Stimulus packages....feelgood crap - Political Forum

liberalman · 01-19-2008, 10:29 AM

The Bushies and now Romney are talking stimulus packages to prop up the economy that the Republicans and their lobbyist pimps have screwed up so badly and all I can say is why bother. Be it a 145 billion in tax breaks or 245 billion in tax breaks it will not do what it advertises.

If we want to get out of this thing then we need to use that money for targeted infrastructure and public works projects that pay a good wage AND increase the belief of the public and small businesses that there is a light at the end of the tunnel. In short,cut money being wasted on DoD boondoggles, increase taxes on the wealthiest and spend that money on new road, bridge and school construction. Instead of talking about "Manhattan Projects" for green energy start one now.

We cannot taxcut our ways out of a recession it does not work instead we need to spend on the infrastructure that has been neglected since the days of Reagan.

By doing this we increase employment, increase spendable income, increase the belief that opportunity is just around the corner and jumpstart the future economy that the conservative movement seems to see as public enemy number one.

Recessions are just as much about perception as they are about hard numbers this plan would (IMO) fundementally alter the perception of AMerica's economic direction.

VoiceofReason · 01-19-2008, 10:41 AM

Quote:

Originally Posted by liberalman

The Bushies and now Romney are talking stimulus packages...................

Ahhhhh so are Pelosi, Clinton, Edwards, Obama, and every other politician.

feldem · 01-19-2008, 10:57 AM

Extremely on topic....

Samuelson: Lollipop Economics 101 | Newsweek Voices - Robert J. Samuelson | Newsweek.com

Lollipop Economics 101

An 'economic stimulus' package would be less about altering the unemployment rate and more about influencing voters' views of vying politicians.

Quote:

You have no doubt heard the well-worn dictum of Karl Von Clausewitz, the great Prussian military strategist, that war is the extension of politics by other means. Well, the same is true of economic policy. As often as not, it's politics by other means—and the looming debate over whether the country needs an "economic stimulus" program will, if nothing else, reaffirm that. The debate promises to be more about politics and public relations than economics. "Economic stimulus" is shorthand for tax cuts and/or increases in government spending designed to accelerate economic growth and job creation. We need that now, say advocates, because the economy is on the verge of a recession or already in one. House Democrats are reportedly discussing a package of $100 billion or more in temporary tax rebates and grants to states. Not to be outdone, the Bush administration is studying tax rebates and business investment incentives.

Call this Lollipop Economics. It's an election year. Voters feel anxious about a weakening economy. Send them economic lollipops (say, a $500 tax rebate for most families). Make them feel better. Show them you're concerned. Prove that you're trying to improve the economy. Above all, make sure they know where the lollipops came from—Democrats or Republicans. Inevitably, presidential candidates offer proposals.

Superficially, the case for "stimulus" seems plausible. In December, the unemployment rate rose from 4.7 percent to 5 percent, a huge one-month increase. Jobs are not now keeping pace with the growth of the labor force. The December increase in payroll employment was a meager 18,000, and all that stemmed from government jobs. The economy needs a shove. Lawrence Summers, Treasury secretary in the Clinton administration, has proposed a $50 billion to $75 billion stimulus to be enacted in the next few months.

Every day, the housing situation seems to worsen. Last week Countrywide Financial—the nation's largest mortgage lender—reported that new foreclosures were higher than expected. Jared Bernstein of the Economic Policy Institute, a liberal think tank, likens a stimulus package to insurance. "The important part," he says, "is to prevent a bad situation from getting worse." Bernstein worries that Federal Reserve policy alone—cuts in short-term interest rates—won't suffice to spur the economy.

All this sounds sensible, but it ignores a confounding dilemma. Folks, we have a $14 trillion economy. A one-time stimulus (rebates aren't permanent tax cuts, and grants to states would probably be temporary) of $75 billion or $100 billion is too small to do much. If the economy is in serious trouble, something much larger is needed. But if the outlook is not so dire, then a modest stimulus plan is mostly political symbolism.

The truth is that there's a touch of hysteria to much current economic commentary that is, as yet, unjustified by what's actually happened to the economy. Yes, the housing slump is vicious, but at its peak, housing was only 5.5 percent of the economy, and the present slump is still only the fourth worst since World War II, notes economist Edward Leamer, director of the UCLA Anderson Forecast.

Whether a recession occurs—a determination made by academic economists, usually after the fact—probably won't affect most people. Differences in forecasts are fairly small. Economist Richard Berner of Morgan Stanley expects a "mild and short" recession, with peak unemployment of 5.6 percent or 5.7 percent in early 2009. Economist David Wyss of Standard & Poor's anticipates slower growth, but no recession; he, too, foresees peak unemployment of 5.6 percent. That's the average, he says, of the past 50 years. This would be a setback, but not a disaster.

