Stimulus

by Aaron Tue Jan 27, 2009 5:43 pm

The White House-backed legislation includes roughly $550 billion in spending as well as $275 billion in tax cuts. Much of the spending would be for items such as health care, jobless benefits, food stamps and other programs that benefit victims of the recession.

source

There's only two problems.

1) The 'victims' are going to be the ones who pay for those benefits in increased excise and sin taxes just as they did in the 30's.

2) None of the items listed above will create jobs so they will not stimulate the economy.

by sodbuster Tue Jan 27, 2009 6:16 pm

But you did not mention what the bulk of it will go for.

You only mentioned the short term spending to ease the pain for those on the bottom.

by Aaron Tue Jan 27, 2009 6:33 pm

sodbuster wrote:But you did not mention what the bulk of it will go for.

You only mentioned the short term spending to ease the pain for those on the bottom.

Unfortunately I did.

Much of the spending would be for items such as health care, jobless benefits, food stamps and other programs that benefit victims of the recession.

Now I have a question for you. How is it going to 'ease the pain for those on the bottom' when they will be the ones paying for the programs through excise and sin taxes?

by Aaron Tue Jan 27, 2009 8:09 pm

I couldn't have said it better myself.

What are they buying?

By Thomas Sowell

http://www.JewishWorldReview.com | Everyone is talking about how much money the government is spending, but very little attention is being paid to where they are spending it or what they are buying with it.

The government is putting money into banks, even when the banks don't want it, in hopes that the banks will put it into circulation. But the latest statistics shows that banks are lending even less money now than they were before the government dumped all that cash on them.

Even if it had worked, putting cash into banks, in hopes that they would put it into circulation, seems a rather roundabout way of doing things, especially when the staggering sums of money involved are being justified as an "emergency" measure.

Spending money for infrastructure is another time-consuming way of dealing with what is called an immediate crisis. Infrastructure takes forever to plan, debate, and go through all sorts of hearings and adjudications, before getting approval to build from all the regulatory agencies involved.

Out of $355 billion newly appropriated, the Congressional Budget Office estimates that only $26 billion will be spent this fiscal year and only $110 billion by the end of 2010.

Using long, drawn-out processes to put money into circulation to meet an emergency is like mailing a letter to the fire department to tell them that your house is on fire.

If you cut taxes tomorrow, people would have more money in their next paycheck, and it would probably be spent by the time they got that paycheck, through increased credit card purchases beforehand.

If all this sound and fury in Washington was about getting an economic crisis behind us, tax cuts could do that a lot faster.

None of this is rocket science. And Washington politicians are not all crazy, even if sometimes it looks that way. Often, what they say makes no sense because what they claim to be doing is not what they are actually doing.

No matter how many times President Barack Obama tells us that these "extraordinary times" call for "swift action," the kind of economic policies he is promoting take effect very slowly, no matter how quickly the legislation is rushed through Congress. It is the old Army game of hurry up and wait.

If the Beltway politicians aren't really trying to solve this crisis as quickly as they could, what are they trying to do?

One important clue may be a recent statement by President Obama's chief of staff, Rahm Emmanuel, that "A crisis is a terrible thing to waste."

This is the kind of cynical revelation that sometimes slips out, despite all the political pieties and spin. Crises have long been seen as great opportunities to expand the federal government's power while the people are too scared to object and before any opposition can get organized.

That is why there is such haste to do things that will take effect slowly.

What are the Beltway politicians buying with all the hundreds of billions of dollars they are spending? They are buying what politicians are most interested in— power.

In the name of protecting the taxpayers' investment, they are buying the power to tell General Motors how to make cars, banks how to bank and, before it is all over with, all sorts of other people how to do the work they specialize in, and for which members of Congress have no competence, much less expertise.

This administration and Congress are now in a position to do what Franklin D. Roosevelt did during the Great Depression of the 1930s— use a crisis of the times to create new institutions that will last for generations.

To this day, we are still subsidizing millionaires in agriculture because farmers were having a tough time in the 1930s. We have the Federal National Mortgage Association ("Fannie Mae") taking reckless chances in the housing market that have blown up in our faces today, because FDR decided to create a new federal housing agency in 1938.

Who knows what bright ideas this administration will turn into permanent institutions for our children and grandchildren to try to cope with?

source

by Aaron Wed Jan 28, 2009 7:51 am

Another great read that dispels the fallacy that EVERYONE supports a stimulus.

