"The Fiscal Stimulus Will Pay For Itself"

[Spang]

Rachel Maddow gets it. Economists and Republicans don't.

I watched Prof. Jeffrey Sachs on Rachel Maddow's show the other day. She asked whether the fiscal stimulus would work. "No" he said emphatically, it would not. "No one has the tools....to fix this......the fiscal hole will cripple us for the long-term."

She tentatively mentioned 'the multiplier.' He brushed this aside with a counsel of despair. "We might have a few more jobs in the short-term but a massive deficit in the long-term..."

Scant consolation for 13 million unemployed and underemployed Americans. Their lives could be transformed by this fiscal stimulus.

And anyway, as Keynes once noted, in the long term we're all dead.

Sachs's analysis is overwhelmingly shared by mainstream economists. And by Republicans. These have been whipping voters into a frenzy with talk of 'generational theft.' Future generations, they argue, will be paying for this fiscal stimulus for decades to come. That is simply not true, as I will show below.

Meantime, these points are truly rich coming from the Republicans. Readers no doubt know that during the Bush-Cheney years the US national debt doubled from $5,700bn in 2001 to $10,700bn today. Others may recollect that Mr. Cheney said in 2001: "Reagan proved that deficits don't matter."

So let's not hear any more from Republicans about deficits mattering or about 'generational theft.'

But to get back to history. The fiscal stimulus of the 1930's was positive -- both in the US and the UK. It dramatically lowered unemployment after 1933.



Second, it is simply wrong to suggest that the fiscal stimulus 'will cripple us long-term.' It will not. The fiscal stimulus will pay for itself. Here's how.

At times of high unemployment tax cuts may be saved and not spent into the economy. But when the government invests the bulk of $789 billion in real, productive economic activity - it always gets its money back - plus some.

It works like this. Government invests in labor-intensive programs e.g. $40 billion in energy efficiency and renewable energy programs, including $2.9 billion to weatherize modest-income homes. $27 billion for highway and bridge construction and repair and $11.5 billion for mass transit and rail projects; $4.6 billion for the Army Corps of Engineers; $5 billion for public housing improvements; $6.4 billion for clean and drinking water projects.

The energy efficiency/transportation/public housing programs hire American workers - some highly skilled, some not so skilled. These programs also purchase materials - from factories. Some foreign, but mostly American.

Next, something called 'the multiplier' kicks in. It's the ABC of economic science and works like this.

The workers get pay checks. They use the income to pay taxes - direct to the US government. So immediately the government can use these tax revenues to fix the budget. Then workers purchase goods and services - boosting the economy. Companies hire more workers to deal with demand for materials from stimulus-sponsored programs. More employed workers equals more taxpayers.

Ever-rising tax revenues drop into the Treasury's coffers.

Because government spending is financed by bank money or credit, income increases. Eventually savings are generated to match the original stimulus expenditure - so there is no 'crowding out' by government. But savings too can find a way back to the US Treasury, because savers could end up investing in US Treasury bonds.

If workers or factories spend money on goods made in China - then some will leak out to China. But experience shows that investment in public works tends to be local investment. By weatherizing the homes of the poor, strengthening flood defenses, growing forests to act as pollution 'sinks' and subsidizing organic farming - investment stays at home.

But investing in this kind of economic activity is not the only revenue source for the US government.

A massive improvement to the budget will be in savings made in unemployment payments.

I looked up the Congressional Budget Office's estimates for expenditure on unemployment compensation and food stamps for the years 2009 - 2015. Their estimates are optimistic. The Congressional Budget Office thinks unemployment is going to decline after 2009. Nevertheless, even under its conservative estimates expenditures on unemployment compensation and food stamps rise to a massive $818 billion between now and 2015.

If the numbers of unemployed people were cut, and if Americans had enough income not to rely on food stamps - Congress would make massive savings to the budget. If we add those savings to the tax revenue generated thanks to the 'multiplier effect' - the outlook is positively rosy for a surplus on the budget as the economy recovers.

So lets not have any more talk of the 'crippling effects' of the American Recovery and Reinvestment Act of 2009.

