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Economists Agree: Stimulus Created Nearly 3 Million Jobs
Amid mounting signs that the economic recovery is faltering, one potential remedy seems out of the question: a booster shot of government spending.
Nobel-winning economist Paul Krugman was among those who advocated for a much larger stimulus package. Recent economic analysis shows that job growth and overall GDP was spurred by the government spending and that despite the miserable state of the current economy, things would be much worse without government spending. The question is now, what next? The White House says the multiyear $814 billion stimulus program passed by Congress in 2009 boosted employment by 2.5 million to 3.6 million jobs and raised the nation's annual economic output by almost $400 billion. A recent study by two prominent economists generally agrees, crediting the pump-priming with averting "what could have been called Great Depression 2.0."
If President Obama expected anyone to say, "Thank you," however, he's been disappointed. In a recent USA TODAY/Gallup Poll, 59% of respondents disapproved of the president's handling of the economy. In the partisan war over the economy's performance, the word "stimulus" has became synonymous with "boondoggle," making the notion of a repeat any time soon highly unlikely - especially if Republicans seize control of one or both houses of Congress in November.
"We have played our policy hand. Now we've got to hope it's good enough," said Mark Zandi, chief economist for Moody's Analytics and co-author of the recent study.
Controversy has dogged the stimulus program since its debut. Formally known as the American Recovery and Reinvestment Plan, the spending effort was designed to fill the hole in the economy left after the housing and credit bubbles imploded. The program was proposed by the president and enacted by Congress at the depths of the post-Lehman-Bros. financial collapse, when the economy was shrinking at an annual rate of 6% and losing 750,000 jobs a month.
Politically, the "Recovery Act" - which is divided among tax cuts, financial aid for cash-strapped state governments, emergency unemployment assistance and spending on roads, bridges and other infrastructure - has taken fire from the left and the right.
Liberal economists such as New York Times columnist Paul Krugman complained that the massive program should have been larger and was marred by the inclusion of excessive tax cuts that would have a less-immediate impact on job creation. Republicans derided the legislation as wasteful spending that would add to ballooning government debt.
Eighteen months later, the consensus among economists is that the stimulus worked in staving off a rerun of the 1930s. But the spending's impact was dwarfed by other crisis-fighting tools deployed by the Bush and Obama administrations, including costly efforts to stabilize crippled banks and the Fed's unconventional monetary policy.
"I think it was important for confidence. ... But fiscal stimulus was the least important of the three planks of the government's strategy," said Harvard University's Kenneth Rogoff, former chief economist of the International Monetary Fund.
Counting jobs
Christina Romer, the outgoing head of the president's Council of Economic Advisers, never really recovered politically from her January 2009 forecast that the stimulus would keep the unemployment rate below 8%. In fact, by the time Obama signed the Recovery Act into law on Feb. 17, 2009, it already had breached that level. (The original administration forecast was prepared using data from late 2008 before the already-wounded economy deteriorated even more dramatically.) The unemployment rate hit 10.1% in October 2009 and stands at 9.5% today.
Republican leaders such as Rep. Eric Cantor of Virginia say that proves the stimulus a failure. But Romer last month told the Joint Economic Committee that the stimulus "helped to turn the economy from free fall to recovery."
It's no surprise that the administration would proclaim its own policies a success. But its verdict is backed by economists at Goldman Sachs, IHS Global Insight, JPMorgan Chase and Macroeconomic Advisers, who say the stimulus boosted gross domestic product by 2.1% to 2.7%.
It's impossible to determine precisely how many jobs or how much growth the stimulus program caused. In a nearly $14 trillion economy, economists can't go employer to employer counting new hires. And there are too many moving parts to confidently link any single factor with individual hiring decisions. Roughly one-third of the stimulus, for example, came in the form of tax cuts, which are designed to boost demand for a wide array of products and eventually result in related hiring.
But to estimate the answers to such questions, economists rely on models based on historical relationships between various policies and real-world results. Earlier this month, Zandi and co-author Alan Blinder, former vice chairman of the Federal Reserve, released the most detailed assessment of the government's efforts to combat the so-called Great Recession. Neither economist is regarded as a partisan firebrand. Zandi, for example, backed John McCain in the 2008 presidential campaign and has advised members of both parties.
Their conclusion: The fiscal stimulus created 2.7 million jobs and added $460 billion to gross domestic product. Unemployment would be 11% today if the stimulus hadn't been passed and 16.5% if neither the fiscal stimulus nor the banks' rescue had been enacted, according to Zandi and Blinder. "It's pretty hard to deny that it had a measurable impact," Zandi said.