In fact, government stimulus plans have a long history of failure. Remember last February’s $168 billion economic stimulus package? President Bush called it “a booster shot for our economy” and promised that it was large enough to have an effect. It wasn’t, and it didn’t work.

This time around, the Do-Nothing Crowd argues that the new spending — which dwarfs last year’s effort — is probably insufficient and definitely unwise. It is largely an economic argument. But there is also a cultural dimension. Many of the Do-Nothings argue that a painful recession is the best way to destroy America’s runaway culture of irresponsibility and debt. Economic turmoil, after all, has a way of grounding Americans.

Schiff and the other Do-Nothings argue that the government should simply allow the economic chips to fall where they may. Dramatic belt-tightening across the board is the only way, they say, to stop the endless cycle of borrowing.

“Our standard of living needs to come down to the point where it can be supported by organic output,” says Schiff. “It’s brutal, but it’s called capitalism, and it works. The alternative is called socialism, and it doesn’t work.”

source

by **ohio county** Wed Jan 28, 2009 8:52 am

Can we agree that we ought not to call it "stimulus"? When people get agitated and suggest the government ought to do "something", this is what the government does - put out a big spending plan to re-elect the incumbents. It is something but it is not a stimulus package.

by Cato Wed Jan 28, 2009 9:00 am

This is the letter I sent to Congresswoman Capito this morning regarding the "so called" stimulus bill

I am writing to express my opposition to the proposed stimulus package you will very soon be voting on.

My arguments are quite simple. First, we simply cannot afford more debt. As of this morning the national debt, the money either owed the people or various trust accounts like the social security trust fund is 10.626 trillion dollars. Congress and former President Bush has already added over $700 billion to the debt in the misguided TARP bill, which has accomplished nothing thus far. It is immoral to add nearly another trillion dollars to that amount.

Look around you. Each day we are reminded what damage excessive debt can do. Look in the legal ads in most newspapers and you will see foreclosures. 99 times out of 100 the people loosing their home never stopped to consider whether they could handle the debt or not. We are seeing the result in the numbers of foreclosures. The US Government is no different. At some point, which is fast approaching, the US taxpayer will no longer be able to afford the debt.

Secondly, I remind you of the findings of the Congressional Budget Office. They stated that the vast majority of the funding in the Stimulus Bill will not stimulate the economy in the near term. Additionally, once the public works jobs are complete the stimulus effect will disappear. Ask yourself, what jobs will replace those that are lost once the stimulus money is gone. Unless the public itself is allowed to create jobs through investment and risk taking one their own, not one job will be there to replace the make jobs the stimulus bill created.

Many say this is an investment in our future. I was reading the remarks of Rep. Peter A. DeFazio (D-Ore.). who said, "I go to my district and people say, 'Yeah, I can use 10 extra bucks a week, but I would rather see more substantial investment.' We've gone through a couple bubbles that were borrowing and consumer-driven. We want a recovery that's solid and based in investment and productivity, and that points us at building things that will serve us decades to come." Rep. DeFazio represents the thinking that has got us to where we are today. A thinking the government is the solution for all the ills that face this nation. I remind you that Ronald Reagan stated once that “government isn’t the solution, it is the problem” That statement remains just as true today.

You can build roads and infrastructure until the cows come home, but if the business climate is such that people can’t afford to create jobs the roads, bridges, and railroads serve no purpose. If congress seeks to tax and regulate to death the very people that create the jobs to begin with, then all of the infrastructure in the world is worthless.

This brings me to my final point, if you in congress truly want to stimulate the economy; this is what you will do. You will cut the tax rate for everyone, regardless of their earnings. You would do it retroactively beginning with the 2008 tax year. Not only would you cut personal income tax rate, you would cut the capital gains tax, and corporate taxes. I would think an across the board cut of 35 to 50 percent would serve well. That would put money in the hands of the people that can stimulate the economy quickly and keep it stimulated.

Additionally, its time that congress quit the practice of creating vague laws and allowing some bureaucrat to write rules with the force law. It is also time that congress quit writing bills that include many subjects. Congress needs to deal with one subject at a time and vote on all the rules necessary to carry out the purpose of the bill.

Cato

by **ohio county** Wed Jan 28, 2009 9:15 am

Nicely done. You make a lot of sense.

by sodbuster Wed Jan 28, 2009 9:47 am

Well I agree with much of that.

Except for the tax cuts which at that rate would throw us into a deficit from which we may not recover.

I would use more targeted tax cuts on both income and capital gains.

Plus I would remove the add-ons and stick with the original proposals which were to create jobs quicker and jumpstart the economy.