If there is a complaint it's the one the non-economist Rachel Maddow made to Prof. Sachs. The fiscal stimulus is just not big enough. $789 billion will not be enough to fill the $2 trillion collapse in output since the crisis started.

So, it's more strength to your elbow President Obama. And Congress, get ready for phase two of the fiscal stimulus.

The Huffington Post

[Winnow]

The Huffington Post? Find a real news source!

[Spang]

The Huffington Post? Find a real news source!

I get my news from several different outlets! Mainly Drudge, Huffington and The Daily Beast, which all link to many other news sources!

[Xyun]

The president called on a journalist from Huffpo at his press conference. Maybe they don't live up to the standards of the fag hooker Bush personally called upon at his press conference, but they get the job done.

Four Republican governors--California's Arnold Schwarzenegger, Connecticut's Jodi Rell, Florida's Charlie Crist, and Vermont's Jim Douglas--joined fifteen of their Democratic colleagues in signing a letter calling for its enactment. A Republican governor, you might say, is sort of like a Republican congressman--except with actual responsibilities.

http://www.huffingtonpost.com/2009/02/1 ... 67300.html

[Tyek]

Out of curiousity why is this view "Right" when so many others see it is "wrong."? I do not have an economic background to judge the package and its long term benefits/negatives. So I can't answer either way and 90% of the idiots on the internet and TV are no more knowledgeable then you or me, they are just reading points they were given.

I think infrastructure building is important on 2 fronts, it employs people who then pay taxes and I can tell you from the electric backbone side that we have lots of lines that are 50-100 years old, so they need to be replaced anyway.

I'm not doing the Republican dance here, I am just very curious why this time the Huff is being hailed, when I know that when they supported Bush on any stance they were mocked and downplayed as a journalistic source.

[Zaelath]

Out of curiousity why is this view "Right" when so many others see it is "wrong."? I do not have an economic background to judge the package and its long term benefits/negatives. So I can't answer either way and 90% of the idiots on the internet and TV are no more knowledgeable then you or me, they are just reading points they were given.

I think infrastructure building is important on 2 fronts, it employs people who then pay taxes and I can tell you from the electric backbone side that we have lots of lines that are 50-100 years old, so they need to be replaced anyway.

I'm not doing the Republican dance here, I am just very curious why this time the Huff is being hailed, when I know that when they supported Bush on any stance they were mocked and downplayed as a journalistic source.

Source? All I recall from the Huff was Xyun reposting it ad nauseum, so I thought it was as left leaning as it gets...

[Tyek]

I could be mixed up Zae, I just started my third course of Antibiotics, this time they busted out the big guns - Leviquin 500mg., plus some inhalers, advair, and a number of other goodies.

I was more curious why this one opinion holds more weight then many others who study these things for a career. Again not bashing, I truely want to know. Even if the stimulus increases confidence in the economy and turns it around it will be a positive to me. I also think, like I said that many of the infrastructure projects will have to be done anyway, so instead of paying unemployment and welfare, create some work and fix a growing infrastructure problem at the same time.

[Xyun]

Out of curiousity why is this view "Right" when so many others see it is "wrong."? I do not have an economic background to judge the package and its long term benefits/negatives. So I can't answer either way and 90% of the idiots on the internet and TV are no more knowledgeable then you or me, they are just reading points they were given.

I think infrastructure building is important on 2 fronts, it employs people who then pay taxes and I can tell you from the electric backbone side that we have lots of lines that are 50-100 years old, so they need to be replaced anyway.

I'm not doing the Republican dance here, I am just very curious why this time the Huff is being hailed, when I know that when they supported Bush on any stance they were mocked and downplayed as a journalistic source.

Source? All I recall from the Huff was Xyun reposting it ad nauseum, so I thought it was as left leaning as it gets...

Actually, I don't read Huff all that much. I think you are thinking of DailyKos, which is way further to the left than HuffPo, and that is what I was linking to so much.

