POL: ARRA (Bailout II: The Revenge)

[sterlingice]

I'm trying to go at this from a political angle, moreso than a "what's the best way to do this" angle but I'm sure we'll get a fair share of both.

So, here we find ourselves with the American Recovery and Reinvestment Act- basically Bailout II. Quick reference:
Obama tells GOP no compromise on tax rebates - CNN.com (http://www.cnn.com/2009/POLITICS/01/27/obama.meetings/index.html)
Boehner: Stimulus bill contains too much spending - Yahoo! News (http://news.yahoo.com/s/ap/20090128/ap_on_go_pr_wh/obama_economy)

Right or wrong, Obama campaigns on how tax cuts for the middle (re: consumer) class and infrastructure building is the way to go to push the consumer economy forward.

Since the bill's inception, a bunch of the infrastructure spending has been gutted to put a $300B tax cut in there, presumably to appease the GOP. (Personally, I'm a bit miffed as I'd love for a ton of money to be poured into infrastructure, and not the 10-18% it's been scaled back to, depending on the numbers you use- but that's neither here nor there)

Now, I understand the GOP's angle on this- they want to make the bill more palatable to their base so they can say they did something. And then they will vote against it anyways and blame the President and the Democrats when it fails to fix the economy, which is in such a disaster state that no single bill can fix it. So, I understand why they're sticking to the line of "bill contains too much spending" (but we have no constructive suggestions on what to spend it on) and "we think there need to be more tax cuts".

This should put the ball back in Obama's court to basically say "hey, if you're not going to work with us in good faith, then it's going to be our bill completely". It's not like people are checking the minutiae of this bill so, if you're Obama, why pass what you think is a watered down version of the bill if GOP leadership isn't going to deliver you any votes anyways? By pretty much all accounts, he has the votes in the House and the Senate and it's pretty much going to be on partisan lines.

So, why doesn't he drop the hammer already and just make the bill he wants?

SI

[Flasch186]

I think because when the GOP was in power they were lambasted for not listening at all to the Dems, including the one time where they physically locked them out of the room. So I would hope that by going to them with open ears perhaps he can avoid the whole you did it to us so now were going to do it to you game.

[JonInMiddleGA]

So I would hope that by going to them with open ears perhaps he can avoid the whole you did it to us so now were going to do it to you game.

Which is naive to the point of foolishness, since nobody subject to that line of thought is going to believe that isn't basically what happened anyway no matter what the final product is and no matter which side of the aisle they're on. More over, virtually nobody on the left of the aisle concerned with that sort of payback would be happy if it didn't happen (nor would I be if the situation were reversed).

[Mizzou B-ball fan]

This should put the ball back in Obama's court to basically say "hey, if you're not going to work with us in good faith, then it's going to be our bill completely". It's not like people are checking the minutiae of this bill so, if you're Obama, why pass what you think is a watered down version of the bill if GOP leadership isn't going to deliver you any votes anyways? By pretty much all accounts, he has the votes in the House and the Senate and it's pretty much going to be on partisan lines.

So, why doesn't he drop the hammer already and just make the bill he wants?

SI

1. I've been opposed to every bailout bill so far and this one is no different. They don't provide any real relief to the economy.

2. With that said, I agree with your point regarding owning the bill. The Democrats played similar politics the last two years when they had the votes to pass it on their own and Bush didn't object to the bill. They've made every attempt to claim the mantle of compromise when they have the full ability to dictate the bills using their Congressional majority.

As a fiscal conservative, I'd actually prefer that the Democrats just go ahead and make it their own. Producing these bills that are muddled with compromise to the point of ineffectiveness does nothing for the country as a whole. I'd rather they just go gung-ho and give their policies a shot to see if they'll work. We need more politicians willing to go with what they believe rather than ones who position themselves to avoid losing politically.

[Flasch186]

Which is naive to the point of foolishness, since nobody subject to that line of thought is going to believe that isn't basically what happened anyway no matter what the final product is and no matter which side of the aisle they're on. More over, virtually nobody on the left of the aisle concerned with that sort of payback would be happy if it didn't happen (nor would I be if the situation were reversed).

foolish? Maybe but I have hope that at some point one of the groups up there will say enough of this BS. Every 2 years we get that chance.

[Noop]

n.W.o

And not the wrestling stable.

[JPhillips]

I sort of agree with Jon on this. What reason do the Republicans have for supporting the bill? If it works Obama will get the credit no matter how many Rs vote for it and if it fails it will only be a huge boon for the Rs if hey can say, "Told ya". It's good politics for Obama to work with the Rs on this, but it's also good politics for the Rs to vote against it.

[JonInMiddleGA]

It's good politics for Obama to work with the Rs on this, but it's also good politics for the Rs to vote against it.

I'd argue even that point I think, unless you mean as a way to share the blame when it fails.

How many Obamites do you honestly believe voted for the guy in order for him to work with Republicans/conservatives/whatever?

If anything, I'd say having much to do with them at all will hurt him politically just as there were concerns about Bush not being nearly forceful enough with the D's at times.

[Flasch186]

me

[JPhillips]

I'd argue even that point I think, unless you mean as a way to share the blame when it fails.

How many Obamites do you honestly believe voted for the guy in order for him to work with Republicans/conservatives/whatever?

If anything, I'd say having much to do with them at all will hurt him politically just as there were concerns about Bush not being nearly forceful enough with the D's at times.

Bush's approval rating didn't go into the crapper because he wasn't conservative enough. His numbers plummeted when independents and moderate Rs fled. There are those on the left that are upset with Obama already, but short of changing party affiliation he'll keep almost all of them come 2012. His real strength going forward will be with independents and moderate Rs that support him on many issues. If he makes an honest effort to work with Rs on this bill he'll have strong initial support nationwide when it passes.

[Mizzou B-ball fan]

How many Obamites do you honestly believe voted for the guy in order for him to work with Republicans/conservatives/whatever?

If anything, I'd say having much to do with them at all will hurt him politically just as there were concerns about Bush not being nearly forceful enough with the D's at times.

Absolutely spot-on. I didn't like some of Bush's compromises for the reason you mention and I've already heard a lot of Obama supporters who are frustrated that he's negotiating in any way given the Congressional Majority the Democrats hold.

[Flasch186]

not spot on

[sterlingice]

Absolutely spot-on. I didn't like some of Bush's compromises for the reason you mention and I've already heard a lot of Obama supporters who are frustrated that he's negotiating in any way given the Congressional Majority the Democrats hold.

I think that's a gross mis-characterization. Re-read my initial post. If there were any sort of good faith negotiation- compromise would be good. But when the bill has already been gutted for tax cuts and it's clearly not enough for them- then, tough. It's clear compromise is not the point.

Then again, I have no idea where you guys are getting the idea that Bush compromised too much. The problem most of the left had with him is that *everything* was his way or the highway.

SI

[JPhillips]

Absolutely spot-on. I didn't like some of Bush's compromises for the reason you mention and I've already heard a lot of Obama supporters who are frustrated that he's negotiating in any way given the Congressional Majority the Democrats hold.

The fallacy here is assuming everyone who was upset with Bush was upset for the same reason as you. There's plenty of polling data that shows Bush maintained very high popularity with conservatives throughout his last term.

And for the record, yes, I know the weighting is biased. :p

[Young Drachma]

I like the one bill from the congressman that suggested a two month payroll tax holiday.

[Mizzou B-ball fan]

I like the one bill from the congressman that suggested a two month payroll tax holiday.

In related news, the tax on unicorn purchases has been dropped for the first 100 days of Obama's term in office.

[Young Drachma]

In related news, the tax on unicorn purchases has been dropped for the first 100 days of Obama's term in office.

I'm pretty sure we're all getting free ponies. I don't need a unicorn, thanks.

[Flasch186]

I see this is turning out to be just like every other POL thread where the trenches were dug years in advance.

[path12]

My impression is that what he wants is a bill that passes by enough of a margin to get the majority of the country behind it. A party line split doesn't accomplish that.

That said, I'm not overly optimistic he gets the margin he wants.

[Mizzou B-ball fan]

I see this is turning out to be just like every other Presidential administration/Congress where the trenches were dug years in advance.

Fixed.

[JonInMiddleGA]

I see this is turning out to be just like every other POL thread where the trenches were dug years in advance.

Which goes decently to my point.

If anything, negotiating with Obama will hurt more incumbent GOP'ers than it helps and won't help most incumbent Dems when they get saddled with any compromises he agrees to. And despite the media circus, the power rests with Congress not Obama, so I don't see them rolling over to play along to give that up.

[path12]

I'm not sure how good an idea it is though to be seen as getting in the way of a president whose approval ratings are hovering around 70%.

[Mizzou B-ball fan]

I'm not sure how good an idea it is though to be seen as getting in the way of a president whose approval ratings are hovering around 70%.

If there's a more useless statistic than an approval rating of a person who's been in the office for one week, I'd like to know what it is. I was pretty popular with my wife a week after we were married, but that's just because the honeymoon wasn't over.

[Dr. Sak]

If there's a more useless statistic than an approval rating of a person who's been in the office for one week, I'd like to know what it is. I was pretty popular with my wife a week after we were married, but that's just because the honeymoon wasn't over.

He just threw out a big softball with that...now who is brave enough to hit it out of the park ;)

[Flasch186]

If there's a more useless statistic than an approval rating of a person who's been in the office for one week, I'd like to know what it is. I was pretty popular with my wife a week after we were married, but that's just because the honeymoon wasn't over.

Can I point to the outfield first?

My head is pounding regarding your judgment of what is and is not a useful statistic or piece of information.

[JonInMiddleGA]

Well that stat does serve at least one purpose, highlighting the lack of discernment ability of the American public.

[flere-imsaho]

I'm pretty sure we're all getting free ponies. I don't need a unicorn, thanks.

I already got my pony and let me tell you, they're an absolute bitch to keep fed. Go for the unicorn instead.

[flere-imsaho]

I'm not sure how good an idea it is though to be seen as getting in the way of a president whose approval ratings are hovering around 70%.

Except that for most of the Republicans in the House, at least, Obama's approval rating is nowhere near 70% in their district.

[Raiders Army]

I already got my pony and let me tell you, they're an absolute bitch to keep fed. Go for the unicorn instead.

I heard those Princess Unicorn dolls were hard to find.

[path12]

Except that for most of the Republicans in the House, at least, Obama's approval rating is nowhere near 70% in their district.

Maybe so -- but just as an example the latest from Alabama is 60% favorable and 62% in Kansas. Alabama and Kansas!

Pollster.com: 14-State Obama Job Approval (SurveyUSA-1/20-21) (http://www.pollster.com/blogs/14state_obama_job_approval_sur.php)

For the record, I think the situation is far too fucked up already to be saved and that looking back we'll probably see we are already in a depression.

I also believe that the "throw everything at it and hope something works" approach is indicative that TPTB are more concerned about propping up the world's financial system as much as trying to stimulate the economy.......

The only good thing about a global depression is that it will likely hit other countries worse than us in the long run, but there's tough times ahead for everybody.

[Dr. Sak]

I heard those Princess Unicorn dolls were hard to find.

My horn can pierce the sky!

[Mizzou B-ball fan]

Maybe so -- but just as an example the latest from Alabama is 60% favorable and 62% in Kansas. Alabama and Kansas!

That's a perfect illustration of how useless those stats are. There's a big difference between an approval rating and whether you'd support that candidate if there were an election today.

[Buccaneer]

I actually approve of Obama being president, I do not support the policies laid out in this bill, nor do I support Congress.

[path12]

That's a perfect illustration of how useless those stats are. There's a big difference between an approval rating and whether you'd support that candidate if there were an election today.

Are you saying you think McCain would win if the election was held today? Really?

[SportsDino]

"Are you saying you think McCain would win if the election was held today? Really?"

Another bank downslide or Iraq disaster, and we might have a race if McCain was swapped for Ron Paul! I still think the smooth, but mostly business as usual , Obama would take it over the radical, who nevertheless is raging to take on the economy (right or wrong though his approach may be).

