washingtonpost.com/wp-dyn/content/article/2009/01/28/AR2009012804002.html?hpid=$":

The stimulus bill passed by the House last night contains a controversial provision that would mostly bar foreign steel and iron from the infrastructure projects laid out by the $819 billion economic package.

A Senate version, yet to be acted upon, goes further, requiring, with few exceptions, that all stimulus-funded projects use only American-made equipment and goods.

Smoot Hawley anybody? I read elsewhere that the buy US clauses raise the costs of infrastructure projects 25%. These guys not only don't see the cliff, they're mashing down pedal.

 

[Esoteric]

JPM economist claims Obama's stimulus plan will add 4 points to GDP Growth

Obama’s Billions May Add 4 Points to GDP Growth: Chart of Day

http://www.bloomberg.com/apps/news?pid=20601109&sid=aAXFCkjQWhrA&refer=home

By David Wilson

Feb. 3 (Bloomberg) -- President Barack Obama’s plan for stimulating the economy would add about 4 percentage points to second- and third-quarter growth, according to Michael Feroli, a JPMorgan Chase & Co. economist.

“Tax reductions, which should find their way into consumer spending relatively quickly,” would lift gross domestic product even before most of the planned spending kicks in, Feroli wrote in a report today.

The CHART OF THE DAY shows the amount of “fiscal support” that the proposal would give to GDP through next year, according to JPMorgan. The chart shows tax breaks, transfer payments such as extended jobless benefits, and assistance to state and local governments apart from direct federal spending.

About $140 billion would be offered to households, businesses and municipal governments in this year’s second and third quarters, the report said. The amounts shown in the chart are adjusted for the potential economic effects of each of the plan’s main components.

Obama’s proposal would have little effect on the pace of GDP growth in the fourth quarter and next year, the report said. At that point, “Gradually rising spending on infrastructure and other construction projects is offset by fading support from tax measures and aid to states and localities,” Feroli wrote.

Sixty percent of the federal government’s own spending would occur in next year’s fourth quarter or later, he wrote, citing estimates from the Congressional Budget Office.

 

[mgb_phys]

Obama’s Billions May Add 4 Points to GDP Growth

I think that tells you all you need to know about the validity of GDP as a measure of economic goodness.

 

[mheslep]

The American Recovery and Reinvestment Act of 2009

Sen Colburn has posted a list on his website of items he considers wasteful and non-stimulus.
http://coburn.senate.gov/public/index.cfm?FuseAction=LatestNews.PressReleases&ContentRecord_id=3d97fd6d-802a-23ad-4656-8435b17a3a0d

• $2 billion earmark to re-start FutureGen, a near-zero emissions coal power plant in Illinois that the Dept. of Energy defunded last year because the project was inefficient
• A $246 million tax break for Hollywood movie producers to buy motion picture film
• $650 million for the digital television (DTV) converter box coupon program
• $88 million for the Coast Guard to design a new polar icebreaker (arctic ship)
• $448 million for constructing the Dept. of Homeland Security headquarters
• $248 million for furniture at the new Dept. of Homeland Security headquarters
• $600 million to buy hybrid vehicles for federal employees
• $400 million for the CDC to screen and prevent STD’s
• $1.4 billion for a rural waste disposal programs
• $150 million for Smithsonian museum facilities
• $1 billion for the 2010 Census, which has a projected cost overrun of $3 billion
• $75 million for “smoking cessation activities”
• $200 million for public computer centers at community colleges
• $75 million for salaries of employees at the FBI
• $25 million for tribal alcohol and substance abuse reduction
• $10 million to inspect canals in urban areas
• $6 billion to turn federal buildings into “green” buildings
• $500 million for state and local fire stations
• $650 million for wildland fire management on Forest Service lands
• $150 million for Smithsonian museum facilities
• $1.2 billion for “youth activities,” including youth summer job programs
• $88 million for renovating the headquarters of the Public Health Service
• $412 million for CDC buildings and property
• $500 million for building and repairing NIH facilities in Bethesda, MD
• $160 million for “paid volunteers” at the Corporation for National and Community Service
• $5.5 million for “energy efficiency initiatives” at the VA “National Cemetery Administration”
• $850 million for Amtrak
• $100 million for reducing the hazard of lead-based paint
• $75M to construct a new “security training” facility for State Dept Security officers when they can be trained at existing facilities of other agencies.
• $110 million to the Farm Service Agency to upgrade computer systems
• $200 million in funding for the lease of alternative energy vehicles for use on military installations.
• State Medicaid Bailout: $87.7 billion Through 3 different mechanisms, the bill would provide additional federal funds to state Medicaid programs over the next 3 years. This is nearly $70 billion more than the governors asked President Obama for in December, and should be a loan to be repaid by the states.

