Stimulus plan?

[enzfan]

You can't spend your way out of a recession.[V]

Analysis: Whatever You Call It, Don’t Call It A “Stimulus” Plan
By Brian Sullivan


Reaction to the stimulus plan (hereafter which should instead be called the “spending” plan based on the lack of stimulus and heavy dose of spending) has nearly universally been negative this morning.

The problem is that there seems to be very little “stimulus” in the stimulus plan, at least in the way of promoting new spending by companies and individuals. Much of the plan is instead devoted to spending on entitlement programs, schools and other social projects.

Analysis from the New York Times indicates the following about the plan:

An $87 billion provision increasing the federal contribution for Medicaid costs is expected to go a long way to help states close their budget gap
The bill would also create a $79 billion state fiscal stabilization fund, disbursing half the money in late 2009 and half in late 2010. The Congressional Budget Office has estimated that little of that money would be spent this year
The greatest prospect of delay in spending is on infrastructure. The bill provides $30 billion for highway construction and tens of billions more for other transportation projects, water projects, park renovation, military construction, local housing projects and more
A look at more than $140 billion in the bill’s spending on education finds some that can move quickly — for instance, $13 billion each over two years for Title I schools, which serve impoverished students, and for special education under the Individuals With Disabilities Education Act
Unemployment benefit checks due to stop will keep coming, along with an extra $25 a week
At the grocery store, a family of four on food stamps could find up to $79 more a month on their government-issued debit card
Remember the President says his impetus for the plan was to create or save 4 million jobs. In his weekly address two weeks ago the President said “the jobs we create will be in businesses large and small across a wide range of industries. And they’ll be the kind of jobs that don’t just put people to work in the short term, but position our economy to lead the world in the long-term.” How exactly do the tiny tax breaks, big entitlement spending and handing billions to states to “fill budget gaps” accomplish this goal?

The Democrats are using the cover of bashing the morals of those against the plan as a way to silence the critics. Because much of the plan has to do with educational, medical and entitlement plans it is easy to accuse those against the plan of trying to damage “children and the ill.” Good try. No one is suggesting that we as a nation do not have a responsibility to help those in need, let’s not confuse that with “stimulus.” This is instead about comparing the stated goals - the selling points - of the plan to what it is now trying to do. And that is to create jobs and “stimulate” the economy. Nearly $100 billion to health care/medicaid, $140 billion to education and a few hundred bucks back in many taxpayers’ pockets will do nearly nothing to create or save jobs as the President has said.

Moreover, the one thing that may create new jobs and help the country’s future energy needs - building thousands of windmills, solar farms new roads, telecommunications and other types of infrastructure - has mysteriously been put on the back burner. As the Times reports, only $30 billion will go to these types of projects initially and even with the possibility of “tens of billions more” we are still looking at just 15-20% of the plan being put toward projects that can actually create jobs and provide longer term benefits to the economy.

As former Fed Governor Larry Lindsey writes in today’s Wall Street Journal the plan as it is will not work, and he says we need to give more money directly back to the people:

And what of the plan being put forward now? As crafted, it is unlikely to produce the desired results. For a similar amount of money, the government could essentially cut the payroll tax in half, taking three points off the rate for both the employer and the employee. This would put $1,500 into the pocket of a typical worker making $50,000, with a similar amount going to his or her employer. It would provide a powerful stimulus to the spending stream, as well as a significant, six percentage point reduction in the tax burden of employment for people making less than $100,000. The effects would be immediate.

Here is a note sent to me today written by the smart folks over at Bianco Research.

Now that we know some of the details of the economic rescue legislation we know why the Democrats have kept it so private. To help put the items in the bill into perspective we suggest that you use a simple litmus test and judge for yourself how each part of the legislation will help boost the U.S. Economy. That test is simple. Does the subject item have a multiplier effect. If the item does not have a multiplier effect, it’s not a valid stimulus and it doesn’t belong in this bill. We may not all agree on the exact amount of the multipliers, but we should be able to determine if a multiplier exists.

Let me explain. Building a highway from one point of commerce to another should over the life of the highway produce an economic benefit greater than the cost of the construction. Some say the multiplier for new highway construction is from 3 to 5 times the initial cost. The important thing is not that we agree on the exact degree of the multiplier, but that we agree that the expense will stimulate the economy and bring some return in excess of the cost.