[SportsDino]

Have not confirmed yet, but this site says it has text of the Obama bailout:

ReadTheStimulus.org (http://readthestimulus.org/)

[BishopMVP]

I'm not sure how good an idea it is though to be seen as getting in the way of a president whose approval ratings are hovering around 70%.It doesn't matter what his approval rating is today. It matters what Obama's approval rating (and the popularity of this bill) are in November 2010. Short of starting a war in October 2010, neither will be anywhere near 70%. In fact, I'd wager support for this bill will be less than 50% less than a month after it passes - opinion polls never supported the previous bailouts either.

Any economic recovery will be in spite of this bill, not because of it, and I sincerely doubt we'll be back in a boom market in 18 months, as much as the media will try to increase consumer confidence. Keynes was wrong, and hopefully people here realize that before we are 150% of GDP in debt like Japan is after passing 10 stimulus bills in the 1990's.

[Mizzou B-ball fan]

Are you saying you think McCain would win if the election was held today? Really?

You obviously failed to read the point you were making. You were pointing out that Alabama and Kansas had 60% and 62% approval ratings for Obama. My point was that Obama wouldn't even come close to sniffing a victory in either of those states against any random Republican candidate if we voted today. Anyone who thinks otherwise needs to get off the Unicorn Express.

[JPhillips]

It doesn't matter what his approval rating is today. It matters what Obama's approval rating (and the popularity of this bill) are in November 2010. Short of starting a war in October 2010, neither will be anywhere near 70%. In fact, I'd wager support for this bill will be less than 50% less than a month after it passes - opinion polls never supported the previous bailouts either.

Any economic recovery will be in spite of this bill, not because of it, and I sincerely doubt we'll be back in a boom market in 18 months, as much as the media will try to increase consumer confidence. Keynes was wrong, and hopefully people here realize that before we are 150% of GDP in debt like Japan is after passing 10 stimulus bills in the 1990's.

If you can really prove Keynes wrong, I'd recommend publishing.

[sterlingice]

Well that stat does serve at least one purpose, highlighting the lack of discernment ability of the American public.

Oh, Jon, you say that about everything ;)

SI

[sterlingice]

So after getting no votes at all, does this send a clear message to Obama about working with the GOP in the House? I'm guessing he'll get a couple of token votes in the Senate, but, this looks like it played out just like the GOP wanted. I mean, really, 0 votes? The only way this helps Obama is if he can get the accusation of them not wanting to work with him to stick.

Or, I guess, if it works. But no single bill was going to turn the economy around.

SI

[flere-imsaho]

Anyone who thinks otherwise needs to get off the Unicorn Express.

NEVER!!!!11ONEONEONEoneone

[Mizzou B-ball fan]

NEVER!!!!11ONEONEONEoneone

Every train needs an engineer. :D

[flere-imsaho]

That should be my new title: "Conductor on the Unicorn Express"

:D

[Mizzou B-ball fan]

Is there a provision in this latest bailout to cover the negative stock market reaction to passing this glorious bill? Nothing like taking a retirement hit while they give billions to government programs and businesses.

Someone needs to tell these idiots to stop 'helping' the American people.

[Flasch186]

as I stated before (in another similar thread) you cant look at only the stock market when choosing how to fulfill the needs of your argument...unless of course youre going to pick and choose the stats that fit.

FWIW, in it's current iteration I am against this bailout package although we are in need of other packages.

[JonInMiddleGA]

That should be my new title: "Conductor on the Unicorn Express":D

Me likey.

edit to add: Unless Robert Gibbs wants to use it. I think he'll probably have a better claim to it than you would, seems only fair that he have right of first refusal.

[albionmoonlight]

Maybe Obama is incorporating some GOP ideas into the bill because some of them are good? Maybe he realizes that a Pelosi-Reid-Obama echo chamber will end up making a worse bill because, even with the best of intentions, too many like-minded people will end up missing some important ideas.

Basically, maybe Obama wants to make the best bill possible, since his name will be on it. And the GOP still has a lot to offer to that bill.

Obama will need to play politics, but, unlike Bush, he seems to want to do it from the position of running the country well and using that as his launch point.

Now, there is a downside to that. Had Bush tried to run the country well, he would not have gotten to do all of the stuff that he wanted.

But there is certainly something to the idea that simply doing the best job possible for the country is a way to facilitate re-election.

[Fighter of Foo]

This should put the ball back in Obama's court to basically say "hey, if you're not going to work with us in good faith, then it's going to be our bill completely". It's not like people are checking the minutiae of this bill so, if you're Obama, why pass what you think is a watered down version of the bill if GOP leadership isn't going to deliver you any votes anyways? By pretty much all accounts, he has the votes in the House and the Senate and it's pretty much going to be on partisan lines.

So, why doesn't he drop the hammer already and just make the bill he wants?

SI

The "watered down" version of the bill IS the version Obama wants. If he wanted something different, he would have done it for exactly the reasons you mentioned.

BTW, this isn't anything new for Dem leadership. It's the same pattern over and over and over and over again. It should be obvious they are collectively OK with the legislation being passed and the "compromising" is nothing more than political cover.

[BishopMVP]

If you can really prove Keynes wrong, I'd recommend publishing.No sense plagiarizing Milton Friedman and Joseph Schumpeter for most of it. The entire argument behind why the New Deal and Japan's 1990's stimuli did not work is that they didn't spend enough. Now, I'm sure Keynesians will argue in a few years that this bill wasn't enough and wasn't spent properly (can't blame them on the latter considering how little is being spent the next 2 years and how much is being spent on useless things like increased college loans, combined with the increasing chance they'll enact Buy American provisions and touch off a trade war) while we're still subsidizing zombie banks much as Japan has for the last decade+.

But no, sadly, I can not prove his theories wrong anymore than I can prove Marxism is wrong. Or anymore than Keynesian proponents can prove their theories are right.

[SteveMax58]

It's good politics for Obama to work with the Rs on this, but it's also good politics for the Rs to vote against it.

+1

Obama has to, at the least, "appear" to be trying to work with Repubs. And Repubs in the House have been so lambasted from the last bailout that they couldn't possibly be seen as supporting this one.

Looks like politics as usual from both sides to me.

[path12]

So after getting no votes at all, does this send a clear message to Obama about working with the GOP in the House? I'm guessing he'll get a couple of token votes in the Senate, but, this looks like it played out just like the GOP wanted. I mean, really, 0 votes? The only way this helps Obama is if he can get the accusation of them not wanting to work with him to stick.

Or, I guess, if it works. But no single bill was going to turn the economy around.

SI

There are a lot of bills coming over the next year. If Obama is seen to be compromising and listening to the Repubs while getting nothing back in return it could easily backfire on Boehner and Cantor in the long run.

That's really my point about why public opinion matters. This guy got elected by nearly 10 points in a country that has been 51-49 for the past fifteen years. This is partly due to the horrific job done by the previous administration, but at least in the public mind change is not just a slogan here and how he approaches bipartisanship is as important as how successful the approach is. I won't underestimate him (ask Hillary what a good idea that is) but it's hard to think of a president who has started out with such a mess since FDR and as we all know the public can be fickle.

Problem is that this economy is not likely to start improving no matter what anybody does until housing bottoms. And there is no sign of housing bottoming in the short term. So in the meantime all you can do is try and get cash on the streets PRONTO. I don't think this bill does enough of that, but really the only thing you can do for that is another rebate and who is likely to spend that on new goods and services right now? I'd think most folks would use that to pay down debt.

One idea I read somewhere (can't remember where offhand) was to take a trillion dollars, break it out to a government coupon per household, but with the following caveats: It could not be deposited or used to pay off debt (new goods or services only) ; and it must be spent within 60 days. I don't know how feasible it is but it would address the immediate problem of improving the current demand destruction that is going on. And make no mistake, demand is being destroyed at an unprecedented rate.

[path12]

But no, sadly, I can not prove his theories wrong anymore than I can prove Marxism is wrong. Or anymore than Keynesian proponents can prove their theories are right.

There's a saying (paraphrasing) about asking 12 economists for a solution to a problem and getting 100 different responses.... :)

You can see that going on right now with Krugman's blog and the conflict between the "fresh" and "salt" water economists.

But again, this is unprecedented. And nobody, nobody knows what the right approach is.

Keynesian, Austrian, tomato, tomahto.

[JonInMiddleGA]

That's really my point about why public opinion matters. This guy got elected by nearly 10 points in a country that has been 51-49 for the past fifteen years. This is partly due to the horrific job done by the previous administration

And partly due to the uninspiring choice of opponent who couldn't motivate a man dying of thirst to drink free water.

One idea I read somewhere (can't remember where offhand) was to take a trillion dollars, break it out to a government coupon per household, but with the following caveats: It could not be deposited or used to pay off debt (new goods or services only) ; and it must be spent within 60 days.

A large portion of which - and I'd suspect the majority - would be spent on goods produced outside the U.S. and provide little more than a short term run for retail workers who end up delaying their unemployment by 3 months or so before we're right back where we started.

[Grammaticus]

I'm trying to go at this from a political angle, moreso than a "what's the best way to do this" angle but I'm sure we'll get a fair share of both.

So, here we find ourselves with the American Recovery and Reinvestment Act- basically Bailout II. Quick reference:
Obama tells GOP no compromise on tax rebates - CNN.com (http://www.cnn.com/2009/POLITICS/01/27/obama.meetings/index.html)
Boehner: Stimulus bill contains too much spending - Yahoo! News (http://news.yahoo.com/s/ap/20090128/ap_on_go_pr_wh/obama_economy)

Right or wrong, Obama campaigns on how tax cuts for the middle (re: consumer) class and infrastructure building is the way to go to push the consumer economy forward.

So, why doesn't he drop the hammer already and just make the bill he wants?

SI

Because he doesn't make the bill, congress does. They (Dem and Rep) don't want the same thing Obama wants. Sure the Dems are closer to what he wants. But it is going to have a bunch of crap in it regardless. He has already played the "This bill is too important to nit pick" card.

With all the garbage in that bill, it is impossible to take congress seriously when they act like they are trying to turn a recession around. They are protecting their power base first and foremost.

If Obama were true to his make a change campaign, he would publicy call congress as a whole on the pork and demand a real bill. Politics as usual baby. Anyone who really thought it would be different with Obama should be tasting the bile right now.

[sterlingice]

One idea I read somewhere (can't remember where offhand) was to take a trillion dollars, break it out to a government coupon per household, but with the following caveats: It could not be deposited or used to pay off debt (new goods or services only) ; and it must be spent within 60 days. I don't know how feasible it is but it would address the immediate problem of improving the current demand destruction that is going on. And make no mistake, demand is being destroyed at an unprecedented rate.

A large portion of which - and I'd suspect the majority - would be spent on goods produced outside the U.S. and provide little more than a short term run for retail workers who end up delaying their unemployment by 3 months or so before we're right back where we started.

I think Jon is dead on. Is a $5000 tax credit just to go out and spend like good little consumers what we really need (maybe this needs to be incorporated into my little economy thread I've been working on for a while)? With consumer debt about to be our next giant bomb after/during this one going off, maybe trying to get consumers to not spend into oblivion would be a good idea. I mean, cheap disposable crap doesn't exactly make the economy go around, especially not here- all you're doing is putting more people back to work in China.

(Maybe I should split this into three posts, but here goes...)

My wife and I were talking a bit about this a couple of days ago with the whole "resodding of the National Mall" thing. Sure, we thought $200M was an insanely high price tag. However, there's a simpler argument going on there.

