July 8, 2010
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It’s true the Stimulus didn’t work
Brad Delong wrote wisdom on his blog today as he often does:
“Q: Will President Barack Obama’s “recovery summer” convince voters the $787 billion stimulus package is pulling the economy out of recession?My Answer: The problem is that the stimulus package Obama proposed was about 2/3 the size that Obama’s economic technocrats thought appropriate in December of 2008, that the marginal votes needed in Congress–Snowe, Nelson, et cetera–cut its effectiveness down to half and had the bargaining power to do so because every single other Republican thought their job #1 was to make Obama look like a failure, and that the magnitude of the financial shock to the world economy turned out to be about twice as big as we were estimating in December 2008.”
Let’s repeat that in overly ridiculously simple terms.
Let’s say your apartment burned down. But not to worry you have insurance! Not only that, but you live pretty frugally so no worries. Let’s say you figure out in December, 2008 that you had $50 worth of stuff that was destroyed in the fire that you need replaced. So you call your local insurance representative and tell them you need $50. He tells you that there’s no WAY he can get you $50 out of his pain in the butt bosses and that the best he can hope for is about 2/3 of that. So he goes to his superiors and asks for $33.33.
Only when it gets to his superiors they decide that $33.33 is waaaaay too much. I mean, studying your profile, you’re obviously a lazy bum who shouldn’t be allowed to succeed in anything! So they decide to cut that in half. You end up getting $16.67.
Only it turns out a year later you realize that YOU miss-estimated the value of the items in your house in the first place. You forgot about all the awesome stuff in your closets! In reality what your stuff was worth was twice as high. So you should have gotten $100 for your lifetime of insurance premiums, but in reality you’re now forced to suffer through with $16.67.
It gets worse. All of a sudden you start getting fines from the insurance company! You suffer 50 small fines for negligence related to fire safety and missing filling deadlines and the likes. The total amount of all of those fines ends up being… you guessed it $16.67!
That’s kinda the state of the economy. The proposed Stimulus would have given us a pitiful percentage of what was needed to make up for the damage caused by the flames of the financial crises. What we actually got after it went through our corrupt and broken political system was substantially less than that. On top of that the States have all been cutting back spending and raising taxes and revenue , in other words engaging in anti-stimulative behaviors that have wiped out what little gains remained.
So yeah, the stimulus failed. It helped a little but it was far too little to deal with the scope of the economic disaster Bush and the big Banks left us with. So we have 10% unemployment and 17% underemployment.
As ridiculous as it is for republicans to claim that the Stimulus didn’t save jobs, it’s even MORE ridiculous for Democrats to try to sell their stimulus as having “worked” when the unemployment rate hasn’t gone down at all. What kind of rational person can believe that? Too many of us know people who have lost their homes and are out of a job or are making substantially less than we used to. We don’t see any extraordinary gains from the stimulus. It strains the imagination to say the least.
If you had a school where only 17% of the students were graduating and you implement a policy change that years later results in… still 17% of students graduating… it’s damned hard to argue that your policy change was great because it prevented the school from dropping to a 0% graduation rate which would have happened otherwise. That might be true, but you can’t call that a success. It’s a failure.
It’s clear the Stimulus failed. The only real question to me is whether or not it was as Brad DeLong suggests: partially a deliberately induced failure encouraged by lawmakers more interested in short term gains they could achieve by making Obama look bad.
There’s no clear evidence of that that I’ve seen. It could just as easily have been the case that the Republican lawmakers who reduced the effectiveness of the stimulus were just being stubborn and dumb and don’t understand the economics. After all we did have years and years where the republican economic strategy consisted solely of cut taxes.
But at least there IS a strategic logic that can be applied to the Republican decisions. As to why the Democrats would have proposed less than their best guesses and then capitulated to their adversaries demands to cut even more even knowing, or at least supposedly believing, how dire the consequences could be, I have no idea. There appears to be no rational excuse. It seems like they just closed their eyes and wished that things would work out alright.
In summary:
Republicans: Either Well Meaning Idiots or Strategically Smart Immoral Assholes.
Democrats: Total Idiots.
I honestly think the democrats deserve to lose the elections this year. And were it up to me, I would totally vote every single one of them out of office. Only one problem. There’s nobody half-way decent to vote for instead!
EVERY indication is that the only other party we have would be even worse. They wouldn’t have done any stimulus, wouldn’t have done any health care reform at all, wouldn’t have extended unemployment benefits at all, wouldn’t have made BP pay for the damages from the oil spill at all, would have tried to create a much weaker financial reform bill, and would have increased wasteful spending on the wars in Afghanistan and Iraq. That’s not stuff I made up. That’s their stated positions.
Unless they were lying all along just for political gain. And for the sake of the country, if republicans take over again in November, I really hope that they were.
Comments (20)
I was just thinking yesterday, we’re blessed to have someone as well-spoken and as well-written as Krugman to even try to inform the uneducated masses.
It seems to be trailing off now more than ever, I am hearing more about it anyways…
The goal of the stimulus was to absorb the shock of the near financial collapse, not magically negate it (which is impossible).
Seeing this in my inbox I thought for a second, “great, another person going to say how the stimulus package was a bad idea.” And then I recalled, “wait, doesn’t Nephyo know his shit?” My suspicion was correct when I finally sat down and read the whole blog; it looks a lot bigger on my phone, btw lol
You do an excellent job with the examples; they demonstrate eloquently just how screwed up our system is. Even when we have good economic reasons to make a certain choice, the system itself is too covered with “gunk” to even work for the best interest of the people this system is supposed to serve! I say viva la revolution, but then I’m over-the-top! Frankly, the system is not self-correcting, especially in any timely manner. We’re screwed; that is the end of it. Until we have a systematic change from this two-party system of morons, nothing will fundamentally change. We’re heading toward a cliff in a burning car, and I’m just gonna laugh all the way down.
