The Stimulus Package Unleashed

[Gaspar]

quote:Originally posted by RecycleMichael

It is the point. One President spends billions starting a war on a different continent and you guys say nothing about the cost. Another President wants to invest in America with billions of dollars and you guys want to pick it apart because of cost.

I choose the second President's version of wasting my money.

That's not at all why we are picking it apart.  First of all 900 billion (1.2 trillion if you actually take a calculator to it) is not enough.  Far more is necessary, but it would need to be spent on things that historically have been shown to stimulate the economy like reduction in marginal tax rates to the people and businesses that are in free-fall (not rebates or refunds).

Lets look at some history to review rebates v.s. real tax relief:

Tax rebates fail to increase economic growth because they are not associated with productivity or work effort. No new income is created because no one is required work, save, or invest more to receive a rebate. In that sense, rebates are economically indistinguishable from government spending pro­grams that write each American a check. In fact, the federal government treats rebate checks as a "social benefit payment to persons."  They represent another feeble attempt to create new purchasing power out of thin air.  

Consider the 2001 tax rebates. Washington bor­rowed billions from the capital markets, and then mailed it to Americans in the form of $600 checks. Rather than encourage income creation, Congress merely transferred existing income from investors to consumers. Predictably, the following quarter saw consumer spending growth surge from 1.4 percent to 7.0 percent, and gross private domestic investment spending drop correspondingly by 22.7 percent. The overall economy grew at a meager 1.6 percent that quarter, and remained stagnant through 2001 and much of 2002.  

It was not until the 2003 tax cuts—which cut tax rates for workers and investors— that the econ­omy finally and immediately began a robust recov­ery. In the previous 18 months, business investment had plummeted, the stock market had dropped 18 percent, and the economy had lost 616,000 jobs. In the 18 months following the 2003 tax rate reductions, business investment surged, the stock market leaped 32 percent, and Americans created 307,000 new jobs (followed by 5 million jobs in the next seven quarters). Overall eco­nomic growth rates doubled.

It's been done several times all successfully.

Marginal tax rates were reduced throughout the 1920s, 1960s, and 1980s. In all three decades, investment increased, and higher economic growth followed. Real GDP increased by 59 percent from 1921 to 1929, by 42 percent from 1961 to 1968, and by 31 percent from 1982 to 1989.
Sited from Brian M. Riedl a Grover M. Hermann Fellow in Federal Budgetary Affairs in the Thomas A. Roe Institute for Economic Policy Studies

It has never failed to turn the economy around, yet it's "OFF THE TABLE" for this crisis.  

So this is not a debate on what Bush did, it's about how to stimulate private industry and stop massive bleeding.

[cannon_fodder]

quote:Originally posted by RecycleMichael

It is the point. One President spends billions starting a war on a different continent and you guys say nothing about the cost. Another President wants to invest in America with billions of dollars and you guys want to pick it apart because of cost.

I choose the second President's version of wasting my money.

That is not true.  I have long complained about the cost of the war and the growing deficit.  I went so far as to say if we want to maintain a large war we need a war tax of some kind to remind people we are spending the money.

But to take some contrary positions just for fun (which I do with the understanding that you can follow the diversion in my position):

- investing in the military IS investing in America too.  At the time the war was begun it had a high level of support.  Once it became clear that it was NOT going to be the endeavor we were led to believe we were locked into future expenditures or faced with a litany of bad choices.

- The stimulus package mostly isn't investing in America.  It's fluff.  Most of the war money was "invested in America" to as Boeing made new planes, Hummers were manufactured, body armor, and soldiers received combat pay.  Most of the money spent on the war found it's way into the American economy and garnered the same 150% return that the stimulus will.
- - -

But, like I said - your basic argument is that the most recent $800+ Billion spending idea is better than the war spending idea of GW Bush.  While that may be true, I believe that level of scrutiny is pathetically low.  We can do better.

(I voted for Obama, I am not anti Obama by any means.  Nor am I against a stimulus package, see my infrastructure suggestion from a couple weeks back)

[Conan71]

quote:Originally posted by RecycleMichael

Let's see...$825 billion for money spent on jobs in America or $700 billion spent to fight a war in Iraq...

Gee, which is the smarter spending?

It's really pretty simple, Bush and the GOP-controlled Congress managed to reward a large bloc of their financial supporters.

That's basically what Obama and the Democrats are doing now is spreading the money around their core supporters under the guise of a "stimulous package".

I just love paying from my pocket to keep 537 of the most corrupt Americans in a well-paying job with a far better retirement and benefits than I've got.

[guido911]

quote:Originally posted by we vs us

quote:

National crisis? What are you talking about?

Read the papers much, bub?

Nope. That's what's driving this "crisis". Just so you know, I am not in any crisis over the economic condition of this country.

[we vs us]

quote:Originally posted by guido911

quote:Originally posted by we vs us

quote:

National crisis? What are you talking about?

Read the papers much, bub?

Nope. That's what's driving this "crisis". Just so you know, I am not in any crisis over the economic condition of this country.

Ah, yes.

I hope your good fortune continues.

[Hometown]

We have a long history of government stimulus spending.  

I'm reminded of Reagan's star wars and of course Baby Bush and Iraq.  Democrats like to stimulate domestic spending.  Republicans like to stimulate military spending.  Domestic stimulation is overdue.  Nation downright ragged around the edges.  We are a long ways from getting out of the "depression" woods too.

