The Stimulus Was An Utter Disaster

College of Political Knowledge

Federal Deficit Series

We hear these words daily coming out of the mouths of Repubs…..Obama’s plan is a bust…the economy is worse because of his policies….on and on…..they prattle  and they prattle and we sink deeper into the hole that the Washington crowd has dug, all of them not one party over another….all of them!

But was the American Recovery& Reinvestment Act (the stimulus) really a failure?  Not really….why?  CBO (or maybe it was the GAO)…..anyway their report on the stim plan shows that 1.3 to 3.0 million jobs were either created or saved and that it created $2 billion of economic activity and  that it has added about 2% of the country’s GDP.  NONE ot that sounds like a failure….yes, it could have been better but at least it did stop some of the slide to the economic abyss.

The failure that one may be thinking of is that of the Bush presidency’s bank bailouts…..these institutions were bailed out so that banks would start lending the money and re-start our economic engine….guess what?  It did NOTHING to improve the economy….it did however, save a bunch of gambling banks from disaster for the games they were playing with the people’s money…..

Maybe we should stop calling everything a failure and just stick to the facts…….or at least fix the designation to the thing that was the real failure and stop playing political games for electoral advantage…..

From Rep. Ryan: Cancel Remaining “Stimulus” Funds

Inkwell Institute

Federal Budget Deficit Reduction:

Paper #2

In continuing with the series on fighting the Federal deficit according to the office of Wisconsin’s Rep. Paul Ryan….next this all seems to be the same song different Congress from the GOP……This installment is entitled:

Cancel Remaining “Stimulus” Funds

The cancellation of the program would save $273 billion over 10 years.  The savings would be directed to the reduction of the Federal budget.

I will agree with Rep. Ryan, which I seldom do, that the stimulus money should be rescinded from its current proposals…I do disagree with Ryan in that it should be used to stimulate demand….instead of the programs it is trying to fund now…

With demand created…jobs will be created….production will increase…..and revenue will be increased……I know how to create demand?  One way could be refunds to people who make less than the official poverty level….they will spend any extra income they have …..this is not perfect but it will create a demand and could kick start a sluggish jobs market and create a bit of a recovery from below……the recovery from above that Ryan and his cohorts helped to create has done NOTHING to improve the lives of the American people…all it has done is save some massive corporations from taking a dirt nap.

I may agree with Ryan, at least somewhat, but the stim money would be spent on infrastructure and if it is canceled then the states will have to make up the cash shortfall and the way these self-indulgent people are acting….the only way to make it up is by slashing all funds for services.  Ryan’s idea sounds pretty good but in the long run may help bankrupt more states than California.

What Are They Yelling About?

Daily Agitator

I am referring to the Tea Party folk……I see the signs about over-taxation and taxed too much and taxation without representation and on and on and……..ad nauseum!

But the TRUTH and I hope you realize the emphasis on the word TRUTH…..is something a bit different than what the GOP and the TP would have us believe……

You wouldn’t know it from the clamor of anti-tax protests, but Americans turned over a lower share of their income to the taxman last year than at any time since the Truman administration, according to a USA Today analysis. State, local, and federal taxes took up 9.2% of income last year, the lowest proportion since 1950 and well below the average of 12% over the last 50 years.

The tax rate paid by all Americans has shrunk 26% since the recession began in 2007, largely because of tax cuts in the stimulus package and lower consumer spending reducing the amount of sales tax paid. Do the figures mean all those Tea Party tax protests are wrong-headed? Not so, says Adam Brandon at protest organizer FreedomWorks. The real problem, he says, is runaway spending and the huge deficit, which is going to have to be paid for by future taxes.

That from a post on Newser on 12 May 2010.

Just what are they worked up about?  If the taxation thing is not it, then what?  Could it be a color thing and the tax thing is just a cover?  What are these uninformed people really protesting?

A 2011 Prediction

We see daily that the media wants us to believe that the economy is recovering, slow but slowly……but is it really in recovery mode?