As of Aug. 13, almost 64% of the program's original $787 billion had been spent. (The Congressional Budget Office, which is among those concluding that the program had a broadly positive economic result, currently projects the Recovery Act's total cost to be $814 billion. Including an earlier Bush administration tax rebate and some unrelated programs, total stimulus spending will reach about $1 trillion over several years.)
Stimulus outlays first topped $100 billion in the third quarter of 2009, which is when the economy resumed growing after the recession that started in 2007. Likewise, personal consumption spending began to increase in the third quarter after four consecutive quarterly declines. To Zandi, those facts buttress his model's conclusion that the program resuscitated a moribund economy.
Not everyone is convinced. "I can't find in my analysis that the 2009 stimulus package had much effect at all," says economist John Taylor of Stanford University.
Taylor, who served as undersecretary of the Treasury under former president George W. Bush, says the recovery that began last year stemmed from a pickup in business investment unrelated to government spending. He dismissed the Zandi-Blinder conclusions as divorced from what is actually occurring in the economy and reflecting built-in assumptions about the impact of government spending.
At issue is the so-called multiplier effect of government spending. Economists such as Taylor who are skeptical of government's pump-priming role argue that for every additional $1 of government spending, GDP increases by less than $1. Those whose models back the stimulus generally assume that $1 in government spending adds more than $1 to total output via the multiplier effect. "If you crank up government spending, it will create jobs," says Sung Won Sohn, an economist at California State University.
The actual multiplier changes depending upon the condition of the economy. Over the course of the business cycle, the average multiplier is less than 1, Zandi acknowledged. If unemployment is low and the government borrows money for stimulus projects - thus crowding out some private companies seeking to borrow money - the net result can be muted. But with unemployment high and the government able to borrow money for 10 years at historically low 2.5% rates, Uncle Sam's borrowing doesn't come at the expense of the private sector and the stimulus is a bigger net positive, he says.
"Ultimately, people have to use their judgment here," says Taylor. "There's a difficulty of knowing what would have happened otherwise."
Facing congressional elections in less than 90 days, administration officials say they know what would have happened: The ailing economy would be in worse shape if not for the stimulus. But even some of those directly benefiting from the stimulus remain dissatisfied amid the economy's myriad woes.
When the president conducted an Aug. 18 town hall meeting in Columbus, Ohio, one questioner said he worked for a company that the stimulus funds were helping.
"It's keeping me and my crews afloat for a while. But what we really need is a stronger housing market here in Columbus. We need to be building new roads and making houses affordable for people. They need to get out there buying. They need to be able to get the loans. And what's up with that?" the unidentified man asked, according to a White House transcript.
Lack of appetite
The economy expanded for four consecutive quarters after the stimulus spending accelerated. But in recent weeks, in the aftermath of the European debt crisis, what once had seemed like steady if modest growth has noticeably weakened. In the week ended Aug. 14, new jobless claims breached the 500,000 barrier for the first time since November. They fell the following week to 473,000, but the four-week moving average remains at the highest level in nine months. Meanwhile, sales of existing homes in July fell 27% from the previous month, reaching their lowest level in 15 years, and durable goods orders disappointed.
"The recovery in the U.S. appears to have come to a complete halt," says John Higgins of Capital Economics.
Among investors, fears of a second recession or "double dip" are rising as stimulus spending gradually tapers off. Some analysts such as David Rosenberg of Gluskin Sheff in Toronto say that the first downturn, which began in December 2007, never really ended. "This is a depression, and not just some garden-variety recession," he wrote clients.
The administration has proposed some modest additional spending measures, such as a plan to aid small business that is stalled in Congress. With about one-third of the original stimulus money yet to be spent, and rising political angst over the public debt, there are no plans for a major new initiative. If the economy requires any additional impetus, it will likely come from the Federal Reserve, where Chairman Ben Bernanke has signaled a willingness to expand unconventional efforts to increase the money supply.
Small-scale efforts to support demand are warranted, Zandi says. But as the economy struggles to work off the excess debt clogging household and bank balance sheets, time may be the most important salve. "Policymakers should remain aggressive," he said. "But I don't think there's any political appetite for a big stimulus plan."
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60 Comments so far
Show AllWill the perpetrators of financial crime ever be punished?
* 8 million lost their jobs
* 6 MILLION families thrown out of their homes
http://www.prwatch.org/node/9388
The 2009 economic stimulus package was the first in a series of Obama's legislation that ignored Obama's base and pandered to Republicans whose votes were never needed to pass it in both houses of Congress. With this track record, Obama is lucky to have so many Americans favoring his handling of the economy.
