Random Thoughts On The Stimulus Bill

A commentor on noted economist Dean Baker’s blog makes a good point about government spending:

an overlooked factor in deciding how much to spend and what to spend it on is the fact that fed govt borrowing costs are incredibly low right now. now is the time to borrow big to pay for needed infrastructure improvements. if we wait until the economy recovers we will still have to borrow but at much higher rates.

Tim Fernholz explains why the “agreement” thats been “reached” in the senate will weaken the stimulus bill:

An agreement has been reached on the stimulus legislation, and it is an agreement we could refer to as “galactically stupid.” The decision to cutting $40 billion in state aid, another $20 billion in school construction, $2 billion for rural broandband access in favor of $30 billion in tax rebates for people who buy homes and cars is a travesty; the former option is more stimulative to the overall economy and targets needed investments, while the latter has a small stimluative value, is regressive and would be a step towards puffing the housing bubble up again.

When it comes to Republicans understanding economic stimulus, I’ve seen more intelligence from promiscuous teenage girls in horror movies. Steven Pearlstein from the Washington Post agrees:

Spending is stimulus, no matter what it’s for and who does it. The best spending is that which creates jobs and economic activity now, has big payoffs later and disappears from future budgets.

Seriously people. You need to read that entire, brief, article.

Jon Stewart, yes THAT Jon Stewart, comes up with an innovative idea for fixing the credit crunch:

…rather than giving bailout money straight to the big banks, Congress should give tax credits to Americans for the express purpose of paying off their consumer debts. Not only will the banks get a cash infusion so they can regain liquidity, his reasoning goes, but consumers will be relieved of their credit card and mortgage debts and will thus have more spending money to pump back into the economy. Stewart calls it “trickle-up economics,”…

Senator Jim DeMint’s “Stimulus” “proposal” would cost at least $6 trillion:

I can’t find an estimate, but based on estimates of the Bush tax cuts I’m guessing that the DeMint price tag is at least $6 trillion over the next 10 years. Why isn’t this a front page story anywhere?

Obviously as a liberal I’d like to see mention of Republican hypocrisy (not affordable, not temporary, not efficient), but that isn’t necessary. I would think “Republicans Propose $6 Trillion Stimulus” would be a sufficiently interesting headline to lead a newspaper.

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4 thoughts on “Random Thoughts On The Stimulus Bill

  1. Look at how many billions of dollars in this bill are wasted on things not even directly related to the economy; STD prevention, fixing the commerce department building, Anti-Smoking?

    Sure, all spending is stimulus, but there better ways of getting that money into the economy, and American taxpayers should get something for their troubles after the spending is done.

    I thought that the President was going to propose something dramatic when he offered his spending bill to congress, some kind of public works-like proposal that would move us towards energy independence or transition us to electric cars or something; instead, we we’ve got two lowest common denominator type bills that the Senate and House are going to cobble into so much mediocrity. The only thing dramatic about this bill is the price tag.

    Personally, I think Jon Stewart’s proposal is much more sensible and would be much more effective at stimulating the economy than the current Highway-Bill-On-Steroids. If my household received the obligatory 10K equivalent worth of cash this bill proposes spending, I would patriotically put it all into a down payment on a Dodge Challenger R/T at the local dealership. Cheers.

  2. Wilson

    You have some of your stimulus facts backwards:

    I thought that the President was going to propose something dramatic when he offered his spending bill to congress, some kind of public works-like proposal that would move us towards energy independence or transition us to electric cars or something

    You must be confused. There are several billions of dollars allocated towards infrastructure programs and green energy programs. In fact, thats one of the main aspects of the bill Republicans have been raising hell for democrats to remove. One example being the hell that the house gop raising over the program to repair the Washington Mall in DC.

    If Republicans proposed spending more money on public works, I gurantee democrats would agree. The problem is that republicans are focused on only tax cuts.

    The vast majority of progressives are actually clamoring for even more money to be spent on infrastructure.

    Sure, all spending is stimulus, but there better ways of getting that money into the economy, and American taxpayers should get something for their troubles after the spending is done.

    Like what?

    Look at how many billions of dollars in this bill are wasted on things not even directly related to the economy; STD prevention, fixing the commerce department building, Anti-Smoking?

    Every dollar spent increases consumer demand and creates jobs for workers who have to supply services and create products. The two provisions you mentioned, anti-smoking and STD prevention, were small provisions that would have saved states millions of dollars which could be allocated to other aspects of their tight budgets.

    Not to mention the jobs created by expanding these state programs and the money families save by implementing better family planning.

  3. Phil,

    thanks for reading and responding. No, actually, I have read through the line items in the bill (which I have linked to at my site) and I am not confused. I haven’t read the 700 + pages of the actual bill, I must confess, but who do you think has?

    I do not disagree that the infusion of this cash into the economy as a whole is going to stimulate aggregate demand, as I stated above.

    But it is not often that a President has the power to spend close to a billion dollars in one fell swoop; Pres. Obama, with a decent mandate and control of both houses, is merely offering a spending bill, that’s it.
    Beyond infusion cash into a struggling economy, what else is this bill going to accomplish?

    I personally expected this signature piece of legislation dramatically alter the landscape of America, as I have Gwritten about previously; it may succeed as a stimulus, but that’s about it.

    We will not all be driving around in electric cars, or sworn off of foreign oil after the last dollar of this thing is spent, and that’s too bad.

    I enjoy your site, by the way.

    Cheers.

  4. Wilson

    You say you’ve read the bill, but your arguments imply that you haven’t. The bill is not simply a spending bill. The stimulus package includes almost $300 billion in tax cuts. This is dems and republicans are having this huge debate about which is more effective, spending or tax cuts. (The evidence says spending by the way.)

    In fact, not only does this spending inject cash into the economy, several studies including the CBO report on the stimulus and an analysis by McCain economist Mark Zandi, reports that the stimulus bill will create 4 million jobs. On top of that Zandi reports that this type of spending in the stimulus bill provides the most bang for our buck. Namely, for every dollar we spend on X project, we tend to get at least $1.30 back.

    Read my post here: https://thechairman66.wordpress.com/2009/01/28/spending-vs-tax-cuts-which-provides-the-best-stimulus/

    You’ve said in both your comments that the stimulus bill is just empty spending that doesn’t provide anything “substantive”. This is just not true. The stimulus bill spends billions upon billions of dollars on various public works projects which will expand and repair our crumbling infrastructure around the country. But that’s only part of the bill. There are other parts that expand pell grants, increase money for green technology, makes government buildings more energy efficient, and provides billions of money to assist cash strapped states.

    No offense, but your arguments are just factually incorrect.

    Now if I’m going to be charitable I could interpret your comments to mean you’re upset that this bill isn’t more ambitious. That i can agree with. I would much prefer a creative and innovative stimulus bill as opposed to the hodgepodge of spending and tax cuts. A lack of ambition however does not equal a lack of effectiveness.

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