Your analysis means that, like the dems and repubs, you’re an idiot.
Obama’s “stimulus” contained 96% pork candy and 4% real construction (roads, bridges, dams, etc.) stimulus. Obama’s ”stimulus” was massively misdirected toward paying off their supporters. The key thing to understand if you want to fix the economy is how to get the hardcore unemployed back to work. Most of the hardcore unemployed used to work in the housing industry. They are a mixture of tradespeople and financial services people. Hence, a real stimulus would involve some sort of construction along with financial services. Even if it didn’t include financial services, it would be a great help to the economy to get the construction workers working again. That could be done in a few ways. 1) streamline new nuclear plant construction along the lines of France so that it takes 2 years to get the proper approvals instead of 10, 2) commit to buying a completely new fleet of natural gas vehicles and build the infrastructure (filling stations, pipelines, distribution centers, maintenance centers, etc.), 3) suspend the SEC enforcement of increased capital requirements until the unemployment rate reaches 8% in order to stimulate more lending by regional and community banks. This would greatly help small and medium sized business, which employ about half of all workers.
The Obama administration needs to stop the populist bashing of business which is creating fear in business which inhibits capital expenditure which would greatly help reduce unemployment. Business is currently hoarding cash because of the bashing. The CEO of GE, an ally of Obama, vehemently criticized the Obama administration for their bashing of business at a meeting with bankers in Italy.
The Obama administration needs to delay the massive increase of tax increases on dividends and capital gains until after the unemployment rate reaches 8%. It is encouraging that Tim Geithner is making a case for greatly reducing the tax increase. A tax increase would hurt new and marginal businesses (e.g., the airlines) because it would end up reducing liquidity for their stock, which would make them much less attractive investments. Thus, their debt would end up costing them more (if they could even get financing) which might make their businesses unprofitable and end up bankrupting them.
The Obama administration needs to use the TARP money to pay for unemployment benefits instead of reserving it for pork. It also needs to fund more state construction projects. This would help reduce the fiscal pressure on states and municipalities to layoff workers as well as helping reduce unemployment among construction workers.
The U.S. will soon have the highest corporate tax rate in the world (38%) once Japan reduces its corporate income tax rate to 25%. We need to follow Japan’s lead and get business to build and hire in the U.S. instead of driving them offshore with high taxes. Of course, high U.S. wages also play a role, but that is beginning to equilibrate. Re-shoring is becoming more common in U.S. business. Even with high U.S. wages, if the U.S. had comparable income tax rates, we might attract capital produced overseas by companies which offshore back to the U.S.
Open up legal immigration to people who have at least $1 million capital to bring into the U.S. (Of course, you know that legal immigration has numerical restrictions by country.) A massive influx of capital will greatly help relieve hardcore unemployment.
That’s my plan, anyway.
Unfortunately, I don’t think they were lying.
I might add that Krugman did a recent blog that is relevant: link.
@agnophilo - My fire analogy was misleading. I’m not talking about the actual destruction caused by the financial crises but the output gap that resulted from crises. In Keynesian economics Stimulus is absolutely supposed to fill that gap completely or close enough to completely. That’s how you bring down unemployment and spur reinvestment and reduce the length and severity of recessions. The goals are full employment and growth.
But you’re basically right. The stimulus wasn’t designed to fill the output gap either. It wasn’t designed to come anywhere close. THAT’S the problem. Because it totally was within the realm of possibility to fill that gap and we decided not to try, condemning the society to years of massively large levels of unemployment until the economy slowly naturally corrects itself. The plan was only to head off the very worst that might have happened. That was a serious mistake the democrats made. Also not realizing that the States would work against them and reverse most of the good that the stimulus did anyway was another big mistake.
Krugman gives more details about this today: http://krugman.blogs.nytimes.com/2010/07/09/what-went-wrong/?src=twt&twt=NytimesKrugman
It’s not like respected economists like Stiglitz, Krugman, and DeLong weren’t saying this all along. They were. Our politicians decided for whatever reason not to listen to the people who know what they are talking about. Just like on Financial Reform, Climate change, Health Care, Campaign Finance, Education, etc. etc. etc.
@soccerdadforlife - ”Obama’s “stimulus” contained 96% pork candy and 4% real construction (roads, bridges, dams, etc.) stimulus. “
This is a lie. Anyone who told you that is a liar.
$105.3 Billion of the Stimulus were INFRASTRUCTURE. That’s 13.37%. That’s your roads, bridges, trains, high speed rail, fixing our water and sewage systems, improving government buildings, improving shipyards, airports, national parks, etc.
In addition, most of the other provisions of the bill were also clearly economically stimulative. Including:
$288 Billion of the Stimulus was used for Tax Cuts. A lot of this was at republican insistence. But that’s 36.59% of the Stimulus.
$144 Billion of the Stimulus was used for support for State and Local governments. This allows them to do more infrastructure projects, pay more unemployment, give out health care, continue to hire school teachers and librarians, and the likes. We’ve seen states cutting back on all of their services and raising taxes and firing people. This kind of money directly stimulates the economy and saves jobs. The original proposal from the Obama administration would have given significantly MORE money to the States for stimulus, but again to get the 3 republican votes the Stimulus got it was drastically reduced.