Widespread infrastructure and environmental projects across America that are sorely needed and critical to future economic and quality of life improvement should have comprised 90%, not 40% of the 2009 economic stimulus.
I agree with what you say here. If ever there was an example of the MSM and its' conjugal relationships with Republicans, the stimulus package was it. They both are the true terrorists we should fear most in this country. Their false flag operations cut in half what needed to be done. After seeing the " tenting effect " in preparation for the Beckfest on Saturday these two should find a motel and a box of condoms and leave the rest of us out of it.
Quite frankly, it my own feeling that had 100 percent of the Stimulus went to Infrastructure improvements , there would not have been many more jobs created.
Why do I say that?
It is because of how the US Government has privatized everything and how all that Stimulus money would be awarded in Contracts.
Corporations would end up with the bulk of the money. They would bid on a specific contract wherein the price "Inflated'. They would hire workers for as cheaply as possible.
I suspect that were a study done it would be found that for every dollar spent on infrastructure improvements 80 percent of it would flow to the people needing the dollars the LEAST.
That being the "Investors".
People are growing rich off the "reconstruction of New Orleans" and all the Government money flowing there. But these people are NOT the workers.
GW,
You are right. What you describe has been referred to as the hollowing out of government......
Good points GW. I have begun to believe that spending money - on Haiti or New Orleans, within charities, on stimulus, on banks, on military contracts - without getting detailed feedback about exactly what happened to the money is an invitation to skimming and corruption. And misrepresentation.
We need accountability, which means actual public accounting for where every dollar went. If the government cannot do it, I know several working mothers who have budgeting and accounting down pat. They know just where every dollar goes. Perhaps they could help Paulson, Bernacke and that whole crew.
Joe
The title should be: "White house economists prove the White house did a great job"
Then the body should be:
The white house spent a measily 900 billion and created way too many jobs, which is why the economy is so great right now.
The END
If you think Krugman is a White House economist you might just be illiterate.
Can someone explain why we can't have sufficient economic activity to keep people busy without "economic growth"? When I hear the term "economic growth", I picture a Brontosaurus getting infinitely bigger until it's to big for any available pond to support its body weight.
Shouldn't we be ecstatic that some birth rates are declining and we could consider looking to a sustainable economy rather than a "growth" economy?
If you think the economy is a dinosaur..you might be a red neck
"Can someone explain why we can't have sufficient economic activity to keep people busy without "economic growth"?"
Let me ask you a question in response that ought to answer your question: Who/What primarilly benefits from "economic growth"--Bankers, Bondholders, Corporations, or Workers? The stock answer from Establishment Ecnomists is A Rising Tide Lifts All Boats, but statistics prove the adage false.
Given that in the future the material accumulation of stuff as a means of gaining/establishing status will no longer be possible, will the gaining and accumulation of knowledge and wisdom be enough to provide for the percieved necessity to improve one's status in society? As the "economic pie" continues to shrink in real terms as time goes forward, more locales will move to a steady-state economic arrangement and thus face immense challenges to their integrity and civility, and nation-states will also face this dilemma, which the largest will likely fail due to the lack of integrity and civility.
We'll just bake another economic pie like Reagan and his ilk, the Supply Siders. If we need 3 pies, what the hey! As for growth being good or necessary try telling the children of late boomers and Gen Xers they don't get anything but crumbs from the crust. Tell me how that's working out for ya, will ya?
I've already told my daughter that there will be less for her than there was for me and why. We are now working together to ensure she has enough "green" assets to provide for her and her extended family's fundamental security: Food, Water, Shelter, Clothing, and Heat. I taught economics in a similar fashion until my forced retirement from education. Telling the truth is far easier than making up fantastical fictions like Reagan's when talking to anyone about anything. Youths will often dislike and even discount the message, but they've yet to learn the reasons for shooting the messenger. I'm 55, and politicos have lied to me every day of those 55 years, except for the very brief deviation by Carter. For awhile I copied Politico's behavior, but it brought nothing but trouble. Tne current crises we face result from similar behavior on a grand scale. I advocate telling the truth; it only hurts once and you don't have to worry about covering it up and continually modifying the lie first told.
To have economic activity, people have to have needs and to have money to address those needs. Now, people have plenty of needs (and I don't mean just wants) and people are willing to work, so where is this breaking down?
I'm thinking of the part in the King Arthur legend where Merlin turns Arthur into a bird of some sort so he can fly above the countryside and see that there are no lines on the globe as there are on political maps. It's the same thing with economics, money is just a fiction and what is real is people engaging in activities and managing limited resources.