What is better for the economy, as a whole, if you have, say, $300K- and let's assume you're not any of the people (so, take out your own interest on whether you'd be one of the people getting the $30000/$3000/$300)? Hiring ten people for $30,000 to resod the National Mall, giving 100 people $3000, or giving 1000 people $300? Now, if you're making $30K a year- you're almost exclusively spending that money and saving very little of that as there's not much there to save. Not only that, but a lot of your money "stays at home", churning the economy- rent, food, utilities, maybe a cable bill, etc. Sure, you're going to get some consumer goods- maybe a tv made in China or a car made in Japan or clothes made in Honduras- but isn't that tax break that people get going to go exclusively towards foreign goods or towards savings/debt, which really doesn't make anything move?

(post 3)

Also, with regards to infrastructure spending- which I would love to see more money spent on- I have one major concern. I would love to see huge gobs of cash spent on upgrades on the power grid, more money on transportation like large chunks of cash for light rail, money spent on water purification- hell, if we had the technology, I'd love to see some massive desalinization plant and a water pipeline that goes through our dryer areas since I think that's going to be a huge flashpoint in 20 or at least 50 years- I would love to see more of this. But I'd really like some safeguards that it will be American citizens working on these: it's no secret that a lot of the work done during the housing bubble was done by people here illegally.

I think immigration is going to be a big flashpoint as the economy continues to worsen. I've never believed the fallacy that "illegal immigrants do jobs other people wouldn't do"- but with more and more people unemployed, that standard of "jobs other people wouldn't do" is steadily going down as any work is good work for now.

SI

[flere-imsaho]

Tangent here for a bit: So, I know the National Mall is pretty big. And I'm going to assume that it may have been some time since it was last re-sodded, and possibly it's become a bit run down. So I can get behind an outlay to refurbish it.

But... how exactly does that cost $200 million? A million or two I could see - sod isn't cheap and the labor is going to be considerable. But $200 million? Really?

[JPhillips]

Bomb resistant sod?

[gstelmack]

Tangent here for a bit: So, I know the National Mall is pretty big. And I'm going to assume that it may have been some time since it was last re-sodded, and possibly it's become a bit run down. So I can get behind an outlay to refurbish it.

But... how exactly does that cost $200 million? A million or two I could see - sod isn't cheap and the labor is going to be considerable. But $200 million? Really?

I'm still trying to figure out how it costs $86million to build a high school here locally...

[DaddyTorgo]

I'm still trying to figure out how it costs $86million to build a high school here locally...

$86m? Really? That's all? You guys are getting off cheap. The monstrosity they built in Newton, MA (next door) was somewhere in the neighborhood of $200m. It ended up forcing the state to rewrite the rules about high school design that receives state aid.

Of course they did that right before rebuilding the HS in my hometown, so instead of a sweet $150m high school of our own we are going to have to settle for some $100m mass-produced POS.

[gstelmack]

$86m? Really? That's all? You guys are getting off cheap. The monstrosity they built in Newton, MA (next door) was somewhere in the neighborhood of $200m. It ended up forcing the state to rewrite the rules about high school design that receives state aid.

Of course they did that right before rebuilding the HS in my hometown, so instead of a sweet $150m high school of our own we are going to have to settle for some $100m mass-produced POS.

Well, North Carolina is not a very unionized state. There's a reason my parents left Taxachussetts in the 70s and are getting ready to leave again...

[DaddyTorgo]

Well, North Carolina is not a very unionized state. There's a reason my parents left Taxachussetts in the 70s and are getting ready to leave again...

:D

But Taxachusetts is great!

[flere-imsaho]

I'm still trying to figure out how it costs $86million to build a high school here locally...

Actually, that I can see a bit more readily. A school's a pretty significant building with some complex requirements. Sure, probably about 15-20% of that is "bells and whistles" larded on top, but it's not quite as difficult to see as $200 million sod.

[path12]

I think Jon is dead on. Is a $5000 tax credit just to go out and spend like good little consumers what we really need (maybe this needs to be incorporated into my little economy thread I've been working on for a while)? With consumer debt about to be our next giant bomb after/during this one going off, maybe trying to get consumers to not spend into oblivion would be a good idea. I mean, cheap disposable crap doesn't exactly make the economy go around, especially not here- all you're doing is putting more people back to work in China.

I don't necessarily disagree with either this or Jon's point re another rebate.

That is one of the inherent dilemmas in the current situation though -- people are swamped in debt, the home ATM (via HELOC) is closed and the bills are due......so naturally the solution is to retrench and cut back on discretionary spending.

Which leads to r(d)epression, which leads to job loss, which leads to even less spending, etc. etc. So ironically the fact that people are finally doing the right thing by trying to reduce debt and increase savings at least a little bit is at the same time keeping demand in the toilet.

So one part of stimulating that demand is to get cash on the street, because the worldwide credit markets are still pretty frozen (though there are starting to be some signs of improvement there - some being the key word). Even a short term boost buys some time for some of the longer term stimuli (?) to ramp up.

[Fighter of Foo]

I don't necessarily disagree with either this or Jon's point re another rebate.

That is one of the inherent dilemmas in the current situation though -- people are swamped in debt, the home ATM (via HELOC) is closed and the bills are due......so naturally the solution is to retrench and cut back on discretionary spending.

Which leads to r(d)epression, which leads to job loss, which leads to even less spending, etc. etc. So ironically the fact that people are finally doing the right thing by trying to reduce debt and increase savings at least a little bit is at the same time keeping demand in the toilet.

So one part of stimulating that demand is to get cash on the street, because the worldwide credit markets are still pretty frozen (though there are starting to be some signs of improvement there - some being the key word). Even a short term boost buys some time for some of the longer term stimuli (?) to ramp up.

I read a stat today that showed only ~20% of the rebate check from last year(?) was actually spent on stuff. The rest went to paying bills/debt. So in terms of short-term effectiveness, there are other measures that are more efficient.

See this (http://www.cbo.gov/ftpdocs/89xx/doc8916/MainText.4.1.shtml#1074482) chart from a CBO report for examples.

[JAG]

hell, if we had the technology, I'd love to see some massive desalinization plant and a water pipeline that goes through our dryer areas

As I understand it, we have the technology to do this now. Desalinization as it currently stands is a very expensive process which is why you don't see more of this. As fresh water becomes more scarce and technology improves, I imagine this will be a future area of growth.

[Ajaxab]

Tangent here for a bit: So, I know the National Mall is pretty big. And I'm going to assume that it may have been some time since it was last re-sodded, and possibly it's become a bit run down. So I can get behind an outlay to refurbish it.

But... how exactly does that cost $200 million? A million or two I could see - sod isn't cheap and the labor is going to be considerable. But $200 million? Really?

Jim has to have insight into this question given the $56 million my resident construction firm demanded to repave my stadium's parking lot in FOF. It's a parking lot after all.

[Raiders Army]

I'm still trying to figure out how it costs $86million to build a high school here locally...

$86m? Really? That's all? You guys are getting off cheap. The monstrosity they built in Newton, MA (next door) was somewhere in the neighborhood of $200m. It ended up forcing the state to rewrite the rules about high school design that receives state aid.

Of course they did that right before rebuilding the HS in my hometown, so instead of a sweet $150m high school of our own we are going to have to settle for some $100m mass-produced POS.

It used to be that your friends did stuff for you for cheaper than someone else. Now they're more expensive because they ARE your friends.

[Raiders Army]

Actually, that I can see a bit more readily. A school's a pretty significant building with some complex requirements. Sure, probably about 15-20% of that is "bells and whistles" larded on top, but it's not quite as difficult to see as $200 million sod.

It was $2,000 for 10,000 square feet of sod to be put in our yard (and we got it at a discount...it was $1700 for 5,000 square feet). Our water bill was also in the $400s for the next two months.

[flere-imsaho]

It was $2,000 for 10,000 square feet of sod to be put in our yard (and we got it at a discount...it was $1700 for 5,000 square feet). Our water bill was also in the $400s for the next two months.

Thanks for the numbers. I looked it up on Wikipedia and apparently the National mall is 146 acres.

So now I'll just wait here patiently until QuikSand comes along to do the math.

[path12]

BTW for anyone who might be interested, this is one of the best basic summaries of where we're at that I've seen.

https://www.gpcresearch.ml.wallst.com/common/emaillink/pdf.asp?SSS_20E89F090409B81E37D8B7177FAE1685&

[SportsDino]

I don't agree path12 with trying to artificially pump demand. Maybe its my fundamental economist side coming through, but I really hate limiting decisions like "oh don't spend this $5000 on debt". People need to make choices, good choices, and often that is spending down debt, rather than buying stuff they don't need to feed an incorrect market model. Mass consumption thinking is just so flawed economically I don't know where to start (promotes wasteful resource distribution, piling on debt, and increases the strain on social services for elderly being three main results of that line of thinking, even if you need to follow the logic through a few indirect steps to get there).

Mass consumption is the baby of the retail and bank industry sheeponomics, its killing the country. The idea that consumers are going to expand their holiday spending by 15% every year while the real economy is growing at best 2%... that is the model for years now and it just does not make sense.

I opened up that Merill Lynch document and had to shut it... I just don't agree with too many elements of it. So maybe I'm completely wrong in my thinking, caveat emptor!

[path12]

I don't agree path12 with trying to artificially pump demand. Maybe its my fundamental economist side coming through, but I really hate limiting decisions like "oh don't spend this $5000 on debt". People need to make choices, good choices, and often that is spending down debt, rather than buying stuff they don't need to feed an incorrect market model. Mass consumption thinking is just so flawed economically I don't know where to start (promotes wasteful resource distribution, piling on debt, and increases the strain on social services for elderly being three main results of that line of thinking, even if you need to follow the logic through a few indirect steps to get there).

We're not as far apart as you might think regarding mass consumption and spending down debt. Frankly I'm kind of pissed that I didn't go ahead and buy a house or lead a lifestyle I couldn't afford while so many others did......

But that horse is out of the barn and only long-term systemic fixes will change that so in some ways it's no longer relevant for the immediate economic distress. My question for you then becomes what do you think a better option is for a jumpstart?

[Fighter of Foo]

See the link I posted above for jumpstart options, costs and benefits.

[sterlingice]

It was $2,000 for 10,000 square feet of sod to be put in our yard (and we got it at a discount...it was $1700 for 5,000 square feet). Our water bill was also in the $400s for the next two months.

Thanks for the numbers. I looked it up on Wikipedia and apparently the National mall is 146 acres.

So now I'll just wait here patiently until QuikSand comes along to do the math.

I know I'm not QS, but I'll show my work so it can be verified ;)

1 Acre = 43,560 square feet
146 Acres = 6,359,760 square feet

Let's use the $1700 per 5000 square feet, which was not at a discount

6359760 sqft * $1700 / 5000 sqft = $2,162,318.40

Now, if it takes $400 to water 5000 square feet, then we're adding another cost, again, assuming the same rates

6359760 sqft * $400 / 5000 sqft = $508,780.80

For a grand total of... $2,671,099.20. Just slightly less than the $200,000,000 budgeted for it.

That does assume that the entire Mall is grass (which it isn't), that we're using the same fine, lush grass that RA has on his lawn (which they wouldn't), that the water and sod costs are the same (which they aren't), and that the same company has enough people to put grass on the entire lawn (which they don't).

SI

[path12]

See the link I posted above for jumpstart options, costs and benefits.

Thanks, I had missed that. Interesting but sort of confirms that there aren't a whole lot of excellent choices in the large benefit/small timeframe solutions.

I think that extending the unemployment benefits and food stamps for those out of work is probably a no-brainer since job loss under any scenario I've seen grows at least through 2009, but the rest of the large benefit/small timeframe solutions revolve around a rebate of some sort, whether a check or tax holiday which put us back to the original pros and cons of those programs.

[flere-imsaho]

I salute you, SI. Thanks! :D

[flere-imsaho]

dola - maybe the other $198,000,000 consists of hiring nubile virgins to individually lick each blade of grass until it is moist and growing happily.

[sterlingice]

dola - maybe the other $198,000,000 consists of hiring nubile virgins to individually lick each blade of grass until it is moist and growing happily.

198,000,000 / 3,700,000 = 53.5...