Remember, this is an economic stimulus bill. It is not intended (we’re told) to tackle social problems, feed the poor, house the homeless, improve the landscaping in Washington D.C., etc. The President has gone to great lengths to assure citizens that the sole purpose of this unprecedented legislation is to stimulate and jump start the U.S. economy. He promised us that the bill would be free of pork, social programs and pet projects. He went so far as to guarantee the public that he would not sign a bill if it had any pork in it.

So then what’s the multiplier for the $50 million for the National Endowment of Arts? How about the $400 million for global warming research, the $335 million for STD prevention, the $650 million for digital conversion coupons, the $81 billion for Medicaid, the $20 billion for food stamps, the $30 billion for Cobra insurance extensions, the $4.1 billion for neighborhood activist groups like ACORN, the $83 billion for the earned income credit to give tax refunds to people who don’t pay income tax, and the $6 billion to subsidize university building projects just to name a few.

The Wall Street Journal estimates that only 12 cents of every dollar in this bill could be called a growth stimulus. Apply your own judgment and the multiplier test to each of the items contained in the bill and come up with your own estimate. I think that the 12 cent estimate is quite generous.

It was telling that not only did no Republicans vote in favor of the bill, but a few Democrats (notably some of the fiscally conservative “Blue Dog” breakaway group) also rejected this plan. They know that it is unlikely to create jobs and likely more of a gift to the Democratic states that help vote the party into full power.

Now it goes to the Senate, and though some tweaks are expected, expect it to pass. This plan adds another $900-plus billion to the long term obligations of the country and our children. This in addition to the trillions already lent and spent by the government and Federal Reserve. Worse, this spending package comes with little benefit to the kind of real job creation or real technological breakthroughs that America urgently needs. The kind that create real change in our transportation and energy usage. And that’s real depressing.

[Bitter Almonds]

<p align="justify">... and the bush chicken-little fiscal policy continues[xx(]

[}:)]

[glokstadt]

Where did this 'aritcle' come from???

And give him some time, he's got 8 years of nonsense to remove and correct, as well as get the economy going again.

The article talks about items not in the legislation that will be forthcoming, hang in there, and eat some popcorn! [:D]


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[marie3]

[quote][i]Originally posted by glokstadt[/i]
<br>Where did this 'artcle' come from???



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[/quote]

Looks like it's from the "fair and balanced" Fox news. [:o)]

http://briansullivan.blogs.foxbusiness. ... ulus-plan/

Be sure to read Brian Sullivan's "The President is Wrong on Wall Street Bonuses".

[glokstadt]

[quote][i]Originally posted by marie3[/i]
<br>[quote][i]Originally posted by glokstadt[/i]
<br>Where did this 'artcle' come from???



Visit Club Impact's website, where "Style colides with Action:" www.clubimpact.us

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[/quote]

Looks like it's from the "fair and balanced" Fox news. [:o)]

http://briansullivan.blogs.foxbusiness. ... ulus-plan/

Be sure to read Brian Sullivan's "The President is Wrong on Wall Street Bonuses".
[/quote]

Thanks Marie! [:D]

[enzfan]

I know it's going to be changed, but for Pelosi and company to send this turd to the Senate is a joke.

[SallyLightfoot]

It's an ok stimulus plan. Yeah, there's a small amount of bullshit spending, and there's also a small amount of pork to entice republicans to vote for it. Interesting that the GOP of the last 8 years has suddenly claimed the mantle of fiscal restraint.

But the bottom line is, the marginalized republicans sorely need to attack this plan, purely for political reasons. They are praying everything will get worse under Obama so that they have a chance to make gains at the next electoral cycle.

The main thing republicans want is tax cuts. They want it despite the bevy of leading economists who say that tax cuts are one of the less effective ways of stimulating demand. But hey, it makes a great rallying cry, and Joe the Plumber thinks it's a hell of an idea. The party of stupid rides on!!

[MARV]

[quote][i]Originally posted by SallyLightfoot[/i]
<br>The party of stupid rides on!![/quote]

Do you consider yourself a people person[?] [;)]

[SallyLightfoot]

It appears that the stimulus plan will be passed tonight. I'm not sure it will do much (or any) good, but I don't fault the government for trying to do something to avoid a depression.

In a real, free market, the healthier (and more effective) thing to do would be to let it all burn to the ground and let a new, stronger economy emerge from the ashes. Let's hope this stimulus provides some benefit, because the alternative will likely be very painful for this generation.

[glokstadt]

Got this in my e-mail this morning, wanted to share from The Cagle Post:


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