Thread: Obama Stimulus package

it's too bad you think it was personal....just a few short months ago, paulson and bernanke ran to the hill and told congress that if they didn't get $700 billion (immediately and with practically no oversight) then the entire US economy would collapse. i was just asking for you to provide a link that displayed your outrage (in the same line by line detail) at that govt. expenditure.

Yup. Swinging for the fences.
Any new pres with high approval rating would do the same, but that doesn't make it right.

Originally Posted by Texpat

Yup. Swinging for the fences.

Using your baseball analogy. All he needs is a single to bring in the sick economy on third. No need for a home run. He gets the single and he's likely to have even more support than he already has.

Originally Posted by Norton

Originally Posted by Bugs

OK, so now here are some things I actually like about the plan:

Agree, these will have a positive effect and as such belong in a "stimulus" package. I would add some monies in the area of unemployment benefits and tax cuts beyond small business. The tax cuts proposed are different than the last round. Last round was a one off check. The proposed under Obama's plan are longer term and folks are more likely to use to buy things rather than sock away. All of the areas that put cash in the consumers pocket will have a near term effect on their spending.

Keeping in mind that Obama still has the second $350 billion to spend, the size of this sitmulus pacakge is WAY over the top.

Obama has proposed pages of tax adjustments and one of them is very similar to what Bush gave (major difference being Bush gave it in the form of a rebate, and Obama is giving a credit- $500 (single)/$1000 (joint)).

Pages 251 – 312 of the bill covers the tax changes - the changes that effect the individual directly seem to be for two years, the changes that effect business seem to be for one year, and the changes that effect bonds and such by state/local government seem to also be for two years - none are what I would consider long term.

“(a) ALLOWANCE OF CREDIT. –In the care of an eligible individual, there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to the lesser of-

“(1) 6.2 percent of earned income of the tax-payer, or
“(2) $500 ($1,000 in the case of a joint return)......

.....“(d) TERMINATION.-This section shall not apply to taxable years beginning after December 31, 2010.”.

The Bush rebate sent check out to put money into people hands, while this particular Obama tax credit cuts thier tax bill - thus not taking it out of their hands in the first place.

The other Obama tax plan that puts money into people hands is the increase in earned income tax credits - Let me just say I have a major issue with this program in general so expanding it does not set well with me in any way.

In any case here are the basics of that bit (Increase in Earned Income Tax Credit):

“(3) SPECIAL RULES FOR 2009 AND 2010.-In the case of any taxable year beginning in 2009 or 2010-

“(A) INCREASED CREDIT PERCENTAGE FOR 3 OR MORE QUALIFYING CHILDREN.-In the case of a taxpayer with 3 or more qualifying children, the credit percentage is 45 percent.
“(B) REDUCTION OF MARRIAGE PENALTY.-
“(i) IN GENERAL.-The dollar amount in effect under paragraph (2)(B) shall be $5,000.

As for unemployment benifits what more would you like to see, outside of what is already in the plan?

Originally Posted by Norton

I quoted your post and agree the spending you listed are appropriate for the "stimulus" package. Didn't see anything in your list related to Unemployment hence my comment, "I would add some monies in the area of unemployment benefits". How much is a function of the amount of unemployment. For the moment nobody can predict when layoffs and hiring will start so any number would be a guess. Have looked at the specifics in the bill passed and would have to figure exactly how much is allocated directly for unemployment benefits. A guess, 20 billion.

We can disagree on the tax cut issue but I maintain it will put cash in the hands of consumers and the proposed plan will be more effective than the Bush one off check.

These are the items that relate to unemployment/job training in the stimulus plan:

Division A, Title IX – Labor, Health and Human Services, and Eduction
$4 billion for Training and Employment Services

Division B, Title II – Assistance for Unemployed Workers and Struggling families
Unemployment Benefits extension of pay - #12 billion in 2009, $15 billion in 2010
Unemployment Benefits $25 pay increase - $5 billion in 2009, $4 billion in 2010
Unemployment incentive program to get states to adopt provisions that would provide benefits to people that may not qualify under existing criteria - $7 billion
Unemployment health insurance – allows everyone getting unemployment to be covered under Medicaid thru 2010, and allows unemployed who can still get covered under COBRA to get 65% of that coverage paid by the feds for 12 months - $40 billion most of which would occur in 2009 and 2010

That's over $40 billion in unemployment outlays and an extra $40 billion to give medical insurance to those that are unemployed.