$100 Billion of the Stimulus was used for Education and worker Training programs. This obviously helps people who lost their jobs get the training they need to get other jobs. Also money spent on education helps teachers keep their jobs and alleviates some of the costs families have to pay on higher education.
Basically very little of the Stimulus appears to fall into the category of “pork barrel spending”. Most of it has real utility and most of it does and did stimulate. It’s not all of it the best kind of economic stimulus. Some of the tax cuts were almost certainly a waste of money. We most certainly could have done better.
But to claim that only 4% of the Stimulus was useful is just utter nonsense. No one honest or serious who examines the spending data can come to that conclusion.
Your proposals aren’t bad. 1) and 2) aren’t appreciably different from building a clean energy economy using wind and solar and battery power or hydrogen. You only mention natural gas and nuclear because those are YOUR pet projects that you think would work best. Democrats have different opinions and spent money to build infrastructure for these clean energy projects. $43 Billion of the Stimulus went toward that. More would have been spent in the energy bill which would have stimulated the economy even more but Republicans have been blocking it. 3) is crazy nonsense. Low capital requirements were a huge part of what made the banks vulnerable to a collapse in the financial crises. Had they had higher capital requirements we would not have needed to bail them out.
“The Obama administration needs to stop the populist bashing of business which is creating fear in business which inhibits capital expenditure which would greatly help reduce unemployment. Business is currently hoarding cash because of the bashing. “
This is either bullshit or these businesses are run by whiny childish babies. You think it’s okay for them to act like whiny babies because oooh the big bad Obama is saying bad things about them? Give me a break! They’re adults. They make policy decisions based on how much money they can make. They aren’t investing because there is no spending and the world refuses to borrow money. You don’t invest if there’s no one with the money to buy your products. It’s insecurity about the future of the economy. It has nothing to do with “populist bashing”.
And businesses need to understand that the population has GOOD reason to be angry and it’s totally natural for politicians of both parties to give voice to that anger. Major corporations spilled massive quantities of oil into our Gulf, destroyed our economy, and constantly put profits above the health and welfare of the people. We’ve seen businesses take over our wars and run them poorly and take over our government and run IT poorly. For example, people were angry at Insurance companies LONG before the Obama administration gave voice to that anger. And the Obama administration barely manifested a fraction of that anger. In fact they mostly capitulated to insurance companies.
“The Obama administration needs to use the TARP money to pay for unemployment benefits instead of reserving it for pork. “
That statement is totally incoherent. Unemployment benefits are not pork. Wherever they come from, they are stimulus. The TARP isn’t used for “pork” either. It’s an insurance policy against catastrophic collapse of banks. It’s also used to help people stay in their homes. If we want to stimulate the economy more we should pay unemployment benefits exactly the way the democrats have been proposing and republicans have been blocking because they think somehow the unemployed will magically start finding non-existent jobs if they don’t get unemployment.
“The U.S. will soon have the highest
corporate tax rate in the world (38%) once Japan reduces its corporate income tax rate to 25%. “
I’d be fine with reducing the corporate tax rate so long as you also close all the loop holes corporations use to avoid paying most of those taxes. Corporations like Exxon and GE end up using those loopholes so that they pay nothing in taxes. Better still, if you’re going to do it, don’t take businesses word for it that they’ll hire Americans, make the tax cuts *contingent* on their hiring Americans. Better yet make it target small and medium businesses who are less able to spend money to find loopholes around the tax system.
But just cutting corporate taxes is no magic cure to the job problem.
“Open up legal immigration to people who have at least $1 million capital to bring into the U.S.”
This strikes me as grotesquely unfair and totally against the history and tradition of this country. Whatever happened to:
“
Give me your tired, your poor,Your huddled masses
yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tossed to me,
I lift my lamp beside the golden door”
We became a great country not by attracting the global economic winners and helping them win MORE. We became a great country by creating the means of people of talent and intellect to grow and BECOME economic winners.
@HappyLemming - It’s great that we have a few voices of reason at each establishment. I don’t know what we’d do without Krugman at the NY Times, Ezra Klein at the Washington Post, even Shepard Smith at Fox News occasionally spouts reason. Without that only those few of us who are actively looking online would know what’s really going on.
@HereLiesNelsontheGreat - yeah it’s definitely running its course. That’s part of what’s so disturbing.
@bryangoodrich - I’m all for revolution! I just don’t know how we build up the organization to do that. I still have some hope that over the long term things will self correct, but many people will suffer and die in the process. Also, you beat me too the Krugman link! Definitely a great article.
@SoapAndShampoo - unfortunately I think you’re right. So given that, I hope that the entire accumulated knowledge of the history of economics is wrong.
Just like I hope Climate Scientists are completely totally wrong and the crazy critics are right.
But they aren’t.
["Obama's "stimulus" contained 96% pork candy and 4% real construction (roads, bridges, dams, etc.) stimulus. "]
“This is a lie. Anyone who told you that is a liar.”
Let’s examine the stimulus summary and see who’s the liar.
You can find the stimulus summary spreadsheet here. $27 billion on roads and bridges. Looks like 4% to me (actually less).
You can find some analysis here.
“trains, high speed rail, fixing our water and sewage systems, improving government buildings, improving shipyards, airports, national parks”
AKA local “pork”
“trains” = AMTRAK = pork (throwing money down a hole)
water & sewage are maintained by municipalities (clean water is good, but is this really stimulus?)
shipyards ditto
airports ditto
Pork, pork, pork.