A good question that has numerous good answers…..if you were around for Reagan then you should be acquainted with the name Laffer…if not then let me help…Laffer is the father of trickle down economics, where if the wealthy get big tax cuts then the benefits will filter down to all strata of the economy…….bullsh*t!……I am still waiting for it to trickle down to my strata!  Anyway Laffer has some predictions for 2011…..

Arthur Laffer, President Reagan’s favorite economist and creator of the famous Laffer Curve, believes the economy is headed for a “train wreck” in 2011. And he thinks it will be so bad that the current recession look like the good ol’ days by comparison.

Human Events reports the details:

In a wide-ranging discussion about where the economy is headed, and the fiscal, tax and monetary reasons why, Laffer gives a bleak forecast of where President Obama and his administration are taking the country in the next three years — which he predicts will end with Obama’s defeat in 2012.

“Obama is a fine, very impressive person. He really is. Unfortunately, everything that he is doing in economics is exactly wrong. He is a crappy president,” Laffer said.

Personally, I do not put much faith in any of his predictions……but there are days when hell freezes over and today is one of those days…….I will agree with Laffer that it is NOT over…..commercial paper is close to exploding, and the great Satan of the current crisis, derivatives are still being done by the large players in our economy and there seems to be NO taste for financial reform in Washington…all that leads me to think that it can only get worse, but it will give a false sense of confidence first before the sh*t hits the fan….again!

The Games Politicians Play

I have been trying to point out as much of the pure manure that the politicians are spreading…..I do so with the hope that both sides will read it and start asking questions on why they are still in power……why they are so damn partisan…..and why they are ALL hypocrites…..

We all have heard the bitching by the Repubs and some Dems that the stim was a waste of time and money….that it has accomplished very little with the exception of driving up the deficit…..you know…the usual BS….

Thinkprogress.org has a great report:

ThinkProgress has investigated opponents of the Recovery Act, reporting throughout the year that many of the lawmakers who tried to kill the legislation have been returning to their home states to claim credit for popular stimulus programs. In a new research report, ThinkProgress finds that over half of the GOP caucus, 110 lawmakers — from the House and Senate — are guilty of stimulus hypocrisy. Among some of the key findings:

Top Republican Senate Recruits Are Stimulus Hypocrites: As ThinkProgress reported, Rep. Mike Castle (R-DE), a candidate for Senate, touted over $5 million in stimulus programs he voted to kill. Rep. Mark Kirk (R-IL), the GOP nominee for Senate in Illinois, signed a letter urging Gov. Pat Quinn to provide “Recovery Act (ARRA) funding to expand the Illinois Community College Sustainability Network.”

GOP Leadership Leads The Way In Hypocrisy: Although he regularly slams the stimulus as a waste while in DC, McConnell has returned to Kentucky to take credit for stimulus programs, even taking time to request more funds. ThinkProgress attended two job fairs held by Cantor, where we found dozens of employers able to hire directly because of the stimulus. Indeed, even Boehner’s office released a statement boasting that the stimulus will create “much needed jobs.”

The Audacity Of Hypocrisy Knows No Bounds: Many opponents of the stimulus have been quite brazen with their ability to try to claim credit for the program. For instance, Rep. Jack Kingston (R-GA) spent the morning of July 28th railing against the stimulus, yelling “Where’s the stimulus package? Where’s the jobs?” on the House floor. On the same day of his rant, Kingston’s office sent out multiple press releases bragging that he had secured hundreds of thousands in stimulus funds to hire additional police officers in his district. Other stimulus opponents, like Rep. Phil Gingrey (R-GA) — who has called the stimulus a “trillion dollar debt bill” — have printed out jumbo-sized ceremonial stimulus checks to present to local communities to try to garner positive press.

Individually, over half of the entire Republican caucus has hailed nearly every aspect of the stimulus as a success — from infrastructure funds, to food programs, to education grants. But politically, admitting its success might harm the GOP’s chances in November. So with Republicans fixated on winning politically, they have focused on deceiving the public by calling the stimulus a failure, while pretending successful programs aren’t stimulus funded.