At the current going rate, that's barely 50 virgins. Do you think that's enough?

SI

[flere-imsaho]

You're right - it must be for something else.

[SportsDino]

Agree with sterlingice about some upcoming flashpoints that would make perfect sense for infrastructure investment (like how to get water to a million people living in a desert, or dealing with mountains of garbage and no one who wants to take it, power grid of course, also cheap fuel/energy efficient mass transport like rail possibily that is safe, practical, and fast). It would be nice if we took this as an opportunity to get some of our crap in order that we know is coming.

I missed that tiny link before ( http://www.cbo.gov/ftpdocs/89xx/doc8916/MainText.4.1.shtml#1074482 ), looks like a lot of data to play with. I'll try and give it a once over and cherry pick one to start. My first area I'll probably bring up when i get the time (probably tomorrow) is something from: Approaches to Providing Incentives for Businesses. My general concern is increasing short/long term investment without really opening up a door for substantial amounts of the incentive to be bled off into giant companies that just shunt the money towards offsetting their massive losses (the point being, no new jobs, and occasional disincentives to create jobs if you can game yourself money easily instead).

Off the top of the pile, I like the idea of payroll holiday, although I would make it more of a long holiday (i.e. preferring a smaller reduction across a whole year rather than a one time large deduction for a single quarter), and agree with some of the sore points the CBO points out. Besides the consumption boost, it might balance out some of the pain of salary freezes (or cuts that employers shove off onto the group rather than firing)... or cancelled bonuses. Its hard to motivate an economy if your working harder, making less, and hear most of the relief going to places you know are just going to be wasted in administration.

[SportsDino]

I dunno, looking at the writeup I don't feel to good about corporate tax reductions or the Investment Tax Credit (ITC). I don't think they'll have bang for the buck... also apparently the writeup chart agrees that a payroll holiday could have a 'large' effect, so I guess that puts my vote a little bit stronger in that category, although of course the specific policy needs to be hammered on.

In the business proposal section, I could get behind changing depreciation if done right. Things I would like to see:
- Limit credits to depreciation on major assets within the United States, do not allow deductions for building more factories in China.
- Emphasize new productive investment, do not just expand depreciation of already rotting assets not being used by the business. My concern is companies that over-expanded and then just ended up firing people... they could see a massive cashflow increase from their bad decision, without having to hire anyone back again.
- As an investor I actually hate money being randomly carried backwards and forward in time, especially if its done to an extreme level. Its not impossible to track, but if it can be a sizable sum of money and over too long a period it may open up the door to even more strategies it would be hard to predict. Although to be fair, most of those strategies involve lower estimates of company value until some recoup at a point in the future... rather than the common game currently of over-estimating short term value and paying in the future.... that is a bit safer for long investors. If its transparent and people actually pay attention to the results of carrying I wouldn't mind, it may free up cashflow for good purposes (like surviving credit crunch during this recession) if used surgically and sparingly.
- I'd like to see some sort of credit for taking a major asset, like a factory, from a crappy company and returning it to production (that meets certain criteria such as not being a shadow corporation hiring one guy). You could give the credit to both sides even, to encourage say GM to sell a plant to someone else who wants it to build tanks or something (if we continue our warmongering ways). Currently there are all sorts of reasons to keep a giant abandoned factory over selling it to a competitor or third party, maybe something to slightly tip the scale towards selling the asset to someone who will use it can loosen up a few more sales. We need to get back to making things (and making useful high quality things... cough cough clean fuel efficient cars with high realibility and parts that either don't need to be replaced or can be cheaply replaced every few years if they were mass produced).


I know this is just not the way things work these days, but I'd like to see a new automaker that focuses on researching the next major evolution of the technology. I.e. the Model T of the future. Maybe this could even work as a puppet company of the big three (big two probably at this rate) that develops the guts of the vehicle, and sells it to the others which reform the technology into their target markets (say sports cars, trucks, some models that have more luxuries versus others that are economy class).

I'm pretty sure much like today where car A and B have a lot more in common than differences, that car X and Y 50 years from now will have a lot more in common as well.... although they might be completely different from A and B.

At the very least I wish someone within these automakers was burning to build that car. I think some are, but the morons with the money are too busy perfecting their beggar act to care.

[path12]

I agree that growing (or at least not losing anymore) of our production capabilities should be a prime focus -- whether by limiting the credits or by turning it over to another company as you mention.

I've heard that 40% of our exports are financial services. We need to find some actual products we can make and that others will buy to lift us out long-term, especially if the general populace keeps working on paying down debt rather than taking more on. It ain't cars, it ain't airplanes. I would subsidize the hell out of any serious effort to advance battery technology -- whoever finally gets the battery that makes electric realistic is going to get very very rich.

[Grammaticus]

I agree that growing (or at least not losing anymore) of our production capabilities should be a prime focus -- whether by limiting the credits or by turning it over to another company as you mention.

I've heard that 40% of our exports are financial services. We need to find some actual products we can make and that others will buy to lift us out long-term, especially if the general populace keeps working on paying down debt rather than taking more on. It ain't cars, it ain't airplanes. I would subsidize the hell out of any serious effort to advance battery technology -- whoever finally gets the battery that makes electric realistic is going to get very very rich.

Battery technology to go 300 miles on a charge already exists. Check out a documentary called "Who Killed The Electric Car". It is pretty good. GM made the EV1 out of their Saturn line.

We are likely to get the same argument that we got in the bailout dollars to the auto industry. Entire support industries exist to support the internal combustion engine. The auto mechanics that serviced the EV1 said there was almost nothing to do to it.

For some reason in this country we have a great fear of allowing innovation to replace obsolete industry. Oh my goodness what will happen to the oil change and mechanic industry? The same thing that happened to the ice man after refridgeration was common.

[JonInMiddleGA]

I've heard that 40% of our exports are financial services. We need to find some actual products we can make and that others will buy to lift us out long-term,

The missing part of that need is a pretty big caveat "... will buy at a price that is profitable". And I'm not sure that there's a big undiscovered manufactured item that fits that definition, nor am I particularly convinced that we have a work force that can produce it & still meet that last criteria even if it does.

[DaddyTorgo]

(CNN) -- On Monday, House Republican leaders put out a list of what they call wasteful provisions in the Senate version of the nearly $900 billion stimulus bill that is being debated:

• $2 billion earmark to re-start FutureGen, a near-zero emissions coal power plant in Illinois that the Department of Energy defunded last year because it said the project was inefficient.
• A $246 million tax break for Hollywood movie producers to buy motion picture film.
• $650 million for the digital television converter box coupon program.
• $88 million for the Coast Guard to design a new polar icebreaker (arctic ship).
• $448 million for constructing the Department of Homeland Security headquarters.
• $248 million for furniture at the new Homeland Security headquarters.
• $600 million to buy hybrid vehicles for federal employees.
• $400 million for the Centers for Disease Control to screen and prevent STD's.
• $1.4 billion for rural waste disposal programs.
<!--startclickprintexclude-->Don't Miss


GOP senators draft stimulus alternative (http://www.cnn.com/2009/POLITICS/02/02/stimulus/index.html)
<!--endclickprintexclude-->• $125 million for the Washington sewer system.
• $150 million for Smithsonian museum facilities.
• $1 billion for the 2010 Census, which has a projected cost overrun of $3 billion.
• $75 million for "smoking cessation activities."
• $200 million for public computer centers at community colleges.
• $75 million for salaries of employees at the FBI.
• $25 million for tribal alcohol and substance abuse reduction.
• $500 million for flood reduction projects on the Mississippi River.
• $10 million to inspect canals in urban areas.
• $6 billion to turn federal buildings into "green" buildings.
• $500 million for state and local fire stations.
• $650 million for wildland fire management on forest service lands.
• $1.2 billion for "youth activities," including youth summer job programs.
• $88 million for renovating the headquarters of the Public Health Service.
• $412 million for CDC buildings and property.
• $500 million for building and repairing National Institutes of Health facilities in Bethesda, Maryland.
• $160 million for "paid volunteers" at the Corporation for National and Community Service.
• $5.5 million for "energy efficiency initiatives" at the Department of Veterans Affairs National Cemetery Administration.
• $850 million for Amtrak.
• $100 million for reducing the hazard of lead-based paint.
• $75 million to construct a "security training" facility for State Department Security officers when they can be trained at existing facilities of other agencies.
• $110 million to the Farm Service Agency to upgrade computer systems.
• $200 million in funding for the lease of alternative energy vehicles for use on military installations.



let the discussion of what is truly waste in here begin

[JPhillips]

Is that even 20 billion? In a bill as large as the stimulus that's not much. But I don't think this has anything to do with specifics. If the Dems took all of these out it wouldn't get any more R support. This is about flexing muscle as the opposition. At this point it's clear the Rs have no intention of supporting any version of the stimulus, so Obama needs to hit them hard for ignoring the suffering of the American public and then work with Ds to pass whatever bill they like. At the end of the day I don't think the Rs want anything to do with a high profile filibuster of an economic recovery package.

[DaddyTorgo]

i pretty clearly see some things i wouldn't consider "waste" and some that are more of a grey area

flood reduction on the mississippi?? probably not waste, given what happened last year
wildland fire management?? not waste
state and local fire stations?? not waste

and that's just 3

[DaddyTorgo]

Is that even 20 billion? In a bill as large as the stimulus that's not much. But I don't think this has anything to do with specifics. If the Dems took all of these out it wouldn't get any more R support. This is about flexing muscle as the opposition. At this point it's clear the Rs have no intention of supporting any version of the stimulus, so Obama needs to hit them hard for ignoring the suffering of the American public and then work with Ds to pass whatever bill they like. At the end of the day I don't think the Rs want anything to do with a high profile filibuster of an economic recovery package.

yeah i think you're right

[sterlingice]

Seriously? This is what we're bitching badly about? Now, if we want to take issue that these things are more expensive than they should be- that's definitely on the table. Plus, the government bidding process is flawed, so, yes, there's a big argument there. But until you have a solution to fix that- what's the plan? Not saying this is the right plan, but criticism should be more than "we just want tax breaks for everything and claim to like infrastructure but have no infrastructure plans we like". Or the "spending process if flawed so we spend nothing". It's good for cheap political points. Doesn't exactly fix the roads or schools or do anything but show a lack of a grasp of the problem.

• $448 million for constructing the Department of Homeland Security headquarters.
• $75 million for salaries of employees at the FBI.
• $75 million to construct a "security training" facility for State Department Security officers when they can be trained at existing facilities of other agencies.
• $200 million in funding for the lease of alternative energy vehicles for use on military installations.
-This seems like a couple of perfect bullets point if you want to go attack the GOP. "What? Are you soft on crime?"


• $248 million for furniture at the new Homeland Security headquarters.
-Sure that number seems a little steep, but have you priced office furniture? We're not talking about $35K for a "commode". Office chairs, cubicles, tables, etc- this stuff costs money. $248M, I dunno.

• $88 million for the Coast Guard to design a new polar icebreaker (arctic ship).
• $600 million to buy hybrid vehicles for federal employees.
• $1.4 billion for rural waste disposal programs.
-Things that seem like good ideas that need to be done. Designing a ship provides well paying jobs. Also, as Arctic resources were starting to become a hot topic last year- this might be very good to have. Hybrid vechiles for federal companies? Sounds like a good idea. Rural waste disposal- jobs and necessary service.