Say what you will about the medical coverage in the US and how it should be changed, but giving medical coverage to the unemployed is not SIMULUS it is Obama pushing his agenda and using peoples fear of the current economic situation to get the money to pay for that agenda approved.

A couple of other interesting tid bits:
One time extra monthly check for everyone getting a social security check - $4.2 billion total over 2009 and 2010.

Increase the feds share of Medicaid thru Federal Medical Assistance Percentage – from Oct 2008 thru Dec 31, 2010 - $87 billion

The one time check for everyone getting a social security check is pissing money away. The one time check from Bush didn't do much, why would this one?

The increase in the feds share of the Medicaid bill is plain and simply Obama pushing his agenda (nationalized health care) and has nothing to do with Stimulus.


As it relates to taxes - yea, I think we will have to agree to disagree on that one -
As I see it Bush sent out checks, and Obama is giving about the same amount but in the form of a credit. The biggest difference from my view of things is that Bush did it for one year, and Obama’s stimulus package gives them a credit for two years.

Depending on how the Obama credit is implemented all it will mean is that folks will see a reduction in the tax the pay by a whopping $500 over the year (an extra $10 bucks a week), or their tax return check at the end of each of the two years will be $500 bucks bigger.

IMHO regardless of how it is implemented the results will be about the same as the what Bush did, which was very little.

Originally Posted by Bugs

IMHO regardless of how it is implemented the results will be about the same as the what Bush did, which was very little.

Tax cuts and rebates have been historically inefficient in putting cash into the economy. Can't find a link but I believe only 20 to 30 cents of every tax cut dollar gets back into the economy as a contribution to GDP. Also, small business tax cuts have historically been ineffective.

Infrastructural projects seem to have the best ROI. $1.50 add to GDP for every dollar invested so say some economists.

Governments the world around are obsessed with the idea they can fix it all. All of them will only come up with plans that ensure their economies return to business as usual. Is it possible economic success via GDP growth driven by mass consumption fueled with credit is a flawed system? I believe the system is the fundamental problem. Needs to be a profound mind set change in the markets if we ever expect these boom and bust "crisis" situations to end.

Well the way things were in the past surely is not the way forward for prosperity – The US growth was driven by consumer consumption funded on credit. The credit bill has come due, and like many credit bills the interest is going to kill us.

IMHO the key to the turn around is keeping people in their jobs, and getting as many people as possible back to work. They will spend naturally, and hopefully now and in the future they will spend within their means and not use credit to finance spending above/beyond their means.

For this reason I am hesitant to do agree to any form of individual tax cuts (as it relates to stimulus), but less so to agree to accept business (especially small/mid sized business) tax cuts. Especially if the tax cuts for business is geared towards hiring people, and investing into the businesses.

Additionally I am a fan of the infrastructure bits – especially things like funds for highway and bridge repair/construction, energy grid improvements, and construction/repair of elementary and secondary schools. Those put people to work and provide additional and fairly long lasting additional benefits to society. I am even willing to accept some of the construction bits that have come under criticism – like the $7.7 billion for federal buildings, additional money to revamp areas of DC, and more money to repair the Smithsonian. I’m even OK with the money being set aside for the health care records IT stuff – because this will require putting people to work as well as a long-term return to society - (but for most of these I think the amount to be spent should be less).

All that being based upon all the fluff in the house stimulus package I think the US will be better off over the long haul if no stimulus package at all were to be passed as opposed to the hundreds of billions of dollars of non-stimulus stuff packed into that plan.

Sadly what seems to be most likely is that the numbers will be tweaked a bit, more tax cuts will be given to appease the red team in the Senate bill. Then a bit more tweaking and a few more concessions will be made to the red team before the final bill goes for joint approval and then is signed by Obama. Right now there seems to be too much fighting over how the $800 billion is best sorted rather than significantly reducing the cost and targeting only those things that must be done – rather than each side fighting over what they want to get done.

Everyone in the US seems to need a class on the difference between needs and wants.