[Zaelath]

Out of curiousity why is this view "Right" when so many others see it is "wrong."? I do not have an economic background to judge the package and its long term benefits/negatives. So I can't answer either way and 90% of the idiots on the internet and TV are no more knowledgeable then you or me, they are just reading points they were given.

I think infrastructure building is important on 2 fronts, it employs people who then pay taxes and I can tell you from the electric backbone side that we have lots of lines that are 50-100 years old, so they need to be replaced anyway.

I'm not doing the Republican dance here, I am just very curious why this time the Huff is being hailed, when I know that when they supported Bush on any stance they were mocked and downplayed as a journalistic source.

Source? All I recall from the Huff was Xyun reposting it ad nauseum, so I thought it was as left leaning as it gets...

Actually, I don't read Huff all that much. I think you are thinking of DailyKos, which is way further to the left than HuffPo, and that is what I was linking to so much.

Was that not aggregating a lot of the Huff's stories? I'd have to check...

[Kilmoll the Sexy]

Our Congress at work!

http://cnsnews.com/public/content/artic ... rcID=43478

Sen. Frank Lautenberg (D-N.J.) predicted on Thursday that none of his Senate colleagues would "have the chance" to read the entire final version of the $790-billion stimulus bill before the bill comes up for a final vote in Congress.

“No, I don’t think anyone will have the chance to [read the entire bill],” Lautenberg told CNSNews.com

Even better....

http://www.usnews.com/blogs/washington- ... ts-do.html

Congressional Offices Don't Have the Stimulus Bill, Lobbyists Do
February 12, 2009 04:14 PM ET | Paul Bedard | Permanent Link | Print
By Paul Bedard, Washington Whispers

We're receiving E-mails from Capitol Hill staffers expressing frustration that they can't get a copy of the stimulus bill agreed to last night at a price of $789 billion. What's more, staffers are complaining about who does have a copy: K Street lobbyists. E-mails one key Democratic staffer: "K Street has the bill, or chunks of it, already, and the congressional offices don't. So, the Hill is getting calls from the press (because it's leaking out) asking us to confirm or talk about what we know—but we can't do that because we haven't seen the bill. Anyway, peeps up here are sort of a combo of confused and like, 'Is this really happening?'" Reporters pressing for details, meanwhile, are getting different numbers from different offices, especially when seeking the details of specific programs.

Worse, there seem to be several different versions of what was agreed upon, with some officials circulating older versions of the package that seems to still be developing. Leadership aides said that it will work out later today and promised that lawmakers will get time to review the bill before Friday's vote.

Sure glad you imbeciles drank the kool-aid and got all that change you were wanting.

[laneela]

I make it a rule of thumb never to trust a person who says "peeps".

[Spang]

I make it a rule of thumb never to trust a person who says "peeps".

What if the person is informing you of what they're eating?

[Keverian FireCry]

I would trust them even less if they were eating that shit.

[Kilmoll the Sexy]

I make it a rule of thumb never to trust a person who says "peeps".

so then why the hell would you vote for them?

[Leonaerd]

One Easter I gathered my peep army, bit all their eyeballs off and made a pile of them.




It was a lonely Easter.

[Ashur]

I make it a rule of thumb never to trust a person who says "peeps".

I feel the same way about people who refer to MMO characters as their "toons"

[Funkmasterr]

I make it a rule of thumb never to trust a person who says "peeps".

I feel the same way about people who refer to MMO characters as their "toons"

You know, that's always annoyed me too.

[Canelek]

I make it a rule of thumb never to trust a person who says "peeps".

I feel the same way about people who refer to MMO characters as their "toons"

Odd. That bothers me too.

[laneela]

I make it a rule of thumb never to trust a person who says "peeps".

so then why the hell would you vote for them?

I didn't vote for your imaginary friend.

[Zaelath]

Our Congress at work!

http://cnsnews.com/public/content/artic ... rcID=43478

Sen. Frank Lautenberg (D-N.J.) predicted on Thursday that none of his Senate colleagues would "have the chance" to read the entire final version of the $790-billion stimulus bill before the bill comes up for a final vote in Congress.

“No, I don’t think anyone will have the chance to [read the entire bill],” Lautenberg told CNSNews.com

That's what committees and summary are for, dipshit.