On the don't miss list:
• $125 million for the Washington sewer system.
• $150 million for Smithsonian museum facilities.
• $500 million for flood reduction projects on the Mississippi River.
• $10 million to inspect canals in urban areas.
• $6 billion to turn federal buildings into "green" buildings.
• $500 million for state and local fire stations.
• $650 million for wildland fire management on forest service lands.
• $1.2 billion for "youth activities," including youth summer job programs.
• $88 million for renovating the headquarters of the Public Health Service.
• $412 million for CDC buildings and property.
• $500 million for building and repairing National Institutes of Health facilities in Bethesda, Maryland.
• $5.5 million for "energy efficiency initiatives" at the Department of Veterans Affairs National Cemetery Administration.
• $850 million for Amtrak.
• $110 million to the Farm Service Agency to upgrade computer systems.
-I see very few problems here on the ones I listed. Most of these things need to be done. Mississippi River flood reduction, sure? Didn't we just have problems with that last year and then there's that whole Katrina thing. Amtrack has needed funding for years- Europe has great train systems that are widely used- it can be cleaner and a cheaper alternative to air. Ours is a sad little "stop at Charlotte and Louisville and Chicago on an Atlanta to Dallas train so an 8 hour ride becomes 24 and wonder why no one rides". Money for NIH and CDC- great. Money for science is important and builds job better even better than most infrastructure jobs. State and local fire stations- let's go.

SI

[Mizzou B-ball fan]

$88 million for the Coast Guard to design a new polar icebreaker (arctic ship).

I have to draw the line here. This is obviously pork. Any good liberal knows that there won't be any ice in the arctic in 10-15 years. Are we designing a new icebreaker that only has to break through waves?

[Mizzou B-ball fan]

dola

Or you could just give it entirely in tax cuts and stimulate the economy directly where it's needed most.....consumer confidence and spending. Property values would stabilize and debt could be paid off, which would inject money directly into the banks the old fashioned way. I don't see much of anything in that list that will stimulate the economy in any noticable way. If any of those things are needed (which some probably are), put them in a spending bill. They have no place in a stimulus bill.

[JPhillips]

Stimulus is spending.

[Masked]

dola

Or you could just give it entirely in tax cuts and stimulate the economy directly where it's needed most.....consumer confidence and spending. Property values would stabilize and debt could be paid off, which would inject money directly into the banks the old fashioned way. I don't see much of anything in that list that will stimulate the economy in any noticable way. If any of those things are needed (which some probably are), put them in a spending bill. They have no place in a stimulus bill.


Tax cuts are an indirect stimulus - the consumer has to spend their tax savings.

[Mizzou B-ball fan]

Tax cuts are an indirect stimulus - the consumer has to spend their tax savings.

Not necessarily. In the case of the current crisis, even if people put their money in a checking or savings account, it helps the economy. Banks would have more money on hand to loan. Paying off debts would also directly help the banking industry. Even the simple act of a check to the taxpayer would help consumer confidence. Fear just for the sake of being afraid is driving some of the crisis. A cash injection would certainly quell some of those fears.

[JPhillips]

Fear has very little to do with this. Even if it did a direct rebate to consumers wouldn't be likely to change perceptions. What would an 800 billion rebate package mean for individuals, maybe 2000? I'd certainly take it, but it wouldn't change my perception about the economy one bit.

[Mizzou B-ball fan]

Fear has very little to do with this. Even if it did a direct rebate to consumers wouldn't be likely to change perceptions. What would an 800 billion rebate package mean for individuals, maybe 2000? I'd certainly take it, but it wouldn't change my perception about the economy one bit.

Perhaps not for you, but I know a lot of people who would welcome that move with open arms and it definitely would stimulate the banking industry in the ways I previously discussed. I disagree regarding fear being a partial factor, but it's not easily measured, so we'll obviously have to agree to disagree.

[SportsDino]

I think you could argue for and against various bullet points, and how much money in particular they get, but they are for the most part consistent with his platform (whether you agree with it or not).

I think tax cuts if pursued incorrectly would be worst than this package. If you dump the money into corporations with no restrictions it will be soaked up by the stock market very quickly with little real economic impact. If you give the giant cuts to all the workers (low to middle income), it probably would have a bigger impact than this package.

Probably the best thing to do is a mix of payroll and low income bracket tax cuts (with a small cut to the highest brackets so the billionaire crowd doesn't soak up the majority of the money as most tax cuts recently have done...), mixed in with some of the spending I see here with more restraint on the amounts (the bigger the number the more it will draw in various forms of thieves to divert the funds). Stabilize the consumer level of the economy and maybe the big spenders will stop burning up the companies for savings and get back to business (I think direct tax handouts to the businesses will just encourage the slash and burning to continue without restoring confidence).

We don't want to turn on the government spending pipe too much or else it won't get closed later and we could end up with a worst downturn in the future. As it is government driven debt is going to blow up when social security and medicaid finally run up against their limits and create an inflation event or forced cuts.

It would not be a bad idea to put in some sort of auditing process for this 800 billion dollars. I'd like a nice electronic database that further breaks down what money was spent on what. Am I the only one who would love to drown in ridiculous amounts of data? (I am a big fan of the software agents to data mine the hell out of things, of course I guess at some point the overhead cost might explode, but not as much as the normal government inefficiency probably adds as is)

[DaddyTorgo]

Not necessarily. In the case of the current crisis, even if people put their money in a checking or savings account, it helps the economy. Banks would have more money on hand to loan. Paying off debts would also directly help the banking industry. Even the simple act of a check to the taxpayer would help consumer confidence. Fear just for the sake of being afraid is driving some of the crisis. A cash injection would certainly quell some of those fears.

problem is you need to stimulate businesses to create jobs. and short-term putting of money in bank accounts by consumers, or even spending on immediate objects does very little to stimulate long-term growth.

and if all these consumers are putting the money in their bank accounts or paying down debt and thus leaving the banks with more money to loan, who exactly are they going to loan it to when there aren't any businesses lined up for it because the businesses are all contracting thanks to the fact that consumers aren't spending.

government spending is the preferred path for ameliorating this problem, because the government can direct the money in such a way that it stimulates long term job growth and thus restarts the economy.

[sterlingice]

I know this is fruitless, but...

Perhaps not for you, but I know a lot of people who would welcome that move with open arms and it definitely would stimulate the banking industry in the ways I previously discussed. I disagree regarding fear being a partial factor, but it's not easily measured, so we'll obviously have to agree to disagree.

I don't know anyone who wouldn't accept a $2000 check from the government. No, it would not stimulate the banking industry in a substantial way. They may have more money but unless there's a significant signal that this is anything more than temporary, they'll just use it to pay down debts on their balance sheets and still hold onto the money. It won't help the liquidity problem at all.

dola

Or you could just give it entirely in tax cuts and stimulate the economy directly where it's needed most.....consumer confidence and spending. Property values would stabilize and debt could be paid off, which would inject money directly into the banks the old fashioned way. I don't see much of anything in that list that will stimulate the economy in any noticable way. If any of those things are needed (which some probably are), put them in a spending bill. They have no place in a stimulus bill.

No, property values would not stabilize. A tax cut for a few hundred dollars or even a couple grand doesn't do anything when people are still worried they're about to lose their jobs. No, consumer confidence would not pick up and there might be a temporary bump, at best, in spending.

TAX CUTS WON'T FIX THIS PROBLEM.

EDIT: Then again, SportsDino said this a lot better than I could.

SI

[JonInMiddleGA]

I am a big fan of the software agents to data mine the hell out of things, of course I guess at some point the overhead cost might explode

Clearly your data mining program needs a tax-payer funded stimulus package.
Or just add it to any of the existing ones, it doesn't seem as though many people would mind.

[SportsDino]

Well I could probably do it for a lot less than a billion dollars on the software end (data collection of course is the overhead beast)... but when I go get my stimulus and preemptive bailout package from the government I'll make sure to ask for a good ten billion and divert some of that towards text sim creation incentives!

Seriously though, its all public money... why not standardize some electronic format for every government transaction so you can quickly search for how much is spent on toilet paper per year, or how many transactions went to XXX company? Heck, you could finally do some nice statistics like identifying where spending dollars are actually going so when its belt tightening time you can find targets fast.

I dunno, something like this will never fly because it makes corruption, the whole point of politics, that much easier to identify and fix.

[albionmoonlight]

I dunno, something like this will never fly because it makes corruption, the whole point of politics, that much easier to identify and fix.

Actually, it would fly, but then different powerful agencies and pet projects would get "exemptions" from the reporting requirements, making the whole thing useless. Actually, worse than useless, because we would be paying to maintain the database, but it would have negative value because it would be misleading in terms of telling us where the money is spent.

[ISiddiqui]

Seems like Senators Collins (R-ME) and Nelson (D-NEB) went up to see President Obama to try to trim the stimulus. I hope they had some success.

The problem is the House Democratic Christmas List isn't really flying with a bunch of moderate Senate Dems. They see the stimulus as I think most people see it out there, emergency spending that needs to be done to prevent the economy from falling into total collapse and while things like energy and education spending may be good, those things should be put in the budget bill, where they can be debated and amended and whatnot. The stimulus plan is a shot in the arm, not a chance for "change". Save that for the next budget.

[JonInMiddleGA]

Actually, it would fly, but then different powerful agencies and pet projects would get "exemptions" from the reporting requirements, making the whole thing useless.

Or instead of exemptions we just let each agency determine it's own criteria for reporting and define terms as they see fit. Call it the NCLBA model ;)

[sterlingice]

Or instead of exemptions we just let each agency determine it's own criteria for reporting and define terms as they see fit. Call it the NCLBA model ;)

:D

SI

[Flasch186]

glad to see some aim at housing in the new worked bill. While I havnt a clue what will stablize housing any stimulus to get those that can afford homes out of the deflationary, "We'll wait and see." is good IMO.....and good for the overall economy.

[Chubby]

glad to see some aim at housing in the new worked bill. While I havnt a clue what will stablize housing any stimulus to get those that can afford homes out of the deflationary, "We'll wait and see." is good IMO.....and good for the overall economy.

We're to the point where now I have to wait til the bill is passed before I feel I can make an offer. I'm not going to miss out on extra "free" money or a shot at 4.0 by mkaing an offer a month too early.

[Flasch186]

me too, we're getting our house ready to put on the market to get something a little bigger at a cheaper rate.....if everything works out well.

Youre reasoning is exactly why the buyer's arent buying right now, sans the ones who fear for their jobs.

[Raiders Army]

Seems like Senators Collins (R-ME) and Nelson (D-NEB) went up to see President Obama to try to trim the stimulus. I hope they had some success.

The problem is the House Democratic Christmas List isn't really flying with a bunch of moderate Senate Dems. They see the stimulus as I think most people see it out there, emergency spending that needs to be done to prevent the economy from falling into total collapse and while things like energy and education spending may be good, those things should be put in the budget bill, where they can be debated and amended and whatnot. The stimulus plan is a shot in the arm, not a chance for "change". Save that for the next budget.

BS. Those WWII vets in the Phillippines need their $9k. That will stimulate our economy.

[JPhillips]

Seems like Senators Collins (R-ME) and Nelson (D-NEB) went up to see President Obama to try to trim the stimulus. I hope they had some success.

The problem is the House Democratic Christmas List isn't really flying with a bunch of moderate Senate Dems. They see the stimulus as I think most people see it out there, emergency spending that needs to be done to prevent the economy from falling into total collapse and while things like energy and education spending may be good, those things should be put in the budget bill, where they can be debated and amended and whatnot. The stimulus plan is a shot in the arm, not a chance for "change". Save that for the next budget.

The problem with the proposal is that there's no rhyme or reason for it. Look at the document that details the cuts. It's all based on what items no one in the room objecting to losing. There's also no reason as to why a bill 90 billion smaller is better.

Their proposal may be better or worse than the original, but it doesn't have any special status because a small group of moderates thought it was right. I'd love to see a real counter proposal that lays out a real argument. This, though, is just a way for a few Senators to please the David Broder set.

[ISiddiqui]

Senator McCain actually does have have a counter proposal. It's basically just infrastructure improvements and tax cuts for $550 Bil or so. I believe it is on his website.

[kcchief19]

As much as I may bemoan pork barrel politics as much as the next guy, I hate even more when a four-term senator who has single-handedly delivered pork to his state for 22 years threatens to vote against the stimulus because -- wait for it -- it has too much pork.