Like roads, bridges, cleaner power plants, water and sewer plants, etc.

For example, I would upgrade Rt. 2 all the way from the northern panhandle to Huntington to stimulate growth in the Ohio Valley.

I would also fix Little Sandy Rd which floods needlessly 3 or 4 times per year due to the Ohio River locks and dams.

And I would undertake public water and sewer projects to serve all the families in northern Jackson County.

I would also build a military base here in WV.

Something comparable to Ft. Bragg in North Carolina.

by Cato Wed Jan 28, 2009 10:14 am

sodbuster wrote:Well I agree with much of that.

Except for the tax cuts which at that rate would throw us into a deficit from which we may not recover.

We are already there. The simple fact is, if you want to stimulate the economy then you have to allow people to keep what they earn. That isn't my opinion, it is simple economics.

sodbuster wrote:I would use more targeted tax cuts on both income and capital gains.

And who would yout target? Would you do like the democrats presently in congress and target the groups you are certain will continue to vote for you. That isn't a taxcut, it is a bribe.

sodbuster wrote:Plus I would remove the add-ons and stick with the original proposals which were to create jobs quicker and jumpstart the economy.

Like roads, bridges, cleaner power plants, water and sewer plants, etc.

For example, I would upgrade Rt. 2 all the way from the northern panhandle to Huntington to stimulate growth in the Ohio Valley.

I would also fix Little Sandy Rd which floods needlessly 3 or 4 times per year due to the Ohio River locks and dams.

And I would undertake public water and sewer projects to serve all the families in northern Jackson County.

And after all of this is done, what jobs exist to replace the ones that end with the end of the stimulus money?

sodbuster wrote:I would also build a military base here in WV.

Something comparable to Ft. Bragg in North Carolina.

What purpose would it serve, other than just to make work? You do understand, I hope, that taking money for one and giving it to another, isn't the defination of wealth creation. It is extortion, and no welath is created it is just transfered or better yet stolen from one and given to another.

by ziggy Wed Jan 28, 2009 1:52 pm

You do understand, I hope, that taking money for one and giving it to another, isn't the defination of wealth creation. It is extortion, and no welath is created it is just transfered or better yet stolen from one and given to another.

And so-called "tax cuts" as we've seen them over the past 40 years have the same result.

by Aaron Wed Jan 28, 2009 2:01 pm

ziggy wrote:
You do understand, I hope, that taking money for one and giving it to another, isn't the defination of wealth creation. It is extortion, and no welath is created it is just transfered or better yet stolen from one and given to another.

And so-called "tax cuts" as we've seen them over the past 40 years have the same result.

You're leaving out the small fact that the ones receiving the "transferred" money are the individuals who actually EARNED it Ziggy.

Other then that one minor fallacy in your statement, you’re spot on.

Rolling Eyes

by Cato Wed Jan 28, 2009 2:14 pm

ziggy wrote:

And so-called "tax cuts" as we've seen them over the past 40 years have the same result.

Then how do you explain going from a growth rate of minus 2% to a growth rate of over 6% in the year following the reagan taxcuts? In fact from the time Reagan and congress cut taxes until 1992 we had postive growth. 1992 saw growth shrink to minus 0.17 percent and from that time until now growth has been postiive, though in 2001, 2002, & 2003 it did dip below 2%. Bush and congress enacted 2 taxcuts, one in 2001 and again in 2003. Growth climbed back to about 3.5% and tailed off to less than 2% in 2008.

by ziggy Wed Jan 28, 2009 2:33 pm

ziggy wrote:
You do understand, I hope, that taking money for one and giving it to another, isn't the defination of wealth creation. It is extortion, and no welath is created it is just transfered or better yet stolen from one and given to another.

And so-called "tax cuts" as we've seen them over the past 40 years have the same result.

Cato wrote:

Then how do you explain going from a growth rate of minus 2% to a growth rate of over 6% in the year following the reagan taxcuts? In fact from the time Reagan and congress cut taxes until 1992 we had postive growth. 1992 saw growth shrink to minus 0.17 percent and from that time until now growth has been postiive, though in 2001, 2002, & 2003 it did dip below 2%. Bush and congress enacted 2 taxcuts, one in 2001 and again in 2003. Growth climbed back to about 3.5% and tailed off to less than 2% in 2008.

The "growth rate" does not compensate for the increased government debt that takes when taxes are cut and spending is not cut.