Are we running out of resources or has our monetary system become dysfunctional?
it is very simple
for the economy to work we need money in circulation
we have all the means to produce as much goods and services as can be paid for
but the money has to be in the hands of those who will spend it
greed and hoarding by the rich is the sole cause of the "economic crisis"
"but the money has to be in the hands of those who will spend it"
True. And that is what was wrong with the way the stimulus was implemented. The money was essentially given to the rich. Whereas it could have been spent on:-
* Alternative power generation technologies.
* Alternatives to the internal combustion engine for transport.
* Public transport.
* Education
* Health
* Community infrastructure projects.
This comment from somebody helped by the Stimulus in Columbus is telling:
"We need to be building new roads..."
No we do NOT need to be building new roads.
Unfortunately the lion's share of Stimulus infrastructure spending went to highways,
precisely what we do NOT need at this point in time when we are running out of oil
and facing catastrophic climate change from auto and truck's greenhouse emissions.
Meanwhile over 150 public transit systems have been cut or had major fare increases
since 2008 ( http://t4america.org ).
This is totally unsustainable infrastructure.
What academic economists seem to forget is the connection to the actual physical world and real world production, costs and side-effects.
For Keynes it did not matter what the government spent money on so long as it
circulated. But in the real world when we spend $3 Trillion on Iraq/Afghan Wars,
almost $1 Trillion every year on all War expenditures combined and the major part
of infrastructure for roads instead of Green Transit this will only waste real world physical resources which are running out.
On other hand if we stop wasting trillions on Wars and spend instead on green public transit, solar energy, wind energy and energy efficiency then not only will
we be providing jobs we will be saving precious resources to provide a sustainable future.
From what I know of economics the "multiplier effect" of differing inputs is not a contentious issue. It is not hard to analyse the stimulative effects of corporate tax cuts for example-- that can be measured directly and does not depend on indirect results made by modeling. It is not surprising that the GOP and its minions would attempt to confuse the issue and deny the stimulus effect. The question really is why one would give their claims any credibility.
But the Obama economists have the same duplicitous stripe. If they recognize the validity of various multiplier effects and recognize that the stimulus, such as it was, did help the economy and save us from depression the next question would be why they did not and will not do more and add another stimulus package which would be more effectively directed at job creation. It's almost as if they are as afraid of a successful government program as their supposed opponents are. If government could be seen as successful then we might demand more of it, more of them-- and how would that go down with the ones they've already sold their souls too.
A fellow once said, "A Recession is when your neighbor is out of work; a Depression is when you are out of work." I guess we need to decide for ourselves.
In regard to an article in the New York Times: “Why We Need A Second Stimulus” (by Laura Tyson) and the recommendations of the American Society of Engineers that the country needs 2.2 trillion dollars in infrastructure money, etc. and (your) arguments vis-a’-vis the National Debt, etc., jobs, income, consumer spending etc., and a recommendation of a Stimulus Plan of 1 trillion over 5 years for infrastructure, etc. (it could be 2 trillion over 7 years), I think, in addition, to the deficits, the National Debt, State Deficits issues, etc., (we) you should contemplate, imagine and envision a different approach on the National Debt, Stimulus plans and spending, etc., in future administration, etc. on just your recommendations
In another words, if the Obama administration, on your recommendations (which I support “as is” and as the notable economists Paul Krugman supports) on increasing the National Debt in another Stimulus Plan by 1 trillion dollars over 5 years for infrastructure (you should again consider the 2.2 trillion Stimulus Plan over 7 years), you should also imaginably see that future presidents would reduce the National Debt by trillions of dollars by eliminating the “Financed Stimulus Deficits” like Stimulus Plans which was created f/ the FED (past), by destroying the debt. Currency, the FED, not private banks or international Banks as in China, India or Japan, is holding 5-8 trillion dollars of our National Debt. 5 trillion easily could be destroyed in a moment reducing the national debt “forward.”
In addition, as an economist, I think you should also imaginably see in this New World of Finance since 2007-2009: Sub-prime crisis: TARP, TALF, PPIP, Fannie Mae, Freddy Mac, AIG, Guarantees of 23.7 trillion dollars, where 4.6 trillion dollars in cash went directly to Wall Street, etc., you should see this New World Finance or better said this New World Exploitive Finance Order, as or in terms of “digits,’ or the trillions of dollars as just “digits,” to be reversed, changed, managed, etc., for and only in the interest of the people on jobs.
I think historically to better help manage your recommendations of 1 trillion dollar Stimulus Plan over 5 years or less in terms of “percentages” or “digits,” being added to the National Debt, you should look at FDR’s WPA and the Tennessee River Valley Authority and how it was finance, and whether on Stimulus Money it was added or only a percentage added to the National Debt
Sincerely,
Jason Pacifico
2004 Reform Party Candidate for President
Just enough stimulus was provided, and it is being dished out slowly, to keep the public from erupting in mass riots.