And here is a good op-ed on the porkulus package:

http://www.nytimes.com/2009/01/30/op...brooks.html?hp

...First, the stimulus should be timely. The money should go out “almost immediately.” Second, it should be targeted. It should help low- and middle-income people. Third, it should be temporary. Stimulus measures should not raise the deficits “beyond a short horizon of a year or at most two.”...

...In a fateful decision, Democratic leaders merged the temporary stimulus measure with their permanent domestic agenda — including big increases for Pell Grants, alternative energy subsidies and health and entitlement spending. The resulting package is part temporary and part permanent, part timely and part untimely, part targeted and part untargeted.

It’s easy to see why Democrats decided to do this. They could rush through permanent policies they believe in. Plus, they could pay for them with borrowed money. By putting a little of everything in the stimulus package, they avoid the pay-as-you-go rules that might otherwise apply to recurring costs.

But they’ve created a sprawling, undisciplined smorgasbord, which has spun off a series of unintended consequences. First, by trying to do everything all it once, the bill does nothing well. The money spent on long-term domestic programs means there may not be enough to jolt the economy now (about $290 billion in spending is pushed off into 2011 and later). The money spent on stimulus, meanwhile, means there’s not enough to truly reform domestic programs like health technology, schools and infrastructure. The measure mostly pumps more money into old arrangements.

Second, by pumping so much money through government programs, the bill unleashes a tidal wave on state governments. A governor with a few-hundred-million-dollar shortfall will suddenly have to administer an additional $4 billion or $5 billion. That money will be corrosive both when washing in, and when it disappears in a few years time.

Third, the muddle assures ideological confrontation. A stimulus package was always going to be controversial, because economists differ widely about whether or how a stimulus can work. But this bill also permanently alters the role of the federal government, thus guaranteeing a polarizing brawl at the very start of the Obama presidency.

Fourth, Summers’s warnings about deficits have been put aside. There is no fiscal exit strategy. Instead, permanent spending commitments are entailed with no permanent funding stream to pay for them.

Fifth, new government expenditures on complex matters are being designed on a hasty, reckless timetable. As readers may know, the policy I am most passionate about is pre-K education. Yet I fervently hope that the Head Start expansion is dropped from this bill. A slapdash and shambolic expansion could discredit the whole idea.

Wise heads are now trying to restore structure and safeguards to the enterprise. In testimony this week, Alice Rivlin, Bill Clinton’s former budget director, raised the possibility of separating the temporary from the permanent measures and focusing independently on each. “A long-term investment program should not be put together hastily and lumped in with the anti-recession package,” Rivlin testified. “The elements of the investment program must be carefully planned and will not create many jobs right away.”

The best course is to return to the original Summers parameters — temporary, targeted and timely — thus making the stimulus cleaner and faster.

Strip out the permanent government programs. Many of them are worthy, but we can have that debate another day. Make the short-term stimulus bigger. Many liberal economists have been complaining it is too small, so replace the permanent programs with something like a big payroll tax cut, which would help the working class.

Add in a fiscal exit strategy so the whole thing is budget neutral over the medium term. Finally, coordinate the stimulus package with plans to shore up the housing and financial markets. Until those come to life, no amount of stimulus will do any good.

This recession is scary and complicated. It’s insane to try to tackle it and dozens of other complicated problems, all in one piece of legislation. Leadership involves prioritizing. Those who try to do everything at once will end up with a sprawling, lobbyist-driven mess that does nothing well.

There are those words again - temporary, targeted and timely.

Note that Alice Rivlin worked for Clinton, and the previouse post was from a blue teamer as well. Seems there might be some bi-partisan ship going on here after all - against the bill rather than in supoort of it.

Strip out the permanent government programs. Many of them are worthy, but we can have that debate another day. Make the short-term stimulus bigger.

BINGO.

Obama needs to follow thru on his rhetoric about bi-partisanship, but his agenda aside for a moment and do what is best for the American people. He can get back to working on his agenda when it comes time to put together the normal budget plan, or even in stand alone legislation - instead of wrapping it in a so called stimulus plan.

I read somewhere that there has been a delay in Obama announcing how he and his crew will spend the other $350 billion. It will be interesting to see what their plan is for that. Hopefully they do a better job than Bush and the boys did.