You also left out the “tax credits” for people who don’t pay income tax. Redistribution of wealth. Pork. No jobs created.
You left out the “green” jobs which is more pork. Take away 1 job to get 1 job. No net construction jobs created.
You left out lots for environmental cleanup. More democrats’ crony capitalist pork.
$144 billion for federal education jobs. Pork for the NEA and SEIU.
“$288 Billion of the Stimulus was used for Tax Cuts.”
I don’t know where you get this figure. Looks more like $20 billion (corporate pork that doesn’t create construction jobs). Maybe you’re including the redistribution of wealth “tax credits.” No jobs created.
“$144 Billion of the Stimulus was used for support for State and Local governments. This *** allows *** them to do more infrastructure projects, pay more unemployment, give out health care, continue to hire school teachers and librarians, and the likes. “
I’d rather be certain that the stimulus was spent on real infrastructure construction projects like roads and bridges, not “greening” govt. buildings or other things that don’t create construction jobs. Otherwise the “stimulus” name is a joke.
“This obviously helps people who lost their jobs get the training they need to get other jobs.”
Yeah, sure, all those construction workers are gonna learn to be engineers or philosophy perfessers.
Yeah, let Obama bash those greedy businessmen! We don’ need no steenkeeng jobs! Oh, yeah, there’s still demand out there, but companies aren’t gonna spend on capital improvements to tap that demand if the risk is too high.
By the way, Exxon’s effective tax rate in 2009 was 43.5% and it paid $15 billion in income taxes. Maybe if we lower the tax rates Exxon will pay income taxes to the U.S. instead of to other countries.
“You only mention natural gas and nuclear because those are YOUR pet projects that you think would work best.”
Only because they would work best. Nat gas and nuclear have high power densities (100 times and more “clean” energy power densities) unlike “clean” energy. “Clean” energy is a step backwards. Next thing we go back to burning wood. Both nat gas and nuclear would help reduce our dependence on imported oil. We will soon be a major exporter of liquified nat gas once the second terminal is built. Too bad we’ll be importing oil at the same time. It’d be nice to tell Ugo Chavez to take a hike instead of buying oil from him.
“Democrats have different opinions and spent money to build infrastructure for these clean energy projects.”
Democrats are morons.
“That statement is totally incoherent.”
Or maybe you are illiterate. My point was that the dems want to save the TARP money to spend on pork later. The repubs want to spend the TARP money on unemployment now instead of increasing the deficit.
“But just cutting corporate taxes is no magic cure to the job problem.”
But it just might increase tax collections here and result in increased capital spending by business and job creation.
“We became a great country not by attracting the global economic winners and helping them win MORE. We became a great country by creating the means of people of talent and intellect to grow and BECOME economic winners.”
Early on we used immigrants for cannon fodder (the Irish in the civil war) and cheap labor working in factories (the italians and slavs) and building the railroads (the chinese). “Give me your tired poor so that I can exploit them.” Don’t drink the liberal kool-aid. It kills the brain.
Now we exploit immigrants in fast food, chicken factories, construction, hotel jobs, etc. Some of them (or their children like Sergei Brin) start major companies. A lot of our engineers and programmers come from overseas, though. That’s changing with the lackluster economy. Now overseas companies are giving away engineering work (especially in China) in order to get manufacturing orders.
If we let in immigrants with capital, they will be likely to start businesses and increase employment. Lots of illegal hispanics have started their own businesses here and employ other illegals. If we let in immigrants with capital, we’d have strong growth (maybe 7%?) instead of just a measly 2.7%. Because of the lackluster economy, we can expect unemployment levels (almost 17% including all those who don’t have full-time jobs) to stay much higher for years (maybe 5-12 before we reach 8% unemployment) than they ever were under the Bush “jobless” recovery.
@soccerdadforlife -
On The Stimulus:
The $288 billion used for tax cuts is visible on the recovery.gov website quite clearly. It’s also on wikipedia and on the WallStreet Journal: http://online.wsj.com/public/resources/documents/STIMULUS_FINAL_0217.html The sections in green are tax related relief.
You live in some kind of warped bizzarro world where spending money to hire someone to fix a bridge is really stimulus but hiring that same person to fix the fucking water and sewage system so we can have clean water is “pork”. You do realize that there are places in this country where their water looks like mud and where you can set the water coming out of their sinks on fire?
I honestly don’t know how I can communicate with you if you are determined to see anything that doesn’t fit within your narrow definition of what governments ought to do as “pork” regardless of whether or not it is effective at saving or creating jobs or improving people’s lives.
But I’m a sucker for punishment, so I’ll try anyway.
I just listened to a program here in Indiana where the Republican leadership was praising how many jobs would be saved and created because of investments in public transportation and hide speed rail. Their whole argument is that many many businesses around the world don’t WANT to invest in a place with a crumbling infrastructure without a mobile population so that their potential workers can get to work. Trains, like your hated Amtrak, buses, subways, high speed rail, even airports were EXACTLY the kinds of investments companies were looking for when trying to decide whether to invest in Indiana. That’s why Indiana recently overhauled its biggest airport too. All amongst the kinds of investments included in the stimulus.
Those are ALSO the kinds of projects aid to States make possible. Really I don’t even understand your objection to giving money to the States. I thought that was a core conservative tenant that the people closest to the people are best able to know what to spend their money on! Your all about States rights aren’t you? I imagine that’s why in fact 91 Republicans have gone home to their States and praised the great Stimulus projects to great acclaim in spite of having not voted for the stimulus at all. http://www.dccc.org/page/content/hhof They were praising the programs and were eager to take credit for them because they fucking worked! They created jobs in their states and they KNEW they would. They’re just such utter hypocrites that they didn’t have the courage to vote for the bill and still want to take the credit.