This enables Obama to move forward with other parts of the corporate agenda shielded from opposition from his base of slow-witted dupes.
Serious job creation and economic rebuilding will require a full reversal of trade, tax, regulatory and monetary policy.
American dollars are being redistributed to shareholders and board members of large corporations via a globalist economy which is the religion of the aristocracy.
We could have three more stimulus packages as Krugman suggested yet the American economy would again slowly deflate as those dollars left the country or were funneled to the billionaires at the top.
It's the system that's the problem, not the band-aid or salve we're applying to it.
This article is full of distortions.
For example:
"In a recent USA TODAY/Gallup Poll, 59% of respondents disapproved of the president's handling of the economy. In the partisan war over the economy's performance, the word "stimulus" has became synonymous with "boondoggle," making the notion of a repeat any time soon highly unlikely."
Do the 59% who disapprove "of the president's handling of the economy" feel that way primarily because of the stimulus bill per se, or is their ire directed primarily at the bank bailouts, which are far, far larger and didn't help Main Street at all? Most people I know hate the bank bailouts but waffle on the stimulus program. The two sentences as combined in the quote amount to what semanticists call a "positive inferential non-statement." The reader is led to think they are related when there is no necessary relation at all.
Or this from the article:
"Roughly one-third of the stimulus, for example, came in the form of tax cuts, which are designed to boost demand for a wide array of products and eventually result in related hiring."
This is bordering on an outright lie. The tax cuts in the stimulus bill were a sop to Republicans and blue-dog democrats to obtain passage of the bill, and were NOT "designed to boost demand for a wide array of products...." Note that the tax cuts in the bill went to businesses and not to consumers. How does that "boost demand"? As economist Dean Baker has said many times over the past couple of years, consumers are "tapped out" in large part because they cannot use the old housing bubble as an ATM machine. In fact, some have argued that the tax cuts to businesses in the bill have had a negative effect on the "multiplier effect" in part because the result is less money to the Treasury. These tax cuts are the REAL "boondoggle" in the bill. They do nothing to stimulate consumer spending or employment. (Another major reason that consumers aren't buying is massive anxiety over continued high unemployment levels and uncertainty about the turbulence in the economy: "Is my job next on the chopping block?" This is also why the savings rate is going up, while prior to the bursting of the bubbles, the savings rate was negative; people have lost faith and logically seek a cushion.)
Of course the article pretends to be "fair and balanced," and quotes partisans who are just plain wrong. Their cynicism is based on their awareness that the average American is economically illiterate on issues macroeconomic.
Next movie: Watch the battle over whether to retain Dubya's trillion-dollar tax cuts for the rich, which contributed to our current economic disaster and further polarized our society between dem dats got, and dem dat don't.
Remember that Dubya defined his "base" as the "Haves and the have-mores." The GOP wants Obama's stimulus efforts to fail for partisan purposes, the health of the nation be damned.
-30-
Good analysis of the article!
This is what you get when Wall Street convinces business and government to switch from a manufacturing economy to a financial economy.
Want proof? Who got the biggest help from the government? Wall Street of course.
What help did homeowners get? They got kicked out of their homes because after losing their jobs, they can't make the payments on their mortgage and guess who owns the mortgage. Wall Street and the bankers.
Sorry, but prepare for worse yet because that is what they have in mind for most of us.
The problem is that when the economy collapsed we kept the banks and Wall St., rich.
Those entities has strong ties to Europe's economy and the bail-out money mostly went to their European assets!
The banks didn't take a hit; the people did. The amount these borrowers owed the banks, didn't depreciate and the banks want all their money plus interest!
So YES! There will be no recovery! There will be a second crash!
Greed robbed the grease that makes the wheels turn.
People are NOT buying frivolous things anymore! That's a good thing, something we should of been doing all along.
Restructuring the economy is the only way out of this. GLOBAL RESTRUCTURING!
"Eighteen months later, the consensus among economists is that the stimulus worked in staving off a rerun of the 1930s"
What do expect them to say? That it failed? They want more money-our money, that is, your child's money. Do they think their friends in banking should go to jail? That we should reign-in our spending? No, of course not. The only thing they know is to spend, to keep the money moving. Its not going to work. GWB asked us to spend our way out of 9-11. Obama is doing the same today. Beck wants us to pray our way out. None of this is going to work.
The stimulus failed, just as if you were bankrupt and tried to spend you way out of it (after quitting your job).
We didn't overt the depression-we're in it.