Or more precisley, the wrong kind of pork. I don't care if Dayton, Ohio gets a hockey rink or we spend $175 million on STD prevention if it means we all get to keep our jobs.

[sterlingice]

As much as I may bemoan pork barrel politics as much as the next guy, I hate even more when a four-term senator who has single-handedly delivered pork to his state for 22 years threatens to vote against the stimulus because -- wait for it -- it has too much pork.

What really gets me about this is that a lot of this "pork" *is* infrastructure. However, since it's part of a Democratic bill and not going to their district, it's pork.

Or more precisley, the wrong kind of pork. I don't care if Dayton, Ohio gets a hockey rink or we spend $175 million on STD prevention if it means we all get to keep our jobs.

Problem is- who knows if throwing $900B at the problem means we get to keep our jobs. Just like the previous bailout, since there is limited regulation attached to the spending, it could just end up lining pockets rather than putting people back to work.

SI

[Flasch186]

As much as I may bemoan pork barrel politics as much as the next guy, I hate even more when a four-term senator who has single-handedly delivered pork to his state for 22 years threatens to vote against the stimulus because -- wait for it -- it has too much pork.

Or more precisley, the wrong kind of pork. I don't care if Dayton, Ohio gets a hockey rink or we spend $175 million on STD prevention if it means we all get to keep our jobs.

the daily show did a pretty good job of roasting senators for being against the pork in this bill and in many of their speeches against pork altogether and than cut in CSPN coverage of them pushing for pork in bills up to just 6 months ago. Pretty hilarious.

[DaddyTorgo]

As much as I may bemoan pork barrel politics as much as the next guy, I hate even more when a four-term senator who has single-handedly delivered pork to his state for 22 years threatens to vote against the stimulus because -- wait for it -- it has too much pork.

Or more precisley, the wrong kind of pork. I don't care if Dayton, Ohio gets a hockey rink or we spend $175 million on STD prevention if it means we all get to keep our jobs.

And one of the things I think people overlook is that all of this so-called "pork" in this bill is going to end up providing jobs.

That hockey rink in Dayton? Somebody's got to work in the factory that makes the glass, that makes the boards, that makes the seats, that makes the popcorn machine for the concession stand, that makes the doors, the zamboni, etc. And then somebody's got to inspect it, transport it there, put it up, inspect the building, etc.

Everything in a stimulus package shouldn't have to be infrastructure. Now obviously you don't just want to give every town a couple thousand dollars because that's not useful. But if things are targeted and/or they are in the hardest-hit communities and will provide jobs there, then a little "pork" in a stimulus bill is actually a good thing.

[Raiders Army]

Let me preface by saying that pork is not right (unless it's a Bacon Explosion).

The difference between six months ago and now is Barack Obama. Didn't he make the promise that his administration would cut the pork from bills, especially this stimulus bill?

[Mizzou B-ball fan]

Today is going to be even worse than previous days in regards to the doom and gloom comments from the President and Congress. The unemployment rate went up in today's report, meaning that we'll get to hear 7.6% more 'The sky is falling and may never recover" statements from the left to attempt to drive this brutal bill through Congress.

[JPhillips]

If we all clap hard enough Tinkerbell won't die!

[Mizzou B-ball fan]

If we all clap hard enough Tinkerbell won't die!

Exactly. There's enough fairy tales coming from the left to keep Disney busy for years.

[SportsDino]

How about instead of one massive publicity whoring stimulus package, we break out some clear focused plans for how to improve the country, and pass those. There is no reason to lump together 800 billion so we can hide massive amounts of pork, and just point as the huge number as single handedly saving our economy.

Some points:
- 800 billion dollars spent on toilet paper is not going to save our economy. Everyone can agree we do not need 800 billion dollars of toilet paper, and most of it is just gonna rot in a factory. Now replace toilet paper with misguided spending, throwing 400 million into building a hospital does not create 400 million dollars worth of jobs necessarilly. And if it doesn't result in a productive asset at the end, well that 400 million may have just been invested in something that may generate 100 million worth of value during its lifetime. I do not buy the throw money at anything argument.

- Focused plans will be easier to pass. Instead of a subportion of pork central bill, why not make a bill called the "No Potholes Left in the Fricking Road Act". Target spending to highway repair, traffic safety, some budgeted money per local government (based on population, no earmarks) to fix roads, road materials research (i.e. civil engineering research I'm sure could generate some new construction process that makes roads less resistant to wear to elements/traffic/etc), and direct incentives to replace roads that are going to be replaced anyway (or new road construction) to use these new materials. There you go, the outline of a basic bill... start chugging some numbers and do some internet browsing I'm sure we could create a useful bill faster than congress that would pass an FOFC vote and probably congress.

- We need to focus on technology and efficiency upgrades. We got rotting infrastructure, don't throw money at wastefully building more rotting infrastructure. Invest in projects with some useful purpose that are not outlandish in scope to value (like the Big Dig).

- Watchdog on how money is spent. Insist projects complete on budget and on schedule if the company wants to get the next contract. String the money over a period, not just one corruptable burst of money, because the economy is a continuous thing, injecting a bunch of money at one point is pointless if the future cash flow expectation is not there. Create projects that are long lasting and of positive value, then fund them with this giant lump sum at the start so we know X years of that project are in place. This allows company to see the pool that will be available, and grow their labor force to accomodate said project over X years. You say you are going to spend 300 million on a building, I can guarantee it will cost at least 300 million to make that building. If you set aside 10 billion for the construction of buildings, and you get on companies asses about costs, even if you are making the same kind of buildings I bet the average will be less than 300 million by far.

- Hell I'm so fired up I think I'm up to writing a letter to the damn politicos. Granted they won't listen to me and it will probably be placed in the circular file... but I would love to flesh out just one idea and have it be stolen and used (of course I would need to go into some real detail, not just say "build X road project").

[Mizzou B-ball fan]

- Hell I'm so fired up I think I'm up to writing a letter to the damn politicos. Granted they won't listen to me and it will probably be placed in the circular file... but I would love to flesh out just one idea and have it be stolen and used (of course I would need to go into some real detail, not just say "build X road project").

An alternative is to call them. Judging from some of the senator's comments concerning public feedback and the 'busy' tone you get when you call many of these senators, the public pressure right now to kill this bill is extremely high. Below is a link if you'd like to call your senator/representative and voice your opinion.

Our Country Deserves Better PAC :: Issues - Stop the "Stimulus" (http://www.ourcountrydeservesbetter.com/issues/stopstimulus.html)

[DaddyTorgo]

the Big Dig was very necessary. The cost overruns on the other hand, due to graft + corruption -- not so much

[ISiddiqui]

Well as President Obama stated:

This plan is more than a prescription for short-term spending -- it's a strategy for America's long-term growth and opportunity in areas such as renewable energy, health care and education

Um... isn't the point of rushing through this stimulus that it is short term spending designed to prevent us falling into the crapper?

Take the long term stuff and put it in another bill, where it can be weighed and debated instead of shoved through.

[Flasch186]

Today is going to be even worse than previous days in regards to the doom and gloom comments from the President and Congress. The unemployment rate went up in today's report, meaning that we'll get to hear 7.6% more 'The sky is falling and may never recover" statements from the left to attempt to drive this brutal bill through Congress.

are you Dennis Kneal? Reluctantly dragged to an admission that we're in a recession and than against anything to try to stem the bleeding and finally saying that all of the stats are bunk or unimportant (unless of course...well you know, they come from a blog or something that backs you up....Those are awesome.)

[Mizzou B-ball fan]

are you Dennis Kneal? Reluctantly dragged to an admission that we're in a recession and than against anything to try to stem the bleeding and finally saying that all of the stats are bunk or unimportant (unless of course...well you know, they come from a blog or something that backs you up....Those are awesome.)

I'm for ANYTHING that will stop the bleeding. This bill doesn't even come close to achieving that purpose. Also, your point that it's somehow just this administration that causes my opposition is wholly inaccurate and without merit. I was opposed to the last bailout bill that Bush supported. It didn't do shit and this one won't either.

The CBO has released their study of the bill and concluded that this bill will actually do more damage to the economy over the long term than doing absolutely nothing. As Ronald Reagan once said, "The most feared words in the English language are: 'I'm from the government and I'm here to help.'"

http://www.washingtontimes.com/news/2009/feb/04/cbo-obama-stimulus-harmful-over-long-haul/

[Flasch186]

I'm for ANYTHING that will stop the bleeding. This bill doesn't even come close to achieving that purpose. Also, your point that it's somehow just this administration that causes my opposition is wholly inaccurate and without merit. I was opposed to the last bailout bill that Bush supported. It didn't do shit and this one won't either.

Well we totally are at odds on this. The first bill (until Paulson said they wouldnt buy bad assets with it - which was absolutely the dumbest thing to vocalize, maybe ever) did exactly what was intended. Just look at LIBOR and credit spreads.



The CBO has released their study of the bill and concluded that this bill will actually do more damage to the economy over the long term than doing absolutely nothing. As Ronald Reagan once said, "The most feared words in the English language are: 'I'm from the government and I'm here to help.'"

http://www.washingtontimes.com/news/2009/feb/04/cbo-obama-stimulus-harmful-over-long-haul/

it aint perfect and I was against it in it's initial form and am glad that it is getting trimmed but scrapping it and starting over, is just political pandering and dangerous.

[Flasch186]

DOLA

Just heard that the SEC is seriously considering a short term 'flexibility' in Mark-to-market accounting. This could be HUGE in helping us out as well. HUGE.....but only if it's short term. Anything longer than what everyone agrees to be short term and we run the risk of a Japanese-like lost generation.

[DaddyTorgo]

easing up on MtM a little in the short term could definately have some positive effects - but I almost want to see them hold off on that till they've got everything else they want to do ready.

I almost think at this point that if you were to compare it to a boxing match, the governments and central banks have been battered so much that they're just tossing soft little jabs out there hoping to get lucky. What they really ought to do is turtle up and get everything aligned and then come out with a flurry.

aka - sit back and line up all their policies and everything they want to do and then everybody hit the market all at once with all these plans - coordination of efforts seems like it would be very effective in improving the situation

[Flasch186]

i can buy that but FED action is different than Gov't. for better or worse.

[DaddyTorgo]

right right. and US action is different than ECB action which is different than BOE action, etc.

Just would be nice to see them all cooperating. But maybe that's the like...utopian in me.

[JPhillips]

I'm for ANYTHING that will stop the bleeding. This bill doesn't even come close to achieving that purpose. Also, your point that it's somehow just this administration that causes my opposition is wholly inaccurate and without merit. I was opposed to the last bailout bill that Bush supported. It didn't do shit and this one won't either.

The CBO has released their study of the bill and concluded that this bill will actually do more damage to the economy over the long term than doing absolutely nothing. As Ronald Reagan once said, "The most feared words in the English language are: 'I'm from the government and I'm here to help.'"

http://www.washingtontimes.com/news/2009/feb/04/cbo-obama-stimulus-harmful-over-long-haul/

No. No. No. That decline in GDP is after the growth projected in the first few years of the stimulus. They make no comparison between the stimulus and doing nothing.

This is simplistic, but take it as an example. Would you prefer:

A- a 10% increase followed by a .3% decrease

or

B- a 10% decrease followed by a .3% increase

The Washington Times is flat out wrong in how they portray the CBO conclusions.

[Buccaneer]

[QUOTE=DaddyTorgo;1938835]That hockey rink in Dayton? Somebody's got to work in the factory that makes the glass, that makes the boards, that makes the seats, that makes the popcorn machine for the concession stand, that makes the doors, the zamboni, etc. And then somebody's got to inspect it, transport it there, put it up, inspect the building, etc.QUOTE]

And that's where I see the fallacy. A true economic recovery will rely on elements that are sustainable. A decision to build a business, like a hockey rink, is one of cost vs profit. It seems that the govt doesn't care about that, just get some union laborers to work now, nevermind that once the a project is done, they may go back to being unemployed. If such a hockey rink cannot sustain itself profitably, then all those people you listed will be out of a job too. Perhaps they already got a team lined up to make the hockey rink profitable?