On Business Taxes
The 48% Tax rate of Exxon Mobile is before they hide their tax burden in off shore holdings. They were actually OWED $46 million in refunds by the federal government. The $15 billion was paid to other countries. This in spite of making a record $45 billion profit. It’s explained in more detail here: http://motherjones.com/mojo/2010/04/exxon-mobil-paid-zero-income-tax-offshore%20shelter-wal-mart-general-electric-forbes
Other companies that are substantially based in the US use similar tactics to lower their tax burden and the US government ends up getting screwed. That’s a terrible system.
But more to the point your faith in businesses willingness to expand and hire Americans if they just only had the money is extraordinary. Why should they if they had more money? Wouldn’t they hire where ever the labor force is must skilled and cheapest? Or couldn’t they, as you implied before, just refuse to spend because they are whiny babies who think President Obama is the big bad Mr. Doom out to get them? We’ve tried tax cuts for the last twenty years, the biggest of which happened in the last eight and we got a financial crises and record income inequality for our trouble.
In spite of this Democrats still included $51 billion of the Stimulus directly on taxes to businesses. Not individuals. Businesses.
On the Workers
You know you might be surprised to know that not all the people who lost their jobs in the recession were construction workers! SHOCKING! I know! Some were. But many many more worked all kinds of other jobs including people working at Home Depot and Starbucks and Linens’n'Things and Circuit City. Massive numbers of them were autoworkers. A large chunk were real instate investors. A good many of them were wallstreet bankers! Many teachers lost their jobs. Truckers lost their jobs. Businessmen in totally unrelated businesses lost their jobs. My Dad was an IT person who worked for a contractor that contracted services out to the local chemical company. He very nearly lost his job and had to downgrade to lower paying job. LOTS of people lost their damned jobs. And today we’re suffering from loses of jobs in the fishing industry and the offshore drilling industry as well.
It’s true the housing construction market collapsed so a lot of construction workers lost their jobs. But that market was overinflated. Getting those people back to work requires more than just making up temporary construction jobs for them. Retraining is totally possible and a viable strategy and in the long run a necessary strategy. Just like the auto-industry permanently contracted so too has the housing industry. Workers in both industries will eventually have to move to other industries. Similarly for the people working in all kinds of other service jobs who lost their jobs all around the country and will find that there might not be enough service jobs for them going forward. They’ll have to learn new skills.
And honestly it’s not hard to learn some computer skills and move into a health care IT position or become a teacher even for a lot of construction workers. Also learning to build solar panels or wind mills is not that different from working in an automobile facility.
Obviously they can’t all become professors. But who knows maybe one or two of them will. Or their children will and add to the overall body of human knowledge. But then the market for professors is over saturated in the US too and it’s damned hard to get a job in that as well as anyone graduating with a PhD will tell you. So no the training programs are in no way built around encouraging people to join pHD programs. Pell grants help people learn all kinds of technical skills at the local community colleges too you know.
On Energy
Natural gas has severe secondary consequences including global warming, but also the whole water-on-fire problem I mentioned above. In the long run it’s a destructive process that is no solution to anything. It has a place as an interim component of an overall energy strategy but not as an overall goal. Similarly with nuclear power. It doesn’t contribute to global warming but it does create radioactive waste that nobody wants to deal with and poses a security risk to boot.
But here’s the thing. The blocked Energy bill included natural gas funding. It included clean coal funding. It included ethanol funding. It included NUCLEAR funding. A LOT of it. Obama’s campaign was partially funded by people who are super big on Nuclear power. It even included god damned offshore drilling funding and we all know where that strategy got us. All of this was core tenants of the Republican platform and they still couldn’t muster not one single republican vote in the senate.
This is the problem of course. For you and your ilk it’s your way or the high way. It has to be 100% what you want, and 0% what anyone else wants. Some people really believe that solar and wind CAN work and IS necessary. It IS working all around the fucking planet. Right here in Indiana I passed a huge and expanding wind farm. There’s a new wind farm getting built off the coast of MA. Germany, Denmark, Spain, and Portugal already get substantial amounts of power from wind. Homes all over the planet are starting to use geothermal and solar power to run zero-energy homes so that they can live without a need for energy from the utility companies. Clean energy together with energy storage technology is very effective. It reduces our dependence on foreign energy as well as domestic dirty fuels. And best of all it’s sustainable. You eventually run out of oil and gas and even coal. You never run out of sunlight and wind and tide.
But everything I’ve said is no doubt irrelevant to you. It has to be roads and bridges and nothing else. It has to be nuclear and natural gas and nothing else.
Everything else must be evil Democratic Pork Spending!
It almost seems to me that you crafted your policy recommendations by looking at what was in the Stimulus and then choosing the opposite. And when you do that you sound like a partisan hack who is just trying to score political points and not making a serious attempt to solve real problems.
And of course your other plan is to gather all the worlds millionaires together in one place here in the US and let them have a fucking party while they exploit the rest of the world for resources and let their poor pitiful masses starve.
Yeah. That sounds really great.
I don’t see how spending on “wastewater” will stimulate the economy. I looked at the funding and lots of it looks like pork. My wealthy city got some and I can tell you that was pure pork.
I don’t see how you fail to link public transportation with unemployed autoworkers.