In the past, we had a robust manufacturing base, we had factories, we made things...and we didn't have a 13+ trillion dollar debt and a meglo-maniacle MIC devouring money as fast as its clicked into existence. We also had a solid base of citizens who had not yet been conned and lied to like we have. The nation had never been attacked, either. So there is little credibility left for anyone, by anyone.
Krugman won a Nobel prize based on our house-of-cards economics. Obama won one for "peace". That in itself should tell you something. One is a fraud, the other a murderer.
As I've said before, stock the pantry and stock it soon. Stock it beyond full. Just as they changed the bankruptcy laws ahead of the "banking crisis", they are (and have been) putting in place, a plan to deal with anarchy when the sh*t really hits the fan. They know exactly what's coming. Be prepared, folks. It can't hurt. You have to eat anyway.
In order to keep people from fighting back, it's necessary for the govt. to keep people divided.
I'd say that's their biggest accomplishment.
Well, I certainly had a lot to say about this article but everyone else seems to have beaten me to it. Not an apologist in the bunch.
The bottom line is you can't borrow your way out of either debt or a structural problem. Best to hunker down and find local sources of good food.
Ditto. Shame on Krugman for lending his name to this.
Ditto. Shame on Krugman for lending his name to this.
Since the 20s Keynesian policy has been used to solve numerous recessions and The Great Depression. Since his policies or Krugman, Steiglitz and Galbraith's wisdom was not followed by Ohbummer & Co. we'll suffer the consequences. Hunker down and finding food are noble but hardly the prescription for what ails us. Blind adherence to supply side policies and corruption got us where we are today. Balancing the budget is a brain dead scheme perpetrated by people who are comfortable with watching their neighbors bleed to death needlessly. The answers exist to solve this problem but punishing the poor, children and homeless shouldn't be one of them.
Keynesianism did not solve the Great Depression. Gov't spending kept things from falling apart. The population in 1930 was around 125 million and more than half lived in rural areas where they could produce food for themselves. People had stronger extended families and more community support. Keynes said that when things get bad the gov't cuts taxes, increases borrowing and spending. When things get better, he said raise taxes, cut spending and PAY DOWN DEBT. Since we never paid down debt (In the late 90's Alan Greenspan said this would be bad because it would contract the money supply) the whole Keynesian argument is moot.
Also, Keynes did not address the Savings/Investment component, it's all about consumption.
You may not like the idea of paying down debt but the only alternative is writing it off. When interest rates go up, and they will eventually, we are dead. The Japanese tried 0% interest rates for over 15 years and moved nothing. They spent billions and billions and got nowhere but deeper in debt while international bankers borrowed short term at 0% and lent long at 5%. What saved Japan was that the Japanese people had savings. We don't.
Sometimes the best stimulus is for the gov't to repeal legislation, such as allowing home brewed beer (finally, 40+ years after Prohibition ended). This produced the explosion in micro breweries and some home brewers wound up with beer that other people were willing to buy.
Of course we're bleeding to death. They've been sucking us dry for over 30 years. All legislation has moved money to the top. You do not fix anything by giving the responsibility to the same people who create the mess. None of the stimulus was useful because taking money from some so that others can buy cars and houses is useless and pisses most people off. So what if they doubled it--these people don't even know what a stimulus is. We don't need more roads, we need to develop local and regional economic systems. Saving GM was idiotic but that didn't stop them.
This requires serious legislation changes. We are getting nothing and should expect nothing The poor have been punished for decades and nothing has been done. The Dems are in control and nothing was still done. Blind adherence to Keynesian thought is no different than blind adherence to supply side nonsense. And by the way, I am not someone who wants to see people bleed. Instead of a stimulus we should have set aside funds to keep people from starving or freezing instead of trying to get people to shop; then implement real change (like reinstating Glass-Steagall)
Do you realize that most of the fights over finanacial regulation have to do with FDIC insurance? The lifting of controls allowed big investment banks to have insured deposits to speculate with.
When things get bad, food will be at the top of the list. We have serious problems and there is no quick fix. The system of sucking us dry has entered a new phase as there is very little left to suck. Enter the police state to control us.