I have not been following closely, but where is the $760 billion coming from? Are they expecting more tax revenues to cover the deficit or are they printing more money? If it's the latter, what are the consequences of such action?

[SFL Cat]

Two words...tax holiday.

[kcchief19]

I sat in on a Webconference yesterday with the chief economist for Moody's Economy.com -- a guy who has generally been much more pessimistic than most economists and been much more accurrate as well. He said that with the stimulus, he still expects to see unemployment top out around 9 percent in early 2010 and the recovery won't start in earnest until 2011.

Without the stimulus, unemployment will exceed 10 to 11 percent into 2012 and we would enter -- his words not mine -- a depression.

Climbing onto my soap box ... I'm against federal debt in general. Debt is something that should only be piled up during war or severe economic strife -- the Great Depression, the stagflation circa 1980 and today being the examples. I don't have a problem with the stimulus plan as it as because it's what you have to do during a severe economic crisis, and this is as bad as it gets.

What I objected to was the piling up of debt the last 25 years. It shouldn't have happened, and we're all going to be f*cked eventually because of it. That cow has left the barn.

If we don't provide more money to prop up the credit system and put people back to work now, we're going to be in serious trouble.

[SportsDino]

Payroll tax reduction holiday, spread over a year, would be a bigger shot in the arm for your 800 billion than this whole package.

Reduction at a lower amount, plus some good government spending (don't throw tomatoes please!!!), I could see that being an even better package. That government spending however needs to be productive assets (like Buccaneer said) and things that will make life easier for us for the next 20 years (like usable transport systems, water and waste system improvement, power production and grid improvements... i could even see dipping into the social sphere with healthcare improvements, but that makes bills more likely to be killed by lobbyists/pork/idealogies).

Create jobs, by golly spend up a deficit if you really think its for the best, but make those jobs mean something. Create value in this country so that those jobs are not one off money mints, but the foundation of the next phase of our economy (if you ask me thats not manufacturing or services, but the pursuit of efficient technology to reduce waste, increase real standard of living, and accelerate growth rather than debt/consumption model).

Measure our economy not on how many tickle me elmos sold last Christmas, but on how many people have drinkable water, sufficient food (and healthy... ahem ahem my beloved peanut butter.. cough cough die :p ), cheap electricity... moving on through to the comfort luxuries like, the option to have a computer, convenience gadgets... and the financial things like savings, reasonable funds to survive retirement, etc.

If we start using some real metrics, maybe we will see some real jobs. If the goal is not price per barrel of oil, but the average utility bill, maybe we will more hydro plants (or nuclear) and energy efficient buildings be made, instead of some of the absolutely ludicrious energy policy we keep seeing. Maybe if a carbon credit actually cost something you would 'kill the economy'... of the gritty smog plants barely surviving this recession anyway. And create an economy of new plant designs and machinery.

I just think so many things are holding us back, and this massive mess could be the opportunity to kick ourselves in the ass and get back to doing something useful. We should not compete with China to pay workers the lowest wages possible to produce the most junk at whatever pollution level our outdated technology results in. We should not struggle to keep a bloated and incompetent aristocracy alive when fundamental capitalism is about incentives, not asskissery of the modern boardroom. We certainly should not keep throwing money at things for shallow reasons (even an ECONOMIC CRISIS CAPS LOCK ON FULL PANIC MODE START NOW!?!?!?!)... every stimulus dollar should be two fold. One dollar's worth of new jobs. One dollar's worth of future use to the country or its people. That is how you build economies instead of print money/increase debt.

Heck, find the ten biggest messes holding back the United States, and make that your stimulus package. Housing crisis the problem, make a package that rewards people most for keeping up with their debts, and helps push as many otherwise viable homeowners into that category as possible. Give someone a job to build a standard for who can renegotiate their loans and who has to come up with it on their own or else they default. Give someone a job to get to as many people that fit that standard as possible and handle the deal. Tell the banks not to fire the guy who processes mortgages actually being paid, and not hire cheap-ass lawyers to collect portions of debt at cost while they can still profitably service it.

I want to see laws or public spending policy that do something to address problems, not throw around money that will bite us in the ass whether the majority understands that or not. Although I think a large number of people do see the stimulus as being a failure in waiting, or something they don't understand but hope magically works.

[Flasch186]

I sat in on a Webconference yesterday with the chief economist for Moody's Economy.com -- a guy who has generally been much more pessimistic than most economists and been much more accurrate as well. He said that with the stimulus, he still expects to see unemployment top out around 9 percent in early 2010 and the recovery won't start in earnest until 2011.

Without the stimulus, unemployment will exceed 10 to 11 percent into 2012 and we would enter -- his words not mine -- a depression.

Climbing onto my soap box ... I'm against federal debt in general. Debt is something that should only be piled up during war or severe economic strife -- the Great Depression, the stagflation circa 1980 and today being the examples. I don't have a problem with the stimulus plan as it as because it's what you have to do during a severe economic crisis, and this is as bad as it gets.

What I objected to was the piling up of debt the last 25 years. It shouldn't have happened, and we're all going to be f*cked eventually because of it. That cow has left the barn.

If we don't provide more money to prop up the credit system and put people back to work now, we're going to be in serious trouble.

yup, the hilarious part is the congresspeople up in arms about the deficit yet they had no problem getting it to this point over the last oh, 25 years except the years we had the surplus. Now its pork but back then it was just good ole' deficit spending to help push the GDP.

[DaddyTorgo]

[quote=DaddyTorgo;1938835]That hockey rink in Dayton? Somebody's got to work in the factory that makes the glass, that makes the boards, that makes the seats, that makes the popcorn machine for the concession stand, that makes the doors, the zamboni, etc. And then somebody's got to inspect it, transport it there, put it up, inspect the building, etc.QUOTE]

And that's where I see the fallacy. A true economic recovery will rely on elements that are sustainable. A decision to build a business, like a hockey rink, is one of cost vs profit. It seems that the govt doesn't care about that, just get some union laborers to work now, nevermind that once the a project is done, they may go back to being unemployed. If such a hockey rink cannot sustain itself profitably, then all those people you listed will be out of a job too. Perhaps they already got a team lined up to make the hockey rink profitable?

I have not been following closely, but where is the $760 billion coming from? Are they expecting more tax revenues to cover the deficit or are they printing more money? If it's the latter, what are the consequences of such action?

the hockey rink was clearly not the best example obviously. which i knew as i said it, but it was the one someone else was using. how about say...massive infrastructure spending? repairing the federal highway system?

[sterlingice]

- Focused plans will be easier to pass. Instead of a subportion of pork central bill, why not make a bill called the "No Potholes Left in the Fricking Road Act". Target spending to highway repair, traffic safety, some budgeted money per local government (based on population, no earmarks) to fix roads, road materials research (i.e. civil engineering research I'm sure could generate some new construction process that makes roads less resistant to wear to elements/traffic/etc), and direct incentives to replace roads that are going to be replaced anyway (or new road construction) to use these new materials. There you go, the outline of a basic bill... start chugging some numbers and do some internet browsing I'm sure we could create a useful bill faster than congress that would pass an FOFC vote and probably congress.

"The honorable Representative from Newark would like to propose the 'No Frickin' Potholes Left in the Frickin' Road Act'". CSPAN with the clip of the day :D

We need to focus on technology and efficiency upgrades. We got rotting infrastructure, don't throw money at wastefully building more rotting infrastructure. Invest in projects with some useful purpose that are not outlandish in scope to value (like the Big Dig).
Let's throw a crazy one out there that I was chatting with friends about this week. What would it take to get our rail infrastructure up from suck to good? In Europe, you jump on a train and you actually get there *before* you would have driving so people actually pay to ride it instead of Amtrak and the 50-stops-from-Chicago-to-Dallas. Going from Florence to Rome takes about 3 hours by road and we did it in 1.5 by rail. You can also take the "stops everywhere" train and go 4 hours- so you have 2 options and 3 or 4 different companies to choose from. But here, the tracks suck so hard and preference is given to freight so you can't build an efficient passenger train infrastructure. Sure, in the middle of the country, you don't save much. But, for instance, would you rather drive 6+ hours (8 in traffic) from DC to NYC, fight LaGuardia and Reagan for almost 6 hours, or take the train in 3? And a train pollutes a lot less than airplanes, which should be used more for longer distance travel not silly little flights from Houston to Dallas (again, 4 hours to drive, or 1 to drive to and from airport with 2 to wait in an airport and 1 to fly, vs what could be 15 minutes at a train station and 1.5 hours to ride)

Again, the other one I would love is to actually get competent light rail systems for any major city. We had the federal government was handing out light rail money so everyone built little $2-$5B stretches that cover nowhere and everyone wonders why no one rides. DC has a wonderful Metro and it's used by everyone. But, for instance, Houston's putters around downtown for a few miles while, instead, they're building out I-10 to 24 effing lanes (4 HOV, 6 each direction, 4 lane access roads each direction) because people routinely take 2+ hours to drive in every morning. You think maybe putting a rail line along there might alleviate some traffic?!? Or how about San Diego- decent rail for downtown and some of the city, but it doesn't go to the San Diego Zoo or Seaworld, arguably the two biggest attractions.

You want to take some carbon and pollution out of the air, save some long term road maintenance costs, and save a crap load of oil- fix rail in this country instead of our antiquated 19th century rail system.

Then I want to see some water infrastructure- water pipelines and desalinization- tho I already mentioned that. The Ogallala Aquifer is running dry in quite a few places in the great plains- you know where those trifling farmers who grow our food live and need water to... grow food. Pipe some water from the Gulf up there or over from the Great Lakes. You know how LA and Phoenix and other cities keep stealing water from the surrounding areas because they're big and have money- make them pay for their water from the ocean so that it's more fair for all.

And don't get me started on electricity. There are two huge components that we can go after. First, generation of new energy and reduction of inefficiency on the distribution grid. And, secondly, conservation- you know that word that's been dirty since the 80s, it seems.

As for generation- renewable is plentiful in that middle part of the country we just mentioned. Or other exciting locales with lots of other stuff like, say, the middle of Utah. However, there are a lot of hurdles that need to be overcome and can if some money is thrown at them. Put those areas to work on clean energy.

I know it's older, but this (http://en.wikipedia.org/wiki/File:USEnFlow02-quads.gif) is one of my favorite graphics I've seen about the issue. Look at how much energy is lost to transportation because of inefficient small internal combustion engines- ultimately, getting every single internal combustion car off the road should be a fairly short term goal, as in 10 years, not 50.

Look at how much is lost during transmission- we can't do a ton about that unless we come up with something close to a superconductor. But we can decrease that in steps, just not leaps and bounds. Particularly if we start increasing a need for electric car infrastructure- there will be money to be made in making that more efficient. Work on a new battery technology so energy generated in these areas is not lost or required to be transmitted over inefficient lines (this could also be research used to develop new batteries for cars, like those used in electric cars).

Lastly, there's conservation. Get cars off the road with better transportation. Get people to save energy- yes, when you leave the lights on you're funding oil buying from the middle east, when you don't recycle you're propping up the Chinese economy with cheap goods, etc.

I'm pretty convinced we will never see a boom time like the 90s again in my lifetime. However, you want a lot of countries beating a path to your door for a product that could be a boom to the economy for years to come- get cracking on better energy generation, better batteries (supercapacitors), and better transmission (superconductors).

You want to spend a trillion or two on something useful, there it is.