As for the rest of your whiny post, sounds like some "staffers" have an overinflated sense of importance too.

[Leonaerd]

From a Daily Show economist.

The total bailout money could pay off 80% of the mortgages in the US.


While doing this might seem unfair to those that paid off their own mortgages, it is less unfair then shoveling the money into corporate/political hands.

Doing this would:
1 - increase the liquidity of banks since the mortgages they held have been paid off
2 - put a shitload of disposable income into the hands of the average Joe
3 - boost the shit out of the economy since #2 results in massive spending sprees
4 - let competition work it's way through the system particularly in the auto industry where piss poor decision making has made them uncompetitive


The problem with this idea is:
1 - it makes sense
2 - it doesn't allow politicians and corporations to skim off the top


Also, to put things in perspective:
There are 60 seconds in a minute
3,600 seconds in an hour
86,400 seconds in a day
604,800 seconds in a week
31,449,600 seconds in a year
It takes 31.79 years for 1billion seconds to pass
It takes 31,796.9 years for 1trillion seconds to pass

And ... if you made $1.3 million/day since the birth of Christ, you'd be just shy of $1 trillion

* of course this discounts leap years and leap seconds, but you get the picture

Interesting. While this would probably work better than what is being put into place, there would have to be some sort of compensation given to people that already paid off their mortgages.

[Canelek]

Interesting. However, I do not go by the christian calendar. I prefer Mayan or Swimsuit Edition.

[Keverian FireCry]

Interesting. However, I do not go by the christian calendar. I prefer Mayan or Swimsuit Edition.

LOL. That's golden. You should copywrite that and sell it to Carlos Mencia, he'll give his left nut to use someone elses good joke.

[Kaldaur]

Interesting. However, I do not go by the christian calendar. I prefer Mayan or Swimsuit Edition.

LOL. That's golden. You should copywrite that and sell it to Carlos Mencia, he'll give his left nut to use someone elses good joke.

He must have a line of bodies ready to auction off other nuts. He traded his for two Carlin jokes ten years ago.

[Truant]

Interesting. However, I do not go by the christian calendar. I prefer Mayan or Swimsuit Edition.

LOL. That's golden. You should copywrite that and sell it to Carlos Mencia, he'll give his left nut to use someone elses good joke.

Except that Mencia doesn't pay for jokes. He just steals them outright.

[Siji]

From a completely uneducated in the ways of the financial industry view.. paying off everyone's mortgages all at once may sound nice, but I'm guessing in reality that banks would actually lose a lot of money. They make more money in interest over time, than someone paying off early. A bank with no interest coming in, and a shit load of money isn't very useful until they loan that money back out. Least, that's how it would seem to me.

[Tyek]

It would be a beast to implement for sure, how do you decide who to pay off? Housing markets might drop even lower since some will see it as a way to dump the house they were in and try and trade up. People who do not have houses will complain that they get no incentive...

There does need to be some better implementation of the bailout funds. It sure seems like some banks just used the money to buy other banks and nothing significant has happened on the lending front, at least from my limited view.

[Ashur]

From a completely uneducated in the ways of the financial industry view.. paying off everyone's mortgages all at once may sound nice, but I'm guessing in reality that banks would actually lose a lot of money. They make more money in interest over time, than someone paying off early. A bank with no interest coming in, and a shit load of money isn't very useful until they loan that money back out. Least, that's how it would seem to me.

As much as I'd LOVE to have my mortgage paid off/drastically reduced...

[Truant]

From a completely uneducated in the ways of the financial industry view.. paying off everyone's mortgages all at once may sound nice, but I'm guessing in reality that banks would actually lose a lot of money. They make more money in interest over time, than someone paying off early. A bank with no interest coming in, and a shit load of money isn't very useful until they loan that money back out. Least, that's how it would seem to me.

As much as I'd LOVE to have my mortgage paid off/drastically reduced...

But if all their mortgages get paid off, they then have all that money to loan out again. Which they'll profit on the interest from, and the economy will benefit as more money is now being put into it.