Sorry, but I'm not buying it. I live in Portland, Or. where mass transit is, by American standards, mature. One thing I can tell you as an avid supporter of it is that with 9 bridges having trains, buses and soon street cars passing over the river: I sure hope they don't collapse. 2 of them should have been replaced decades ago. This is true for the overpasses on the major arterials as well. The infrastructure all over this country has a backlog of repair and replacement in the 600-750 billion range, at least. Same with schools, airports, etc. As for food do you really think we can " eat our way to prosperity "? I'm all for regulating and reigning in Wall Street and the Banksters: it should be done regardless of the worst recession in 80 years. Oregon is the microbrewing headquarters of the U.S. so I understand repeal: marijuana and industrial hemp repeal would create a couple hundred thousand jobs, for sure. It would help get us off the oil addiction as well. There are lots of things to be done that would benfit the general public and put millions back to work. Tax cuts for the rich and the rest of the bullxxxt being proposed right now isn't the answer and saving deflating dollars isn't either. Just sayin'.
linkwray: You're right about the infrastructure problem. We desperately need good rapid transit. But someone has to pay. Cities need to prioritize because the feds are done. The federal gov't is incapable of responding to the needs of the people. Are there not enough examples over just the last 10 years? If Obama wanted to respond to the needs of the people, Joseph Stiglitz or Simon Johnson would be Treasury Sec. Probably the truest thing any politician ever said was John McCain in 2000 when he said we won't be able to solve any of our problems until the money gets out of politics.
No one with any serious input in this debate has mentioned a corporate personhood amendment or the dissolution of the Empire, which are the main things that could save us. And that won't be painless but it will eventually work.
Your point about marijuana/hemp is a great example. I think we should be doing a lot more talking about what the gov't can stop doing that would help and less about how an incompetent, ineffective system should be given more power. And I certainly don't support "tax cuts for the rich or any of the bullxxxt being proposed".
About food-- I mentioned it as a survival tool, not an economic stimulus; although supporting local food systems is also a way to encourage local jobs.
Sorry I'm slow. I think we are probably 95% there with solving this country's problem with our combined comments. Thanks, I enjoyed the oppurtunity.
I have too. Some of my frustration here is that this budget is going to be cut no matter what (Even the pentagon is trying to show how they can give up $100 billion over 10 YEARS, what a joke) and progressives have a choice--offer suggestions or abdicate to those who would choose to cut benefits. This is what happened with "welfare reform". Change was needed, the ideas should have come from those who actually care about those in need.
Why all the details, talk of models, and speculation, for an article to be consumed by readers in a country that happily refers to itself as a nation of believers? 'USA Today' should just have two different versions of the article. "Stimulus Good" for democrats and, "Stimulus Bad" for republicans.
Most readers are just going to believe what they want based deeply held prejudices. I doubt many Republicans will ever read an article like this one and come to the conclusion that Obamas stimulus was the right thing to do. After all they believe Obama is just a Fascist Socialist Muslim that was born in Kenya. How can he possibly know what is best for real god fearing Christian Amerikans, 'specially them white ones, right?
>>>> "The White House says the multiyear $814 billion stimulus program passed by Congress in 2009 boosted employment by 2.5 million to 3.6 million jobs..."
That works out to $225,000 to $325,000 per JOB, so far!
djb
"but the money has to be in the hands of those who will spend it
greed and hoarding by the rich is the sole cause of the "economic crisis"
That is why when the society gives 'welfare money' to the needy, that money circulates... from one week to the next week the money they are 'given' gets spent, there is no money left after the needs are met to 'hoard'.
This ridiculous cry : why don't you SAVE or buy a 'little business' or a chain-saw or a step ladder and bucket (you can carry these, you don't need a car!) so you too can earn 'plenty' of money and stash it away.... Annoying, huh?
~
"David Rosenberg of Gluskin Sheff in Toronto say that the first downturn, which began in December 2007, never really ended. "This is a depression, and not just some garden-variety recession,""
This is exactly the situation we are in ... the stimulus just juiced a zombie economy a bit ... The fact is we need restructuring ... a 32 hour work week, single payer, tariffs to protect jobs and banking to be run as a public utility whereby the public not private banks benefit from the creation of our currency and credit ...
There are no more bubbles left to blow ... The 30 year credit fiesta is over and with it millions of jobs destined to never come back. Even the so-called liberal economists are singing from the "back to business as usual" hymnbook ... Growth at all costs ... there are no sectors left to grow and no more markets to take our goods ...
We lost 221,000 jobs in June, and 131,000 in July of this year. What will August bring?
I read the following comment on a financial website which really hit home!
"Borrowing from China et al to replace the lost manufacturing surplus and sticking the tab on the class you are screwing all while blasting wages backwards by four decades and expecting to have any semblance of a strong economy is an entirely moronic idea dreamed up by loons."
And, as Marc Faber has said, "The Fed will continue to monetize.... they will print and print and print until the final crisis wipes out the whole system."
Pat Choate has suggested that eliminating personal and corporate income taxes and replacing them with a VAT would be an efficient and fair way to help get the economy on its feet and bring back jobs to this country.