Some of these are clearly egregious, they have no business in a so called stimulus bill that is supposed to be about job creation in a recession. Subsidy for Holywood movie producers to buy film? (That one was ripped out today). Smoking cessation? However, some of these on his list do seem intended to create jobs, even if they are otherwise debatable. That is, unless they require too much time to start up, or have an existing / redundant alternative already in place, it appears they should qualify as job creators.
-$2B. Futuregen is a big construction project for clean coal.
-$1.4B. Rural waste disposal. Sounds like a program to buy more trucks, build landfills.
-$6B federal green buildings. This is an upgrade to federal buildings that should eventually pay off and create lots of construction jobs. Its not additional office space, which the government has in large excess.

 

[mheslep]

I think that tells you all you need to know about the validity of GDP as a measure of economic goodness.

What is 'economic goodness'?

 

[mgb_phys]

A GDP of >$30,000/capita puts you into first world position.
The US population is 300M, so if you are allowed to count government deficit spending as GDP, then now there is a deficit of >$9T everybody can stop working.
If we can only double the deficit we will double GDP!

 

[russ_watters]

A GDP of >$30,000/capita puts you into first world position.
The US population is 300M, so if you are allowed to count government deficit spending as GDP, then now there is a deficit of >$9T everybody can stop working.
If we can only double the deficit we will double GDP!

Obviously, that is not a steady state condition. GDP works just fine as a measure of economic health as long as there aren't any momentary aberrations...of course, you could say the exact same thing about many measurements in many scientific fields.

 

[Astronuc]

With regard to Coburn's list -

Aren't there already funds for this stuff? Aren't such things covered in the normal appropriations bill?

I keep wondering - so what about next year? Another stimulus package?



Obama needs to listen to republicans' concerns about those various items. We don't need busy work, but sustainable jobs.


Obama needs to sit down (behind closed doors) with the leaders of those bailed out financial institutions and figure out the best strategy to move forward. Ostensibly they want to make good loans so they can make money. I'd like to know what Warren Buffett and other executives think about the stimulus.

 

[Gokul43201]

Obama needs to listen to republicans' concerns about those various items. We don't need busy work, but sustainable jobs.

Is there anything much that Obama can do at this point? This ball is in Congress' court right? Can Obama do anything more than apply some gentle pressure on Dems in the Senate?

 

[Astronuc]

I hope Obama is firm with the Pelosi and Reid.

Looking a the last item on Coburn's list as cited - State Medicaid Bailout: $87.7 billion Through 3 different mechanisms, the bill would provide additional federal funds to state Medicaid programs over the next 3 years. This is nearly $70 billion more than the governors asked President Obama for in December, and should be a loan to be repaid by the states - that's 10% of the proposed bill.

Obama just signed the SCHIP (State Children's Health Insurance Program) Bill for ~$33 billion to extend health care to 4 million children.

Obama signs bill extending kids' health insurance
http://news.yahoo.com/s/ap/20090205/ap_on_go_pr_wh/children_s_health

http://www.cms.hhs.gov/home/schip.asp

 

[WhoWee]

I think Ms. Pelosi is over-reaching...and a little confused?

http://www.nypost.com/seven/02042009/news/politics/pelosis_500_million_person_slip_153530.htm

 

[Gokul43201]

I just don't get Coburn's list. How can he claim that the things on that list provide no stimulus? Looks to me like most of them would, indeed, provide stimulus.

To quote Mark Zandi again:

The mix of tax cuts and spending increases in the stimulus package is designed to provide both quick relief and a substantial boost to the struggling economy. The tax cuts will not pack a big economic punch, as some of the money will be saved and some used to repay debt, but they can be implemented quickly. Aid to state and local governments will not lift the economy, but it will forestall cuts in programs and payrolls that many governments would be forced to make to meet their states' constitutional obligations to balance their budgets. Infrastructure spending will not help the economy quickly, as it will take time to get even "shovel-ready" projects going, but it will provide a significant economic boost.

http://www.economy.com/mark-zandi/default.asp?src=economy_homepage

Clearly, like most economic advisers, Zandi supports the three-pronged approach, and Coburn doesn't seem to care much for two of them.