Senate Republicans Slam Obama Stimulus , CBS Evening News: Spending To Balloon At Federal Agencies; Bill Likely To Change - CBS News

Looks like now that folks have had a chance to actually see what is in the porkulus plan they are starting to withdraw their support, support numbers are down to around 50% and dropping:

More than half of Americans say Congress should make big changes to the stimulus package or reject it altogether. And Republicans sense a chink in the new president's armor.

All sides now agree the President's stimulus bill won't survive in the form passed last week by House of Representatives (with only Democrats voting in favor).

Thankfully

It's a bout half the size of Mr. Obama's plan, much of which would be tax cuts and, they say, money that would address the mortgage crisis first.

Half the size - OK
Tax cuts - OK, but mostly tax cuts????
Address the mortgage crisis first? - IMHO there is $350 billion that needs to be used first before we agree to spend even more money on the banking/ mortgage issue. That might mean changes to what TARP money is allowed to be spent on.

many economists believe this stimulus plan isn't even close to being big enough...and that these obstructionist practices based on partisan politics are only going to make it more difficult for the country to pull out of the bush recession/depression.

Originally Posted by raycarey

many economists believe this stimulus plan isn't even close to being big enough

I'm sure this is the case. More spending to right the economy is a near surity.

Originally Posted by raycarey

obstructionist practices based on partisan politics

Partisan criticism is inevitable and I would consider it irresponsible if only for the sake of discrediting any bill passing through Congress. Opposition to the stimulus bill is however warranted. The plan needs to focus on one thing and one thing only. Gov must spend only for those things that "stimulate" the economy. All the other stuff needs to be addressed in separate legislation.

Originally Posted by Norton

Gov must spend only for those things that "stimulate" the economy.

And that should be the name of the tune..

The problem with Fiscal packages, is that they usually come too late, when the damages is done, and will actually fuckup the economy after the Fed did a better job by controlling the Money Supply. It can only happen with a coordination with the Fed, and it's not going to happen as the Fed needs to react fast.

Originally Posted by Butterfly

Fed did a better job by controlling the Money Supply

A large part of this problem though is that the Fed did a lousy job of controlling the money supply, running an artificially low interest rate policy and thus encouraging speculation, debt and an asset price bubble when they should have been doing just the opposite.

Fiscal stimulation packages, and fiscal policy in general, is not seen as part of the day to day armoury of economic policy, but nevertheless it has had an important part to play in times of crisis. Two well known examples being FDR's 'New deal' and Thaksinomics. That there is a price to pay is a given- in fact, I am quite amazed by the recent strength of the USD, I would have thought with negligible interest rates and a blossoming money supply it should be getting weaker.

Amazing, so many intelligent people actually believe government spending and increased government involvement in the economy is the way towards growth. The US has had 25 years of fantastic growth and six months of an economic downturn. If one takes a longer-term view one sees the US system has out-performed all others. However, we (Americans) have been moving away from the basic principles that brought the US to the top of the econoic heep.

The US became an economic powerhouse because it has historically had more individualism and less government intervention in the economy.

The US economy will recover, but if we take history and all evidence from previous government spending programs as a guide, this stimulus package will delay the "real" recovery. How much effect did the Bush stimulus package have? Just because this one has the name Obama on it as opposed to Bush, does that imply a different result?

Pelosi: Without Porkulus Plan, 500 Million Americans a Month Will Lose Their Jobs

JammieWearingFool

Just because this one has the name Obama on it as opposed to Bush, does that imply a different result?

You got it, homes.

Job losses are growing. Sure, tax cuts are good, but how will that help folks with no jobs? The banks need to open credit again.

Originally Posted by sabang

A large part of this problem though is that the Fed did a lousy job of controlling the money supply, running an artificially low interest rate policy and thus encouraging speculation, debt and an asset price bubble when they should have been doing just the opposite.

That's only because the Fed has been strategically mislead for years, but in routine terms it still does a better job to control the business cycle, and it did. It was just not aggressive enough for the long term, a strategic mistake, but the Fed did a few well done soft landing over the years, something you can't accomplish with Fiscal policies.

Originally Posted by sabang

Fiscal stimulation packages, and fiscal policy in general, is not seen as part of the day to day armoury of economic policy, but nevertheless it has had an important part to play in times of crisis.

I agree it's needed, at least politically, unfortunately the results are not always as expected and studies in the past suggest that they contribute more to the problem than fixing it. But again doing nothing is not an option either.