AMTRAK is a rathole, no matter how you slice it.
If high speed rail is truly necessary to get the workers to work, that might be a good case. Most times, this stuff is pork and padding someone’s resume. Light rail (really just buses with an overhead line like in San Francisco) is a contentious issue in my metro area. It’s a crony capitalism situation here.
“I just listened to a program here in Indiana where the Republican leadership was praising how many jobs would be saved and created because of investments in public transportation and hide speed rail.”
Lots of repubs take pork, too. But, hey, I’m an independent. I’ll rant against repub corruption, too. I dislike repubs only slightly less than dems.
“Really I don’t even understand your objection to giving money to the States.”
Because it gives an opportunity for pork. Really, it’s very simple. It encourages crony capitalism.
“They’re just such utter hypocrites that they didn’t have the courage to vote for the bill and still want to take the credit.”
No question that lots of repubs got pork and are hypocrites. I’d oppose them in the primary.
I really don’t see why you have a problem with Exxon. They got their money overseas and paid their taxes overseas. I see this just as a trickle-down from offshoring. Eventually wages will equilibrate and we’ll see a pickup in reshoring. But if you dems get your way, you’ll drive business overseas even more.
“In spite of this Democrats still included $51 billion of the Stimulus directly on taxes to businesses. Not individuals. Businesses.”
I counted $8 billion net in the column “Business tax credits.” Maybe you’re counting the “green” business grants, which are just wasteful.
“But more to the point your faith in businesses willingness to expand and hire Americans if they just only had the money is extraordinary. “
See, when it comes to business, you don’t know your stuff. Large American corporations are cash-rich! They have muh-ney! They won’t spend it on capital improvements unless the risk/reward ratio is favorable. When the feds are bashing business, that affects the risk/reward ratio negatively, so they won’t spend their cash. New loans are hard to get for all kinds of business. Those with the best credit ratings (generally large corps) get the new money if any exists. Many corps have existing lines of credit, though sometimes those get cut (or eliminated if the credit rating of the business declines).
“You know you might be surprised to know that not all the people who lost their jobs in the recession were construction workers!” Not at all. My IT position was eliminated some months back. Construction workers felt the brunt of the pain, though. Also financial institutions that lent money for construction. Workers at the financial institutions are more adaptable. Older men were the ones most likely to be unemployed, so retraining and getting hired in a new industry is very difficult.
Sure there were layoffs in lots of companies that relied on housing and consumer spending. Get those construction workers back on the job and the rest will sort itself out. If I recall correctly, about half of all workers worked in the housing industry somehow. That was a big bubble.
“We’ve tried tax cuts for the last twenty years, the biggest of which happened in the last eight and we got a financial crises and record income inequality for our trouble.”
What do you think caused the financial crisis? Wall Street just up and decided to cause trouble? Nah, they were trying to make lemonade from the lemons pushed on them by govt. policies to let stated-income, no-money-down, balloon loans slip through the system. What was the SEC doing to make sure that Wall Street’s mortage packages were legit? Downloading porn? Makes you want to rely on more govt. agencies to prevent problems, doesn’t it? Yeah, just pass more regs, we’re sure the SEC will enforce them. What did the SEC do for ten years when whistleblowers were telling them to investigate Bernie Madoff? Playin’ with themselves? Oh, yeah, the officer in charge of overseeing the branch of the SEC that was responsible for enforcement (Sheila Bair) is now running the agency? Guess she knows how to hide the skeletons.
Why is record income inequality a problem? If the bulk of the population of our country has a high median standard of living, just because there are a bunch of rich people, why is that necessarily wrong? If a bunch of people become unemployed because of liberal housing bubble policies (whether advocated by dems or repubs like Bush), maybe we need to stop drinking the liberal kool-aid. If people become unemployed because of offshoring, we need to figure out a way to attract business, not cause them to leave.
IT is basically closed for new jobs, at least where I live. Millions of asians earn IT degrees every year and offshoring is rampant in IT.
“The blocked Energy bill included natural gas funding. It included clean coal funding. It included ethanol funding. It included NUCLEAR funding. A LOT of it. “
It also included the incredibly stupid cap and trade stuff, which was more crony capitalism to benefit Goldman Sachs and GE. That would have amounted to a hidden tax that would have raised prices 10% minimum.
Ethanol — inefficient; a stupid waste of land usage
Clean coal — a pipe dream. Best case, it’s available in 2040. Not something we can afford right now.
Natural gas — I couldn’t find it in Obama’s bill, though it was in a repub energy bill.
Nuclear — what it needs is not funding, but streamlined, optimal regulations instead of idealistic, cumbersome regulations like we have now. It takes 10 years just to get the regs in order. Way too expensive and risky. This needs to be handled in a bill all by itself
Obama’s energy bill was comprehensive rat poison, which is 99% good food mixed with 1% poison (or maybe more like 70% poison).
“This is the problem of course. For you and your ilk it’s your way or the high way. It has to be 100% what you want, and 0% what anyone else wants.”
You libs are absolutely clueless when it comes to business. You guys are precious, but it’s sad to think that we are in the hands of such an incompetent as Obama.
“All of this was core tenants of the Republican platform “
The word is “tenets”.
“And today we’re suffering from loses of jobs in the fishing industry and the offshore drilling industry as well.”
Well, we can thank the Obama administration for screwing up the cleanup so that fishermen are idled and tourism is down and idling 10,000 deepwater oilworkers along with 90,000 support workers with its ban on deepwater drilling.
“Natural gas has severe secondary consequences including global warming, but also the whole water-on-fire problem I mentioned above.”