This more recent analysis by Moody's will probably have Coburn throwing a fit:

The industry research firm Moody's Economy.com tracked the potential impact of each stimulus dollar, looking at tax rebates, tax incentives for business, food stamps and expanding unemployment benefits.
...
In findings echoed by other economists and studies, he said the study shows the fastest way to infuse money into the economy is through expanding the food-stamp program. For every dollar spent on that program $1.73 is generated throughout the economy, he said.
...
The report pointed to expanding unemployment benefits as the program that gets the next biggest bang for the buck. That's because, although the unemployed are already getting checks, they need to spend the money. For every dollar spent here, the economy would see a return of $1.64, Zandi said.
...
Finally, Moody's report says business incentives such as tax breaks for buying new equipment - so-called accelerated depreciation - would give the least bang for the buck and potentially provide the slowest infusion of money. A dollar spent there would generate only 33 cents in the economy because, Zandi said, it takes longer for businesses to implement any benefit received.

http://money.cnn.com/2008/01/29/news/economy/stimulus_analysis/index.htm

 

[Astronuc]

Home-buyers tax cut raises cost of stimulus bill
http://biz.yahoo.com/ap/090205/congress_stimulus.html
Thursday February 5, 6:21 am ET
By David Espo, AP Special Correspondent
Home-buyers tax cut raises cost of stimulus bill that Senate Dems hope to finish by Friday

WASHINGTON (AP) -- Historically huge to begin with, economic stimulus legislation is growing larger by the day in the Senate, where the addition of a new tax break for homebuyers sent the price tag well past $900 billion.

"It is time to fix housing first," Sen. Johnny Isakson, R-Ga., said Wednesday night as the Senate agreed without controversy to add the new tax break to the stimulus measure, at an estimated cost of nearly $19 billion.

The tax break was the most notable attempt to date to add help for the crippled housing industry and gave Republicans a victory as they work to remake the legislation more to their liking.

Democratic leaders hope for Senate passage of the legislation by Friday at the latest, although prospects appear to hinge on crafting a series of spending reductions that would make the bill more palatable to centrists in both parties.

Three swing-vote senators met with President Barack Obama at the White House on Wednesday to discuss possible cutbacks, but they declined to discuss details of their talks. Obama has made the legislation a cornerstone of his recovery plan.

For their part, Senate Republicans signaled they would persist in their efforts to reduce spending in the measure, to add tax cuts and reduce the cost of mortgages for millions of homeowners.

Officials figures were unavailable, but it appeared that the measure carried a price tag of more than $920 billion, making it bigger than the financial industry bailout that passed last year and as large as any measure in memory.

. . . .

I wonder if the subsequent appropriations bills for FY2010 will be cut back. Given current practices I somehow doubt it. The process reminds me of those TV commercials that claim "we will save you money" - if you spend it.

For 2009 - http://www.gpoaccess.gov/usbudget/fy09/browse.html

 

[WhoWee]

I just don't get Coburn's list. How can he claim that the things on that list provide no stimulus? Looks to me like most of them would, indeed, provide stimulus.

To quote Mark Zandi again:

http://www.economy.com/mark-zandi/default.asp?src=economy_homepage

Clearly, like most economic advisers, Zandi supports the three-pronged approach, and Coburn doesn't seem to care much for two of them.

This more recent analysis by Moody's will probably have Coburn throwing a fit:

http://money.cnn.com/2008/01/29/news/economy/stimulus_analysis/index.htm

Perhaps the most effective combination would be to focus on (recently) unemployed people...provide food stamps along with unemployment benefits...and then NOT tax the benefits.

 

[mheslep]

A GDP of >$30,000/capita puts you into first world position.
The US population is 300M, so if you are allowed to count government deficit spending as GDP, then now there is a deficit of >$9T everybody can stop working.
If we can only double the deficit we will double GDP!

There's no free lunch. The government sooner or later crowds out the private economy when it spends extravagantly.
http://en.wikipedia.org/wiki/Crowding_out_(economics )

 

[mheslep]

Is there anything much that Obama can do at this point? This ball is in Congress' court right? Can Obama do anything more than apply some gentle pressure on Dems in the Senate?