Some of us bloggers have been yelling about the hypocrisy in the Congress and now we can see that we were right….too bad others will not see them for what they are….HYPOCRITES!

I wish I could say that was all the silliness that there is to report…but that would be an outright lie….Yes, Irene there is more stupidity!

Stealing a page from President Obama’s transparency book, House Republicans on Wednesday asked Democratic leaders to hold an on-camera meeting with them on the economy and how to create jobs.

“Despite our differences, we believe that it is imperative for us to begin discussions and work together toward a shared goal of putting Americans back to work,” the House’s top two Republicans wrote in a letter to the House’s top two Democrats.

House Republicans want another chance to air their opinions and policy suggestions on public television with their Democratic counterparts.

Does anyone else see the stupidity of this statement and proposal?…..(insert long pause for reflection here)…….waiting….waiting….oh crap that is enough time…..

I believe that the two house of Congress are there for debate and CSPAN is there for transparency……this is just yet another BS move to look like they are being froze out of the process……it is BULLSH*T!…..plain and simple……the crap they want is already at their disposal and they will NOT use it…….

Someone once said, “stupid is as stupid does”….pretty much says it all…..for those that are saying the stupid crap and those that believe the stupid crap……

Yet Another Stim Plan?

Many on the Left as well as others have been mouthing that there needs to be yet another stim plan to help us out of the recession that is crippling the US…….of course there are others, mostly on the Right, that say it will be way too expensive and it would expand the deficit even further……

So Professor, will there be yet another stim plan?  Easy and simple answer is YES……but it will not be called that…..there will be some other cutesy label put on it to try and make it look like something other than what it is…..another stim plan…..

Professor, please qualify that answer…….sure thing people……let us begin with demand….there is NO demand……with no consumer demand there will be little to no jobs created…..no jobs then no expansion of inventories and then NO recovery……it is just that simple….

Then how will the economy recovery?  The new stim plan will not use that label but it will employ such tactics as cash for clunkers, extension of unemployment benefits, etc….things already used that have helped the economy in a minor way…there is already some indications of this will be their tactic….like the cash for caulkers, which is suppose to help people spend money on weatherizing their homes and businesses….

Basically, this is an end run, to use a sports analogy, to help the economy to start its recovery…..personally, I do not think this will do all they intend…..the first stim plan should have been used in other ways than they used it……as I have always said…..it is always good to create demand….without it there is NO recovery….

But this is not just an idle issue…..

More than 230 mayors are in Washington for the winter meeting of the United States Conference of Mayors, and many said they had been forced to impose layoffs, furloughs, service reductions and fee increases to deal with falling municipal revenue. The next fiscal year looks even worse, they said.

“We are in the middle of a ‘jobs emergency’ that demands decisive and swift action,” said Elizabeth Kautz, the mayor of Burnsville, Minn., and president of the conference. “We need the Senate to pass a Main Street jobs package now.”

Mayor Kautz is a Republican, and while many Republicans in Congress oppose a second stimulus package, many of the Republican mayors here support it.

The economy is NOT looking good….but is a second stim plan really going to help or just be another massive bailout of gamblers and thieves as the first one was?  We have heard lots of lip service about jobs….but where are those jobs?….what sector is employing people?  This is just another “gimme” to Wall Street!

What Happened To The Shovel Ready Projects?

I recall at the beginning of the process, the stim plan would create jobs because of the state’s shovel ready projects that need funding….remember?…..almost all governor’s said there were many, many shovel ready projects in their state that could use funding and that the stim plan would get those projects up and working……..and especially putting Americans back to work……that was then….this is now…..

As reported on ABC:

Ten months into President Barack Obama’s first economic stimulus plan, a surge in spending on roads and bridges has had no effect on local unemployment and only barely helped the beleaguered construction industry, an Associated Press analysis has found.

Spend a lot or spend nothing at all, it didn’t matter, the AP analysis showed: Local unemployment rates rose and fell regardless of how much stimulus money Washington poured out for transportation, raising questions about Obama’s argument that more road money would address an “urgent need to accelerate job growth.”