I don’t think that this has been shown to be an unmanageable problem. Deep fracking is totally safe. Some water contains naturally-produced methane. Shallow fracking can be a problem if casings aren’t done properly.
“You eventually run out of oil and gas and even coal.”
Prove it. We were suppose to run out of oil in the ’80s. If oil forms abiotically, it may get replenished from the magma.
“Right here in Indiana I passed a huge and expanding wind farm.”
Incredible waste of space. Think how much food that land could produce to feed the hungry. You do care about feeding the hungry, right? Or do you only want to use the hungry to propagate your class envy?
The only economical place I can think of for solar is on the rooftops or out in space. And only if it doesn’t require govt. subsidies to get people to buy it. It has to be able to stand alone economically.
“It doesn’t contribute to global warming but it does create radioactive waste that nobody wants to deal with and poses a security risk to boot.”
Yeah, eventually radioactive waste becomes a problem. It could be sunk into the ocean depths where it would be taken into the magma. Terrorists could always buy a mining company and mine pitchblende, so it’s always a security problem. And what if the North Koreans or Iranians start selling radioactive material?
“It almost seems to me that you crafted your policy recommendations by looking at what was in the Stimulus and then choosing the opposite. And when you do that you sound like a partisan hack who is just trying to score political points and not making a serious attempt to solve real problems.”
No, you are living in lalaland. And as I wrote above, I’m nonpartisan.
“let them have a fucking party while they exploit the rest of the world for resources and let their poor pitiful masses starve.”
Your class envy is truly pathetic.
In a capitalist system, the people who are competent to manage capital should be in charge of managing it. They will create jobs and manage risk so that most everybody benefits. Give an excess of money to people who don’t know how to manage it and they will just piss it away. Most people don’t know how to manage a lot of money.
@nephyo - It might have also been the fact that we were already 10 trillion in debt and they didn’t want us to owe the total value of everything produced in america for an entire year to china.
Your argument about the unemployment rate assumes something: That without the stimulus, the unemployment rate would have remained the same. Unless you’re a genie or a scientist with lots of money for performing an experiment, you cant know that. Now, you can look at unemployment trends and make predictions, but you cant just make that assumption.
Otherwise, I like this post.
@IntrospectiveOctober - ”Your argument about the unemployment rate assumes something: That
without the stimulus, the unemployment rate would have remained the
same.”
Not at all. I believe that without the stimulus the unemployment rate would have been substantially worse. But I don’t think that contradicts my argument at all.
Note this is not a random opinion. We can show easily that jobs are created by stimulus. No one disputes that some stimulus spending went directly to hiring people. There’s no reason to expect those people would have magically found jobs without the stimulus.
In addition many many economists generally believe that stimulus creates jobs when there is an output gap. The logic behind this is fairly simple. If people aren’t spending, businesses aren’t making money. If businesses aren’t making money then they CAN’T hire people. If you provide people with money, directly or indirectly, that provides businesses with money that they could use to hire people or at the very least to not lay off as many people.
You’re right that I CAN’T know with absolute certainty. Nor do I know with absolute certainty that the sun will rise tomorrow. But no one has provided a credible explanation to me that makes sense to me that would suggest that without the stimulus we would have gained jobs and had a lower unemployment rate. The best explanation of the facts is that the stimulus probably reduced unemployment from what it otherwise would have been.
You could maybe argue that the extent to which it reduced it is so negligible that it doesn’t even show up as a fraction of a percent in the unemployment rate. So in effect that there has been no change. But I don’t think there are many economists who would agree with that.
Maybe someone could make an argument that the stimulus made the economy worse but it would be a pretty torturous argument. You’d have to argue that businesses lost confidence in the economy because the stimulus wasn’t big enough or wasn’t focused enough and so they horded money rather than hiring. But those would just be arguments for more stimulus which would put us on the exact same page.
The only way to get to a difference conclusion would be to say that the stimulus hurt the economy because it raised the deficit and that made businesses less confident so they didn’t invest in jobs. I find that argument torturous at best. Businesses bottom lines aren’t really that concretely connected to the deficit. And big businesses don’t make decisions on who or when to hire based on whether the US deficit is bad. Moving jobs out of country is slow business, and there hasn’t been any excess of that lately more than during normal times, or at least the times just preceding the crises. In fact there’s evidence that businesses have confidence in the US government because interest rates for the government to borrow money are like at 3.3% or lower. Also the stimulus included some incentives to keep jobs in the US, albeit not a whole lot.
But even accepting that the stimulus DID save jobs doesn’t mean that it counts as a successful policy. Admittedly this is a subjective opinion of mine, but I think if you do a half measure, that isn’t nearly good enough, it’s still a failure not a success.
We want to get employment levels as good as we can, given our capacity, since we haven’t done enough to do that, I think that counts as failed policy.
@nephyo - ”If you had a school where only 17% of the students were graduating and you implement a policy change that years later results in… still 17% of students graduating… it’s damned hard to argue that your policy change was great because it prevented the school from dropping to a 0% graduation rate which would have happened otherwise. That might be true, but you can’t call that a success. It’s a failure.”
Did you add this part in, or did I miss it the first time?