Every politician is sensitive to some degree to running counter to the will of a popular new elected President. If the President were to say 'these long term projects and projects that otherwise have nothing to do with getting the economy going don't belong in this fast track stimulus bill' Reed would have to listen. The President is putting pressure of that kind on the Republicans right now with his public rejection of 'the notion that tax cuts alone will solve all our problems' (though no major Republican is saying anything like that).

 

[mheslep]

I just don't get Coburn's list. How can he claim that the things on that list provide no stimulus? Looks to me like most of them would, indeed, provide stimulus.

To quote Mark Zandi again:

http://www.economy.com/mark-zandi/default.asp?src=economy_homepage

Clearly, like most economic advisers, Zandi supports the three-pronged approach, and Coburn doesn't seem to care much for two of them.

It is not clear to me what Coburn considers ok, he doesn't single out every dime of spending. However, if we agree that Zandi's description is indeed an economically correct one, the current bill still falls short of that mark with 'smoking cessation' fluff and the like - that's not infrastructure, not job aid to state governments.

 

[Gokul43201]

I agree there's fluff. That's why I said "most" of them.

Heard in the news today that they've nearly knocked out $100B worth of porky projects from the House bill, and that's probably as close as it will get to a maximum consensus number.

 

[Astronuc]

Wanted: Personal Economic Trainers. Apply at Capitol.
http://www.washingtonpost.com/wp-dyn/content/article/2009/02/05/AR2009020503413.html
By Steven Pearlstein

As long as we're about to spend gazillions to stimulate the economy, I'd like to suggest we throw in another $53.5 million for a cause dear to all business journalists: economic literacy. And what better place to start than right here in Washington.

My modest proposal is that lawmakers be authorized to hire personal economic trainers over the coming year to sit by their sides as they fashion the government's response to the economic crisis and prevent them from uttering the kind of nonsense that has characterized the debate over the stimulus bill during the last two weeks.

. . . .

 

[Astronuc]

Obama seems to have a good team of advisors on the economy, particular the CEOs of Caterpillar and GE.
http://news.yahoo.com/s/ap/20090206/ap_on_go_pr_wh/obama_economy

. . . .
Obama had already tapped Paul Volcker, a former Federal Reserve chairman and a top Obama adviser, as the leader of the Economic Recovery Advisory Board. Members will include former Securities and Exchange Commission Chairman William Donaldson, TIAA-CREF President-CEO Roger Ferguson and Harvard University professor Martin Feldstein, who wrote a Wall Street Journal op-ed piece last year titled "John McCain Has a Tax Plan To Create Jobs."

Obama friend and campaign finance chairwoman Penny Pritzker also is on the board, as is Caterpillar Inc. Chairman-CEO Jim Owens and General Electric Co. CEO Jeffrey R. Immelt. Two labor officials — Anna Burger of Change to Win and Richard Trumka of the AFL-CIO — also were named to the 15-member board designed to offer Obama advice as he seeks a way to weather the crisis and rebuild the economy.

The new council is intended to be an economic sounding board for Obama — an outside-the-Beltway group that will report to the president directly. It will meet regularly with Obama, perhaps once a month. Its mission will include responding to requests from Obama — such as delving into a particular subject — without competing with the National Economic Council or day-to-day decision-making at the White House.

. . . .

Presumably, he's getting sound advice.

 

[russ_watters]

Heard in the news today that they've nearly knocked out $100B worth of porky projects from the House bill, and that's probably as close as it will get to a maximum consensus number.

Here's an obvious question: since the bill is composed entirely of unnecessary projects that are being funded to stimulate the economy, how does one differentiate what is "pork" and what is not?

 

[Gokul43201]

Here's an obvious question: since the bill is composed entirely of unnecessary projects that are being funded to stimulate the economy, how does one differentiate what is "pork" and what is not?

You think they are all unnecessary. From what I've read so far, few others do. No one else on this forum, for instance has expressed such an opinion.

But the way I differentiate pork from non-pork in just this specific spending bill, is based as much on its short term merit in terms of job creation and GDP growth as on its potential for generating longer term improvements in efficiency (the first requirement would not feature in my definition of non-pork for any general allocation, only for rare situations such as this one).

So even if an allocation falls under what I might otherwise consider pork, I will likely not cringe if it serves little long-term purpose but has a large multiplicative effect in the short term. For instance, I would support a temporary (i.e., expiring within the next couple years) but sweeping expansion of food stamps or unemployment benefits, something that I wouldn't normally support in a healthier economy.