Even within the construction industry, which stood to benefit most from transportation money, the AP’s analysis found there was nearly no connection between stimulus money and the number of construction workers hired or fired since Congress passed the recovery program. The effect was so small, one economist compared it to trying to move the Empire State Building by pushing against it.

So basically, there is NO change in the status quo of the projects and the promised employment has NOT changed in the least.  So if infrastructure projects would be a boom to the economy, why is it not helping?

Basically, because the bulk of the stim money is being spent saving the gamblers on Wall Street….which I have said many times is NOT creating what the economy needs…..DEMAND!

Cash For Caulkers

Another brilliant idea…..it accomplishes very little…..A rather ingenuous label……trying to tie it in to the semi-successful program of Cash for Clunkers….cute……But what is this program all about?

The program contains two parts: money for homeowners for efficiency projects, and money for companies in the renewable energy and efficiency space.

The plan will likely create a new program where private contractors conduct home energy audits, buy the necessary gear and install it, according to a staffer on the Senate Energy Committee and Nadel at the American Council for an Energy-Efficient Economy.

Big-ticket items like air conditioners, heating systems, washing machines, refrigerators, windows and insulation would likely be covered, Nadel said.

Consumers might be eligible for a 50% rebate on both the price of the equipment and the installation, up to $12,000, said Nadel. So far, there is no income restriction on who is eligible. That would mean a household could spend as much as $24,000 on upgrades and get half back.

A good idea?  IMO….HELL NO!  Why?  This will only help a small percentage of Americans…..think about it…..let us say you are a home owner who is finding it difficult to keep up with the mortgage payments….where will you find the money to spend on this?  Or better yet, 1 in 6 Americans is unemployed…that alone would not make it feasible to spend much needed money on home improvements….and then there is the tight credit for individuals….need I say more along that line?

Just where is the jobs creation?  At best, it is a band-aid for a gunshot wound……

So far the Obama Admin is doing NOTHING substantial to create jobs or to help Main Street……is this the change we voted for?  Not my idea of change but then I am sarcastic SOB……

But Future Generations Will Suffer

We have all heard the argument that the deficit and the spending being done by Obama and the Dems will make our children’s children suffer and have to be taxed to pay off the deficit that is slowing creeping upward.  Conservatives like to call it “generational theft”.

In an article written for tom paine.common sense:

Nancy Folbre, a professor of economics at the University of Massachusetts Amherst, makes the point in an April 2009 article for The New York Times: “Borrowing creates assets as well as liabilities—and future generations will inherit both. It’s the relationship between assets and liabilities that matters most.”

Conservatives often argue from a “generational accounting” frame that says what we spend today our kids and grandkids will pay for tomorrow, but does not argue that the public works projects, health care reforms, education investments, clean energy research and development, and community development initiatives we do today are inherited as well. “Generational accounting typically ignores the value of the government services children will receive as well as the important non-market assets they will inherit,” Folbre writes. “The president’s proposed budget features investments in health, education and environmental sustainability that promise important future benefits.”

Generational accounting is a method of national accounting for measuring redistribution of lifetime tax burdens across generations from social insurance, including social security and social health insurance.

It goes beyond conventional government budget measures, such the national debt and budget deficits, by accounting for projected lifetime taxes per capita net of transfers, which may not be reflected in a pay-as-you-go system of social-insurance accounting.

The latter includes only current taxes for retirees less current outlays. Uses include projecting future taxes and outlays from different prospective current policies. For example, if a fall in labor-force growth from an earlier fall in the birth rate is projected to increase the proportion of retirees to the labor force, generational accounting might examine different projected changes in taxes or program benefits to finance the change. (thanx to Wiki)

Everybody is , especially on the Right, saying that the grown deficit is a form of theft, generational theft.  But is it?  There are deficit neutral ways of spending that are NOT a form of theft.

the deficit might be cut in equal amounts by decreasing transfer payments across-the-board or by imposing an income tax surcharge. The surcharge would be paid disproportionately by younger generations earning income, whereas the decrease in transfer payments would be borne primarily (in present value terms) by older people receiving social security, medicare, and medicaid. This illustrates how the budget can redistribute income among generations without changing the deficit or the government’s capital expenditures.