Only time and patience will cure some economic problems. Though few mention it, rising inflation is a threat. For the year ending in November, consumer prices increased 4.3 percent; the annual rate for the past three months is 5.6 percent. Raw material prices have soared. In early 2006, copper sold for $4,900 a metric ton, reports economist John Mothersole of Global Insight. By late 2007, the price was $7,300. Slower economic growth—even a recession—would dampen prices and incipient inflationary psychology.

The housing predicament is similar. Inventories of unsold homes are high; monthly sales are low. What basic economics teaches is that when there's a big gap between supply and demand, prices adjust. That has to happen in housing. Home prices must drop further, so that houses become more affordable and revive both sales and new construction. It's true that falling home prices will probably lead to more mortgage losses and foreclosures. But the more the adjustment is delayed, the longer the housing market will remain moribund.

In an election year, politicians inevitably try to show their sensitivity to voters' economic worries. A slowing economy does suggest a few common-sense and responsible steps: for instance, lengthening unemployment benefits from the standard 26 weeks to 39 weeks. But a big exercise in pump-priming, which is all that a "stimulus" package is, would be justified only if the economy deteriorated considerably more.

It's not possible, or desirable, to correct every twist in the business cycle. A "stimulus package" now would represent the use of government funds for campaign advertising—to show voters how "caring" their politicians are. The great danger is that once proposed in a modest lollipop form, any plan would quickly be expanded to include many other tax breaks and spending increases, the fiscal equivalents of candy bars and peppermint sticks. This would bloat its costs and confuse the public about the long-term budget problem, which is, not surprisingly, just the opposite: to control the huge spending increases of baby boomers' retirement.

© 2008 Newsweek, Inc.

VoiceofReason · 01-19-2008, 11:03 AM

Quote:

Originally Posted by feldem

Extremely on topic....

Samuelson: Lollipop Economics 101 | Newsweek Voices - Robert J. Samuelson | Newsweek.com

Lollipop Economics 101

An 'economic stimulus' package would be less about altering the unemployment rate and more about influencing voters' views of vying politicians.

The most telling thin about this is listening to the Dems admit that letting people keep their own money helps the economy.

SamInTheSouth · 01-19-2008, 01:34 PM

Quote:

Originally Posted by feldem

Extremely on topic....

Samuelson: Lollipop Economics 101 | Newsweek Voices - Robert J. Samuelson | Newsweek.com

Lollipop Economics 101

An 'economic stimulus' package would be less about altering the unemployment rate and more about influencing voters' views of vying politicians.

The stimulus package will be nothing more than a short term solution. It does not address the issues that will continue to cause us economic problems in the long term.

liberalman · 01-19-2008, 01:41 PM

Still waiting sam.....or does your last post admit that I am correct? You say I know nothing and counter....with nothing.

SamInTheSouth · 01-19-2008, 01:49 PM

Quote:

Originally Posted by liberalman

Still waiting sam.....or does your last post admit that I am correct? You say I know nothing and counter....with nothing.

Why would I bother to waste my time correcting you? You are a dedicated Marxist. You are going to believe what you believe no matter what facts I throw at you because of your belief in Marxist ideology.

Furthermore, this type of debate has been hashed umpteenth times on this Web site so I doubt there is anything more I would point out to you now that hasn't been pointed out before. If you didn't learn from it then, you won't now.

That is the end of this conversation, so there is no need for you to reply.

Albinonewt · 01-19-2008, 02:25 PM

The left started with the talk of a stimulus package. The right is getting in on it now to look like they care.

Bush's stimulus package won't really help, but it doesn't do any damage really so I guess it's ok. Some of the other packages are harmful, but none of them are very helpful.

francois60 · 01-19-2008, 10:41 PM

We cannot taxcut our ways out of a recession it does not work instead we need to spend on the infrastructure that has been neglected since the days of Reagan.

we haven't invested in infrastructure because liberals prefer handouts to favored interest groups. Republicans have always been in favor of spending on infrastructure and against just cash handouts.

yhwhluver · 01-21-2008, 01:22 AM

Last I checked, the government is not on the NYSE. That is the main perception people have of the stock market. If the Dow is up, the economy is good. If it's down, it's bad. By taxing big companies (like those on the NYSE and the DIA), you're hurting the perception even more. That whole line of reasoning (about taxing the companies so the government can hire more people) doesn't make sense to me. I think you can really help it by giving some extra cash to the to the taxpayers and entice companies to hire more people with some extra tax breaks (which I believe is apart of this plan). By hiring a couple more people, that's a couple more people that can now buy more stuff, thus stimulating the economy.