I imagine that some weighting of short-term stimulative effect and long-term value must go into most people's valuation of whether a particular allocation is justified.

 

[russ_watters]

You think they are all unnecessary. From what I've read so far, few others do. No one else on this forum, for instance has expressed such an opinion.

No, it's a matter of the reality of what Congress thinks and does, plus a little bit of logic, not *our* opinions. I think building 500 new nuclear plants is "necessary", but that's not what I'm talking about - if Congress thought it was necessary, they'd have done it already. If these public works projects were truly deemed "necessary" by Congress (the people for whom "necessary" actually gets bills passed), they would be done regardless of whether we were in a dire economic situation or not. For example, there was a recent report in the press about our crumbing infrastructure, yet before the stimulus, Congress did not consider it necessary to put such massive funding into our infrastructure - otherwies, they would have done it!

But the way I differentiate pork from non-pork in just this specific spending bill, is based as much on its short term merit in terms of job creation and GDP growth as on its potential for generating longer term improvements in efficiency (the first requirement would not feature in my definition of non-pork for any general allocation, only for rare situations such as this one).

But "pork" is exactly that. Pork is when Timbuktu, Alaska (made-up town) decides it needs a new $10 million visitors' center and the congresspeople for them get a line-item put into a bill to fund it. With a population of 10,000 people, such a construction project does immediate wonders for the local economy (or at least the construction part of it).

And I can assure you the Congresspeople from Alaska think that that project is "necessary" whereas most others, if pressed, would say they don't.

 

[Gokul43201]

You can't really say that Obama never deemed any of these projects necessary, can you? He promised during his campaign to invest in education and infrastructure and cleaner energy. And Congress may have just been waiting for the changing of the guard before pushing for projects that they may have expected the old guard to veto. And until a month ago, the Dems didn't have a strong enough majority in Congress to do very much. Moreover, the need for some specific projects may have arisen only recently (or else, one could just as well use your argument that all the spending in this bill is unnecessary because Congress never chose to spend it before now, to every single spending bill ever passed).

 

[WheelsRCool]

IMO, this bill is going to be a long-term disaster; it is a big pork bill and likely will not work. It is just throwing money at people. And historically, government spending has not once ever stimulated any economy. The Japanese had the same type of crises we are in when their real-estate bubble burst, and they tried multiple times to stimulate their economy through borrowing. They also have yet to recover, and experienced an at least ten year recession (they have a 200% debt to GDP ratio!). IMO, what is needed is to let the economy self-recover and for the government to provide the proper social safety nets they can (like unemployment) and maybe infrastructure work to ease the pain. Otherwise, usually whenever government tries to "stimulate" the economy, they in fact mess things up and slow it down.

Economies go into recession. Yes, if the financial system is going to collapse, that is like a utility and must be saved, but otherwise, economies have to occassionally go through a recession.

There are economists both in agreement and against the stimulus plan (http://www.cbsnews.com/stories/2009/01/28/politics/otherpeoplesmoney/main4759532.shtml). Some economists who are skeptical, or critical of this plan, are:

Robert Barro: here is an article he wrote in The Wall Street Journal that caused a stir: http://online.wsj.com/article/SB123258618204604599.html
Greg Mankiw
Gary Becker
Thomas Sowell
Stephen Moore
Robert Lucas
Eugene Fama
Kevin Hassett

Some economists who support the bill are:

Paul Krugman
Robert Reich
Joseph Stiglitz
Matt Yglesias
Brad DeLong

And on a sidenote, with deciding to spend this kind of money, I think it is very wrong for President Obama to have signed SCHIP. That is not going to cost any $35 billion as planned. Very rarely do government healthcare programs cost as planned, because the cost estimates are always off.

The Medicare prescription drug benefit signed in 2003 by President Bush has cost less than expected, but that is because it has triggered competition among drug companies.

Obama friend and campaign finance chairwoman Penny Pritzker also is on the board, as is Caterpillar Inc. Chairman-CEO Jim Owens and General Electric Co. CEO Jeffrey R. Immelt.

Immelt I get a bit antsy about. This is the guy who was doing business with Iran, who has had GE's stock decline by 60% under his watch, who lobbies for global warming legislation so that they will buy GE's windmills, etc...(not that I'm against doing anything against global warming if it will work, but windmills are not yet viable).