Gail: I've been thinking about the VAT since I heard Lester Thurow talk about it in the early-mid 90's. Sounded good, he even had a way to protect poor people. Then the internet took off and I can't figure out how you collect taxes from something purchased in Hong Kong, Berlin or Johannesburg. And, you know as well as I that if people can avoid that kind of consumption tax, they will. Imagine the intrusions into personal lives required to stop it.
Also, what about all the money in Roth IRAs which have theoretically already paid the taxes? Frankly, from a personal standpoint I have pinched pennies and deferred spending for decades in order to be financially OK at this stage of life. It angers me to think that now I'll have to pay taxes at 23% on purchases when I've reached the point of paying little taxes because my unearned income is low. The devil is always in the details.
Marc Faber is probably right because they have sworn to do anything to avoid deflation and that is like trying to defy the law of gravity.
"Imagine the intrusions into personal lives required to stop it."
cassandra,
The credit card companies are already keeping track of what we buy. Taxing an out of state or overseas purchase would just create a little more work for them. They would have to maintain a VAT file. Though the government could give them a small percentage to take care of the additional paper/computer work involved, the problem would be the usual lack of oversight to actually collect the VAT from them.
A VAT would squeeze the money out of the super-wealthy who are paying almost no taxes right now because of the favorable legislation bestowed upon them by Congress. If done properly, food and other basic needs items would not be subject to the tax that would prove harmful to many people.
Stimulus Created Nearly 3 Million Jobs - No way José.
I don't believe it. Economists are liars. They can prove anything with their figuring in the classroom. Sounds to me like Bush kept US safe - we did not get hit again since 9/11. I see no job creation. No new plants, etc.... The stimulus went to stae, city, county governments for repairs and maintenance and to keep people on the payroll. No new jobs were created. Just more smoke and mirrors and political BS for the coming election.
Obama has not created any jobs. He would very much like you to believe that he has. The latest red herring is, 'give some stimulus money to small business." vs big business. WRONG! Giving money to the Cadillac Esplanade crowd will only buy them vacation properties. Government stimulus money needs to go directly to the people WPA style for infrastructure repair and maintenance. We need to put people to work repairing roads, bridges and building schools and hospitals. Paychecks from the government itself - nationalized - no middle men. It's our money. Every paycheck dollar gets spent on consumer goods = demand/recovery.
The (D)s and (R)s don't know another way than tax breaks to the well to do. Even the $8,000 homeowner tax credit was targeted at the wealthy. When people are out of work and losing their homes who can take advantage of this tax credit other than the well to do. More smoke and mirrors with our money.
Wake up America. "We" need some new faces in Washington.
FDR's Work Project Administration and Blue Eagle stimulous programs gave many people, using skills they had, the opportunity to counsel and teach hundreds of thousands of people during the First Depression in the 30's. From the CCC to smaller Community Centers provided jobless people pay for learning new skills. The projects themselves built our forests and roads infrastructure. Those are things people need today, constructive jobs helping the nation to stimulous jobs that counted and taught and paid them money all of which fed hundreds of thousands of others. Stumulous programs like those are good, productive and worth it.
The recent giving of stimulus money to states to insure that teachers wouldn't lose their job was a scam to get the public to believe that the Dems were saving teachers' jobs, thus deserving of re-election this year.
In actuality, over 100,000 teachers lost their jobs this past year. Maybe a few more were prevented from losing their jobs this year, but those of us who were cut last year aren't being called to return to work.
What are the net figures in terms of hours worked and wages earned?
The decline in US jobs has been going on for decades, egged on by Reagan's union busting, Clinton's NAFTA, and all the mean and selfish policies of both Bushes and Wall Street, the banking and mortgage industries, who have increasingly invested in enterprises with low paid workers outside the country and even worse have spent their savvy intellects speculating and creating false instruments.
I remember once there was an announcement on the radio that the Brooklyn Navy Yard was hiring several hundred new workers. I called up to find out how to apply and was told by merciful and truthful woman that 500 had been laid off in the past months and the 200 "new" jobs would be taken by returning workers.
That's how I perceive the stimulus. I would love to see a truthful report about exactly where the stimulus money went, how much for tax cuts and which jobs were created or saved. Some jobs have been created or saved against a background of increasing and longer and longer term unemployment and an increase in the proportion of low-paying, part-time and temporary jobs without benefits.
But then I am not a trained economist, you know those guys who could not see the financial collapse coming.
Joe
Get outta here... Economists can't tell a left shoe from a right one. If they agreed about this, then it's probably not true.
BS
Hmmm... Let's see.
$814 billion of stimulus money/3 million jobs created = $271,000 PER JOB!
Wow - I WANT ONE OF THOSE!