That debt, which some presume to somehow represent "wealth", which in practice is "negative wealth", is shifted from one class to another, from one generation to another.

by ziggy Wed Jan 28, 2009 2:36 pm

Aaron wrote:
ziggy wrote:
You do understand, I hope, that taking money for one and giving it to another, isn't the defination of wealth creation. It is extortion, and no welath is created it is just transfered or better yet stolen from one and given to another.

And so-called "tax cuts" as we've seen them over the past 40 years have the same result.

You're leaving out the small fact that the ones receiving the "transferred" money are the individuals who actually EARNED it Ziggy.

Other then that one minor fallacy in your statement, you’re spot on.

Try telling that to the people who are actually responsible for the increased national debt that is created when taxes are cut for some folks, but spending is not cut accordingly.

by Aaron Wed Jan 28, 2009 2:43 pm

So you think Americans don't deserve to keep the money they earn because politicians don't know how to budget revenue, cut wasteful and fraudulent spending and thus waste massive amounts of tax payer dollars?

Why I am not surprised?

by Cato Wed Jan 28, 2009 2:59 pm

ziggy wrote:

The "growth rate" does not compensate for the increased government debt that takes when taxes are cut and spending is not cut.

Two points, First, Increased economic activity equates into increase tax revenue. People like to talk about how Clinton had surpluses. First, he didn't have nay surpluses, but the rate of the growth of debt was supstancially lessened. That is an obvious fact based on figures from the US Treasury. The reason for this was that during most of Clinton's reign, the economy was expanding.

Secondly, I agree that spending needs to be cut. In fact, if congress had any guts at all they would cut spending in half, immediately. That savigns woudl goto two things, first to the repayment of debt and secondly back int he hands of the taxpayers, from whom the money was extorted to begin with.

ziggy wrote:That debt, which some presume to somehow represent "wealth", which in practice is "negative wealth", is shifted from one class to another, from one generation to another.

Debt it's self is not wealth, that is true. However, debt when properly used in the private sector is a tool that facilitates growth. Debt allows factories to retool and expand. Debt allows individauls to start or expand business. It is the operation of said businesses that creates wealth just as it pays back the debt. Additionally, the lenders of the funding that originally madeup the debt earn interest on the funds they loaned which also increases wealth.

by **ohio county** Wed Jan 28, 2009 3:51 pm

How stimulating is any of this?

http://online.wsj.com/article/SB123310466514522309.html

by Aaron Wed Jan 28, 2009 4:15 pm

It's scary the kind of garbage democrats want to dole out in the name of bi-partisanship.

We've looked it over, and even we can't quite believe it. There's $1 billion for Amtrak, the federal railroad that hasn't turned a profit in 40 years; $2 billion for child-care subsidies; $50 million for that great engine of job creation, the National Endowment for the Arts; $400 million for global-warming research and another $2.4 billion for carbon-capture demonstration projects. There's even $650 million on top of the billions already doled out to pay for digital TV conversion coupons.

by **ohio county** Wed Jan 28, 2009 4:32 pm

Smoke and mirrors. The President says the package must be approved NOW despite the Congressional Budget Office's estimate that less than 25% will be spent in the first year. There is nothing "stimulating" about this lavish spending plan.

by sodbuster Wed Jan 28, 2009 4:36 pm

"....$2.4 billion for carbon-capture demonstration projects."

Would you not support that Aaron?

Development of that procedure would be a big shot in the arm for WV coal and power.

by **ohio county** Wed Jan 28, 2009 4:43 pm

If you pick at it enough you can probably find a worthwhile billion or two. Overall, it smells like last week's fish.

by sodbuster Wed Jan 28, 2009 4:50 pm

Well let me make a prediction ok.

After the Dems' recovery package is passed w/o any republicans putting principle over party (and being part of the solution instead of part of the problem), after Dems have to put it through on their own, and the economy recovers again you will hear all the republicans whine and moan about how they got left out.

Just remember where you heard it first.

by **ohio county** Wed Jan 28, 2009 5:04 pm

Noted. Except you have it backwards - if the republicans do not join in on this abortion it will be because of principle and not in spite of it, for a change.

by Aaron Wed Jan 28, 2009 5:32 pm

sodbuster wrote:"....$2.4 billion for carbon-capture demonstration projects."

Would you not support that Aaron?

Development of that procedure would be a big shot in the arm for WV coal and power.

How so? We're going to burn coal, like it or not simply because we have to have the energy provided.

As for clean coal, it's a myth and if coal companies want to explore this unproven technology, let them fund it using their profits, not my tax dollars.

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