 

[Ivan Seeking]

No, it's a matter of the reality of what Congress thinks and does, plus a little bit of logic, not *our* opinions. I think building 500 new nuclear plants is "necessary", but that's not what I'm talking about - if Congress thought it was necessary, they'd have done it already. If these public works projects were truly deemed "necessary" by Congress (the people for whom "necessary" actually gets bills passed), they would be done regardless of whether we were in a dire economic situation or not. For example, there was a recent report in the press about our crumbing infrastructure, yet before the stimulus, Congress did not consider it necessary to put such massive funding into our infrastructure - otherwies, they would have done it!

You have got to be kidding! We've been fighting a $trillion war, remember? Also, the Republicans controlled the government - the party that brings prosperity to the country.

Just be glad the Democrats are now running the show so that we can do some nationbuilding at home.

 

[Gokul43201]

The Medicare prescription drug benefit signed in 2003 by President Bush has cost less than expected, but that is because it has triggered competition among drug companies.

Less than which estimate of the cost? All of them?

Bush first announced it would cost $400B (over 10 yrs)...

One month later, the ten-year cost estimate was boosted to $534 billion, up more than $100 billion over the figure presented by the Bush administration during Congressional debate. The inaccurate figure helped secure support from fiscally conservative Republicans who had promised to vote against the bill if it cost more than $400 billion. It was reported that an administration official, Thomas A. Scully, had concealed the higher estimate and threatened to fire Medicare Chief Actuary Richard Foster if he revealed it.[2] By early 2005, the White House Budget had increased the 10-year estimate to $1.2 trillion.[3]

So, is there a newer estimate that is lower than the original $400 billion? Should we make David Walker eat his words?

Former US Comptroller General David M. Walker has called this "...probably the most fiscally irresponsible piece of legislation since the 1960s... because we promise way more than we can afford to keep." [4]

LINKS:

Here's the wiki:
http://en.wikipedia.org/wiki/Medica...ement,_and_Modernization_Act#Changes_to_plans

More on the cost numbers and related issues:
http://www.washingtonpost.com/wp-dyn/articles/A9328-2005Feb8.html

And for some fun, how the GOP tried to bribe their way into passing the bill:
http://www.usatoday.com/news/washington/2003-12-04-dem-inquiry-bribe_x.htm

 

[Astronuc]

The Medicare prescription drug benefit signed in 2003 by President Bush has cost less than expected, but that is because it has triggered competition among drug companies.

AFAIK, if the Medicare prescription program cost less, not because the drugs cost less, but because the government is covering less, e.g. reduced remimbursements, and in some cases, simply not paying for prescriptions, or paying for less expensive 'generic' equivalents, which are less effective.

Immelt I get a bit antsy about. This is the guy who was doing business with Iran, who has had GE's stock decline by 60% under his watch, who lobbies for global warming legislation so that they will buy GE's windmills, etc...(not that I'm against doing anything against global warming if it will work, but windmills are not yet viable).

GE took a big hit because of GE financial, which is a big chunk of GE's profit. Compare 60% to 90% for other financial institutions. GE stock is a bargain right now, with a yield over 10% if the dividend holds.

GE sells aircraft (jet) engines, but that business is down along with aircraft orders. GE is also interested in selling nuclear plants, yet orders are slow to take off - utilities are waiting for approval, then need to line up the financing. Apparently the 'stimulus' package may have some funding for new nuclear plants.

New nuclear plants won't happen right away since there is only one shop in the world that is qualified to fabricate nuclear-grade pressure vessels. There is one shop in the US that could be qualified - IF there was a market. Even then we might only see about 1 or 2 pressure vessels per month.

 

[mheslep]

You can't really say that Obama never deemed any of these projects necessary, can you? He promised during his campaign to invest in education and infrastructure and cleaner energy.

Yes he did promise those, but this bill and the emergency path its taken are about the recession and immediate job creation, or so we are told in the bill's title. If the issue at hand is just education, infrastructure and clean energy it can go through the normal legislative process, otherwise its a fraud.

 

[mheslep]

You have got to be kidding! We've been fighting a $trillion war, remember? Also, the Republicans controlled the government - the party that brings prosperity to the country.

Spkr Pelosi and Sen. Reed have been in leadership seats now since Jan 4, 2007, and 'I Can't Drive' Daschle was the head of the Dem. Senate Majority '01-'02. That 'Republicans controlled the government' yarn is getting a little long in the tooth.