Look at it this way, if nothing else will, inflation will eventually decrease our national debt.

Of course, I liked it when Clinton began to pay down the national debt for the first and only time in my life, but no, not good enough for the grey beards of Oklahoma.  Throw the bum out.  But that's all history and doesn't apply to current situation where we best spend some money.

[RecycleMichael]

We are going to spend billions of dollars no matter who is President.

Bush did it paying for a war I opposed.

Obama is doing it by investing in energy savings for schools districts, food programs for the poor, and clean water systems for rural America.

The choice is clear to me.

P.S. I didn't mean to include cannon fodder when I said "you guys" in my last post. He has always been a strident arguer for fiscal responsibility.

[Conan71]

quote:Originally posted by RecycleMichael

We are going to spend billions of dollars no matter who is President.

Bush did it paying for a war I opposed.

Obama is doing it by investing in energy savings for schools districts, food programs for the poor, and clean water systems for rural America.

The choice is clear to me.

P.S. I didn't mean to include cannon fodder when I said "you guys" in my last post. He has always been a strident arguer for fiscal responsibility.

Irony in the energy savings area is that the last three or four federal project bids which have come across my desk have some of the least efficient heating equipment in them.  According to engineering types I associate with, there are more in the works like that.  I totally get that the Obama admin is just now in office, but the reality of what $$ gets spent on is usually pretty far removed from the promise.

The government for some reason is inconsistent with specifying energy-star compliant or looking for the most efficient equipment for a given project.

[Conan71]

quote:Originally posted by Hometown

We have a long history of government stimulus spending.  

I'm reminded of Reagan's star wars and of course Baby Bush and Iraq.  Democrats like to stimulate domestic spending.  Republicans like to stimulate military spending.  Domestic stimulation is overdue.  Nation downright ragged around the edges.  We are a long ways from getting out of the "depression" woods too.

Look at it this way, if nothing else will, inflation will eventually decrease our national debt.

Of course, I liked it when Clinton began to pay down the national debt for the first and only time in my life, but no, not good enough for the grey beards of Oklahoma.  Throw the bum out.  But that's all history and doesn't apply to current situation where we best spend some money.

I haven't been stimulated in a long time.  I wonder when the gov't is going to decide it's my turn.

[guido911]

quote:Originally posted by RecycleMichael

We are going to spend billions of dollars no matter who is President.

Bush did it paying for a war I opposed.

Obama is doing it by investing in energy savings for schools districts, food programs for the poor, and clean water systems for rural America.

The choice is clear to me.

P.S. I didn't mean to include cannon fodder when I said "you guys" in my last post. He has always been a strident arguer for fiscal responsibility.

RM, I think you are missing the point. What is going on right now is an effort to stimulate the economy. Us "guys" do not think that STD testing, purchasing "green" autos, and a myriad of other projects has nothing to do with stimulating the economy. It's plain ear mark spending, which Obama once said he opposes.

You are talking about discretionary spending vs. war on terror spending. We can have that debate when it's time to do the next budget.

[guido911]

Rasmussan's poll shows decreasing public support for the stimulus package, 42% favor:

http://www.rasmussenreports.com/public_content/business/general_business/public_support_for_economic_recovery_plan_slips_to_42

[Hometown]

Conan, you were stimulated last year.  Now that stimulation was about as significant as Reagan's tax cuts for the middle and lower classes, so you might not remember it.  But you were definitely stimulated.

[waterboy]

Is the honeymoon over? Or are the newlyweds just arguing over the checking account?

[Gaspar]

quote:Originally posted by Hometown

Conan, you were stimulated last year.  Now that stimulation was about as significant as Reagan's tax cuts for the middle and lower classes, so you might not remember it.  But you were definitely stimulated.

The GDP grew by a record 31% under the Regan tax cuts.  Last year's stimulus was not a stimulus (no matter what they called it).  It was a rebate, and rebates have a history of failure.

[waterboy]

I had a 48% increase in operating revenues yesterday. Someone bought me lunch.

It was easy to show great gains under Reagan. Since 1984 represented a pretty piss poor economic time period, we had nowhere to go but up. The joke at the time was, "if you're paying any taxes now, fire your tax accountant". That downward cycle was different in nature than this one and not as severe. Assuming a tax cut will cure this mess is just partisan posturing.

Ah, the simplicity of the republican mind. Just cut taxes, cut the tax rate, etc. Problem is, a tax cut for the lower 3/4 of the population only goes towards basics or reclaiming lost ground. They are debt squeezed, facing rising expenses for  health care, utilities, food, real estate taxes and transportation. Meanwhile, their jobs are shaky, they are having to forego raises & bonuses (excepting the big boys) they face increased pressure and responsibility as management realizes they can now stick it to their employees in the name of "the economy". Exxon posted record earnings this morning. Q4 earnings for Office Depot matched the previous year.  

But like many are quick to point out, its the top tier who pay the most taxes. That's problematic for the tax cut argument. Because, the banks didn't pump their bailout money into the economy and historically the top tier of taxpayers don't spend their new tax savings either. They don't need to. That leaves even less for government to work with to provide services. Or...is that what republicans see as a corollary benefit?

This complex problem economy is going to require more than simplistic thinking. Taxes are only a small part of the answer.