My point is that the whole idea of generational whatever is a political tool….there is NO way to really judge the effects of the deficit because it will change yearly, if not monthly.  I pass this on to my readers so when they hear the crap being spread about the future generations and the concern….they caqn look at the debate and think of what it really is….CRAP!

Why do I say this?  An easy one to answer!

  • Generational accounting is difficult to understand.
  • The estimates of taxes and transfer by age depend on limited data and theoretical assumptions on which there is no consensus.
  • The future budget projections depend on economic, demographic, and policy assumptions that are uncertain and controversial.
  • Generational accounting does not consider general equilibrium feedback effects. In particular, it does not include the effect of current deficits on capital accumulation and therefore on future income.
  • The right discount rate to calculate present values is uncertain and controversial.
  • Generational accounts have only been constructed for the consolidated Federal, state, and local sectors, so responsibility for the fiscal outcome is diffuse.
  • Generational accounting does not assign any benefits to the public from the government purchasing goods and services in order to provide education, highways, national defense, and other services. This is due to the difficulty in making imputations. However, government purchases comprise one-quarter of Federal spending and three-quarters of state and local spending. Because the benefits of this spending are important, the “net tax” is not a true fiscal burden. These benefits can have a major effect on the distribution of economic well-being by generation. Different programs affect different generations differently (e.g, education compared to veterans medical care); and some government expenditures are investments whose benefits occur over many years (e.g., office buildings, aircraft carriers, highway grants, R&D, and education).

Hopefully I need not go any further with the lesson for today.

The Economy Is In Slow Recovery

At least that is what is being championed by the Obama mouthpieces on the Sunday talk shows and by the Prez himself in his radio address.

The Prez used his speech to pat themselves on the back.  Obama used his weekly address on Saturday to hail the GDP figures as a vindication of his economic policies. He said that his stimulus package and his “other difficult but important steps” had “put the brakes on this recession.”

“We took unprecedented action,” he continued, “to stem the spread of foreclosures by helping responsible homeowners stay in their homes and pay their mortgages. We helped revive the credit markets and open up loans for families and small businesses. And we enacted a Recovery Act that … provided relief to struggling states to prevent layoffs of teachers and police officers and made investments that are putting people back to work rebuilding and renovating roads, bridges, schools and hospitals.”

Tom Eley observed:

One can only wonder: What country is Obama talking about? State and city governments are slashing jobs and social programs to meet the most crippling budget deficits in modern history. New data released this week reveal that bailed-out banks continue to deny loans to consumers and are hoarding cash more now than at the beginning of the year. As for helping “responsible” homeowners, foreclosures in the first six months of this year hit a record 1.5 million.

The supposed success of his policies, Obama suggested, vindicated his unquestioning support for the profit system and his drive to relieve businesses of their health care obligations to workers. That this is the underlying aim of his health care proposals was made clear by his call for “a health care system that makes it possible for entrepreneurs to innovate and businesses to compete without being saddled with skyrocketing insurance costs.”

All of the policies of the Obama administration have been focused on protecting the interests of a financial aristocracy that exercises a de facto dictatorship over the social and political life of the country. Now, the crisis which the bankers precipitated is being used to effect a permanent reduction in the living standards and social position of working people.

There will be no return to the already depressed wage levels and paltry social benefits that existed prior to the crash of 2008. Instead, a further redistribution of wealth from the bottom to the top will be carried out through the destruction of all that remains of past social gains and an immense intensification in the exploitation of the working class.

Mr. Eley sounds a bit radical in his observations, but I will have to agree with him….I see nothing on Main Street that says we are doing any better now than we were a year ago.  In the same vein, Wall Street is doing just fine, so much so that they are handing bonuses.  The stimulus money is well spent if you happen to be in the Wall Street clic.  Unfortunately, most of us live on Main Street and that road is full of potholes and speed bumps.