And that policy, while not an improvement of the previous year, sounds pretty damned good to me (increasing the graduation rate by 17% from 0%)! Even if the rates are the same, you have to look beyond the numbers here, and at the context. The policy is not a “complete failure” because it did affect the graduation rate, and substantially even. Narrowly viewing the numbers as the main indicator of policy success, while not considering the context of the situation, is an unfair way to measure the success of a policy. Further, a policy doesnt have to be black and white: a success or a failure. There may be some areas that it succeeded in (preventing the entire student body from failing out of school) and some areas which it has not been successful (increasing the numbers from the previous year). You seem intelligent, and I feel like I shouldnt have to go into too much detail here on why the statement that I quoted from you is absurd.
Since you’re a fan of analogies, lets put it this way. Say one of your power outlets stops working, so you call the electrician. As soon as the electrician gets to your door, the power goes out for your entire house. The electrician fixes the power for your entire house, but only has a limited amount of time and resources, so he doesnt have a chance to fix the outlet which caused your call, and he leaves. Did he fail to fix the specific outlet that needed fixing? Yes, he did. Is he a failure of an electrician? No, because if he wasnt there, you’d be sitting in the dark.
You see where its going: just because the employment rate is the same as last year, it doesnt mean that the stimulus was a complete failure.
Here is the link to the the unemployment rate trends graph.
@IntrospectiveOctober -
The school analogy was definitely in there to begin with. And I still stand by it.
It has to do with goals. You see if you reform a school that has been declining at a rate of 2% graduation rate per year and has gotten all the way down to only 17% of the students graduating, your goal isn’t, or at least shouldn’t be simply to stop the rate of the decline. That might be where you start, but it certainly can’t be where you end. We can’t call your policy a success until you’ve at the very least turned it around so that the percentage of students graduating is increasing year by year. More likely we wouldn’t even say your policies are a success unless we saw substantial improvement in the graduation rate year by year to the point that you expect the graduation rate to reach something like normalcy for the area in a few years time. Like maybe 50% or 60% or better yet around 90% if it’s a very good school.
The thing is there are a whole range of policies the new administrators can do when the y come into that school where only 17% of the students are graduating. Some of those plans will help a little. Some will help a lot. And some will make things worse. But we shouldn’t have standards so low that we think that any policy that the new administrators implement at all that is better than nothing is a Good policy. We certainly shouldn’t pat the people on the back. Because we KNOW there are scenarios where failing schools can turn around much better much faster. We’ve seen successes that work. Just because the new administrators are not as utterly horrible as the administrators that came before doesn’t mean we should call them successful.
A -2% decline to a 0% decline is what happened in my scenario. That’s progress. It’s not a complete failure. But it’s far from a success. You need a -2% decline to change into like a +10% per year improvement. THEN we might start talking about success.
Likewise we can’t say that the Obama administration has been successful just because they aren’t as complete an economic disaster as the last couple of years of the Bush administration.
With regard to how the economy stands now, most economists I have read are saying we have reversed unemployment trends to some extent, but that compared to other recessions we are going to see a much longer period of much higher unemployment. Many models don’t even predict that we’ll ever reach the lower levels of unemployment that we had just four or five years ago. Rather they seem to be predicting a new norm of like 6% unemployment. That’s atrocious. It means many many people will be suffering horribly in the mean time. Poverty will be on the rise and the wealth gap will widen considerably. I just don’t see how I can consider that a success just because it’s better than it was before.
As for the electrician analogy. I think the proper analogy would be that your power was draining out of your house rapidly for some unknown reason and after two days of it already half your electrical items don’t work. Your electrician comes over, can’t figure out the cause, and has limited time, so he just hooks up a back up power boost generator that increases power to your house the exact amount that has been draining out.
So now your no longer losing electricity, but still half your appliances don’t work. Your electrician reassures you by telling you that sometimes these problems fix themselves and maybe just maybe it’ll go away on its own. But even if not he intends to come back in a month or two and find and fix the leak and get you back to full power with no energy drain.
But then a month or two later he calls you and starts whining about his boss and some nonsense technical terms you don’t understand like filibuster and obstruction and budget reconciliation and yatta yatta yatta. The end conclusion is that he can’t come fix your electricity and your plum out of luck.
Of course if you buy more energy draining appliances or your appliances just lose efficiency over time, you’ll lose power faster and eventually run out. If you buy more energy efficient devices you might be able to make do. And maybe the electrician wasn’t full of it when he said these problems fix themselves on their own. But would you really believe him? Whatever the case your on your own.
Would you consider that really a successful job? I wouldn’t. At the very least I’d have expected the electrician to plug up a generator big enough to give me enough power to run all my appliances. Better yet I’d rather he fix the damn problem so I don’t lose power in the first place.
That’s kinda what the Stimulus was like.
Note that the original proposal for the stimulus was 1.4 trillian. It ended up getting cut down to 0.7 trillian. HALF the size of what people originally thought was needed when the worst projections for the future economy were about HALF as bad as things turned out to be.
It’s a crazy failure.
I’m not saying you should blame the democrats entirely for this crazy failure or blame the Obama administration or even blame the Republcans or the conservadems or the State governments. (though I think that order I just gave is pretty close to the correct increasing level of deserved blame) But I AM saying that the administration is being DUMB when it tries to sell us this line that the stimulus was a great success.
I can’t understand why anyone would accept that. It’s a near impossible sell. At the very least it’s terrible strategy. But I don’t think it’s too far off to call it a lie.
Now if the administration wants to highlight specific good thigns that the stimulus did, that’s a whole ‘nother matter. I could accept that. It HAS done some good things. But it hasn’t succeeded in changing the fundamental realities of our economic downturn in any significant way and I think our leadership ought to be honest with us about that.
Democrats have some successes they can honestly run on. But the economic stimulus is definitely not one of them.