- Watchdog on how money is spent. Insist projects complete on budget and on schedule if the company wants to get the next contract. String the money over a period, not just one corruptible burst of money, because the economy is a continuous thing, injecting a bunch of money at one point is pointless if the future cash flow expectation is not there. Create projects that are long lasting and of positive value, then fund them with this giant lump sum at the start so we know X years of that project are in place. This allows company to see the pool that will be available, and grow their labor force to accommodate said project over X years. You say you are going to spend 300 million on a building, I can guarantee it will cost at least 300 million to make that building. If you set aside 10 billion for the construction of buildings, and you get on companies asses about costs, even if you are making the same kind of buildings I bet the average will be less than 300 million by far.
It's weird because this is how most city budgets operate but we expect different from the federal budget: city bonds, school bonds, library bonds, city sales tax increases, state sales tax increases- it's all over 20 or 30 year periods to pay back for a project. But not the federal government- sure they issue bonds to pay for it in the end, but we never think about it that way. We think about it like a big money spout.

As for the watchdog aspect- I'm not sure there is any way that would work. So many agencies would declare they can't disclose what money is used for as stated before. Could you see the army or CIA claiming where any of their money was spent. The military chunk of the budget is, what, $400B, or roughly one third?

Also, you know how this would work- as soon as information is released, it will be cherry picked by idiots so all we hear about on the news is how much it costs to resod the National Mall but some stupid $20B plan is let go because it doesn't sound as "sexy" leading off the news. As futile as that is, tho, I'd like the transparency, nonetheless- I just don't think it would help much.

(Wow, that ended up longer than expected)

SI

[sterlingice]

DOLA

Just heard that the SEC is seriously considering a short term 'flexibility' in Mark-to-market accounting. This could be HUGE in helping us out as well. HUGE.....but only if it's short term. Anything longer than what everyone agrees to be short term and we run the risk of a Japanese-like lost generation.

Oh god. Please don't do that. Does anyone seriously think that financial companies will do anything but completely rape these rules and we'll be right back here in a couple more years, staring down at the Japanese 90s?

SI

[Flasch186]

obviously we disagree as I think a short (6 mos) period of suspension of the mark to market accounting measures would be a good thing.

[SportsDino]

I don't have trust in the corporations, the SEC, or most agencies that evaluate businesses to think suspending mark to market is very safe. It will probably happen anyway, if it was not going to be used for evil or someone would watch for naughtiness I wouldn't worry so much.

Sterlingice you have my vote. I could get behind 90% of what you said without question. As for 'secret budgets', we can still have those, if we admit that they are only necessary for a very small portion of the budget. Most military spending can be public, almost all domestic spending can be public, and we could just say the CIA reports a giant lump sum as its budget. As long as we control the size of that lump sum, I won't mind it being spent in secret.

And I'm tired of the argument that it can't work to make public finances transparent. It is a project for sure (lots of IT and data management jobs would be needed hint hint), but given the amount of bullshit forms and overhead we already have for anything in the government, it won't be that much harder for the daily bureaucrats life if that was standardized into an electronic system that reported to the giant database of doom (copyright and trademarked by me). Heck, we might even find we can save entire forests worth of trees by getting the government to go paperless on as much as possible. I prefer trees to landfills full of rotting paper.

You may even see labor savings with such a system, if we make it so whenever you walk into a government office all you need to do is log on to a terminal and you can have 90% automatically filled out forms waiting for you... ya we will still need customer service, but I'm sure lines and waiting could be cut dramatically.

Tracking the majority of where your tax dollars are going should be a service of the government. Yes the media will corrupt the hell out of the numbers to make their dumbass points, but they do that already. That is not a good excuse to avoid doing something smart, you can corrupt anything to a foolish purpose (including the giant database of doom). And maybe some elements of the media would actually do their jobs effectively and use this data to detect government corruption (like contracts that are constantly late and over budget for no reason, and the same company keeps getting more contracts).

So in my opinion this is a form of data infrastructure that the government is going to need eventually anyway (since it will have to cut costs dramatically once the baby boom goes boom). Create a lot of software jobs and others to create this massive interlinked system. And maybe actually decrease that massive amount of waste that we all know happens with any government project (I'm not talking cutting programs, I'm talking the waste involved in executing those programs at all, good and bad programs).

[SportsDino]

A quick summary:
- The No Frickin Potholes Left in the Frickin Road Act
- The Giant Database of Doom Act
- Efficient Mass Transit Reform Act
- Southwest Water Supply Act
- Power of the Future Act
- Pollution Standards Reform Act
- Mortgage Stabilization and Incentives Act
- Payroll Tax Holiday for the Year Act

I think any of those introduced as their own focused piece of legislation would both inject funds into the economy AND serve some valuable economic growth purpose that will help us in the future rather than just increase our debt. I also think they could be made in a way to get bipartisan support.

They also could be completely corrupted by our evil politicians and their lobbyist overlords, as well as misrepresented by the media, subverted by business, and generally screwed up in execution... but face it, that is the truth with everything these days. A side effect of choosing the wrong people with the wrong incentives in place. Doesn't mean we shouldn't try these in place of obviously corrupted garbage they are trying to pass now.

[molson]

I think any of those introduced as their own focused piece of legislation would both inject funds into the economy AND serve some valuable economic growth purpose that will help us in the future rather than just increase our debt. I also think they could be made in a way to get bipartisan support.

They also could be completely corrupted by our evil politicians and their lobbyist overlords, as well as misrepresented by the media, subverted by business, and generally screwed up in execution... but face it, that is the truth with everything these days. A side effect of choosing the wrong people with the wrong incentives in place. Doesn't mean we shouldn't try these in place of obviously corrupted garbage they are trying to pass now.

I think its going to be the second one.

The optimism and blind faith the government to fix all of our problems is fascinating.

Nobody's going to notice the impact of any of these things. It will push back the "real" recession (and ultimately the recovery), a little later.

[sterlingice]

I don't have trust in the corporations, the SEC, or most agencies that evaluate businesses to think suspending mark to market is very safe. It will probably happen anyway, if it was not going to be used for evil or someone would watch for naughtiness I wouldn't worry so much.

Sterlingice you have my vote. I could get behind 90% of what you said without question. As for 'secret budgets', we can still have those, if we admit that they are only necessary for a very small portion of the budget. Most military spending can be public, almost all domestic spending can be public, and we could just say the CIA reports a giant lump sum as its budget. As long as we control the size of that lump sum, I won't mind it being spent in secret.

And I'm tired of the argument that it can't work to make public finances transparent. It is a project for sure (lots of IT and data management jobs would be needed hint hint), but given the amount of bullshit forms and overhead we already have for anything in the government, it won't be that much harder for the daily bureaucrats life if that was standardized into an electronic system that reported to the giant database of doom (copyright and trademarked by me). Heck, we might even find we can save entire forests worth of trees by getting the government to go paperless on as much as possible. I prefer trees to landfills full of rotting paper.

You may even see labor savings with such a system, if we make it so whenever you walk into a government office all you need to do is log on to a terminal and you can have 90% automatically filled out forms waiting for you... ya we will still need customer service, but I'm sure lines and waiting could be cut dramatically.

Tracking the majority of where your tax dollars are going should be a service of the government. Yes the media will corrupt the hell out of the numbers to make their dumbass points, but they do that already. That is not a good excuse to avoid doing something smart, you can corrupt anything to a foolish purpose (including the giant database of doom). And maybe some elements of the media would actually do their jobs effectively and use this data to detect government corruption (like contracts that are constantly late and over budget for no reason, and the same company keeps getting more contracts).

So in my opinion this is a form of data infrastructure that the government is going to need eventually anyway (since it will have to cut costs dramatically once the baby boom goes boom). Create a lot of software jobs and others to create this massive interlinked system. And maybe actually decrease that massive amount of waste that we all know happens with any government project (I'm not talking cutting programs, I'm talking the waste involved in executing those programs at all, good and bad programs).


Again, I'm in agreement with you- I think it should happen. I agree 100% with the statement "Tracking the majority of where your tax dollars are going should be a service of the government." Let's just not pretend this is a giant panacea for our out of control budgets.

Speaking of panaceas and unicorns- wouldn't it be great if we could start the budget out every year from scratch rather than "last year plus 10%" or "last year minus 5%". Then again, that would have a host of other problems (we don't like that senator so we're cutting out funding this year for a 10 year project that's in year 4).

SI

[sterlingice]

I think its going to be the second one.

The optimism and blind faith the government to fix all of our problems is fascinating.

Nobody's going to notice the impact of any of these things. It will push back the "real" recession (and ultimately the recovery), a little later.

I have even less confidence in the "free" market to correct these issues. I'm of the belief that "survival of the fittest" and "no concern for our fellow man" are not beliefs I want my elected officials to have and if they do, they're likely going to not get my vote.

Now, whether this particular plan is a good one- yeah, I think that's leaning much more towards "no". But just letting things go- how does that help anyone except the rich, who will be there to continue to profit on the poor?

SI

[JonInMiddleGA]

But just letting things go- how does that help anyone except the rich, who will be there to continue to profit on the poor?


Beat the blue hell out of making sure everybody is poor or near enough to it as to not make any difference.

[SportsDino]

The government is trying to muck things up either way. If they can't stop themselves from doing something, I would rather it be something useful. I don't think it will cure anything until people get back to basic capitalism (this means shareholders that vote their shares instead of short them, like me, hahaha... granted they seem all preferred these days anyway).

Things like saving up some money, only investing it in real business, not instruments with 'expected average returns' with nothing behind the curtain...

CEOs that are focused on increasing company value, not on exploiting their control and market knowledge to loot their company for as much money as they can before getting fired with a golden parachute.

People that quit acting like sheep, expecting the government to fix economies for them (ya I'm guilty of this as well, given I sit around programming and daytrading all day and night and bitch on message boards rather than doing something).

My hope is things stay stable enough to prevent revolution, but screwed up enough to keep the market messy enough long enough for me to gather up enough capital to create my own corporation of doom. At least that is my pipe dream! But somewhere in my heart is a little bleading heart liberal that wants as many people as possible in the country to not fear for losing their job for reasons out of their control (and elsewhere in my heart is a vicious taskmaster that wants to beat many others mercilessly for being lazy and ignorant, myself included).

I don't think politicians and corporations are playing survival of the fittest, or capitalism... I think what they are doing resembles an abstract variant of feudalism most days more than a capitalist republic. Its just there is so much currency and potential opportunity flowing around that it is hard to see or understand the decay. Heck, I think by the time I'm 40 I'll probably be joining up with JiMGA in the democracy has failed group.

[molson]

I have even less confidence in the "free" market to correct these issues. I'm of the belief that "survival of the fittest" and "no concern for our fellow man" are not beliefs I want my elected officials to have and if they do, they're likely going to not get my vote.

Now, whether this particular plan is a good one- yeah, I think that's leaning much more towards "no". But just letting things go- how does that help anyone except the rich, who will be there to continue to profit on the poor?

SI

I didn't use either the phrase "survival of the fittest" or "no concern for our fellow man" in my post, so I'm not sure what you're quoting.

The idea that anyone who opposes your specific view of how the economy works doesn't care about people is a little annoying. But its very standard around here.

My goal isn't for people to starve to death. I don't want to see that happen. I feel its much more likely that people starve the way we're going. You disagree, and that's fine, but the relentless liberal bullshit that anyone thinks differently hates people, or doesn't care about human suffering, is stupid. It's identical to "if you criticize the government, you're unamerican", or if "you're against the war, you hate freedom".

And I think some kind of stimulus package might help. In this environment though, with the fear-mongering and panic and desperation to pass anything, it will be a disaster. It's only been a few months since the financial bailout and the flaws in that have already been made clear. At the time, many were already warning about the next bailout. Maybe we can just run an entire economy on bailouts with money that doesn't exist? That'll never come crashing down in any significant way, I'm sure.

[Buccaneer]

the hockey rink was clearly not the best example obviously. which i knew as i said it, but it was the one someone else was using. how about say...massive infrastructure spending? repairing the federal highway system?

Let's look at that simplistically. By infrastructure, I assume you mean transportation and utilities. The question is, will that make that much a difference? You would put some of the laid off construction workers back to work but that's about it. Here in Colorado, there are only a handful of firms that are capable of securing federal highway construction work (roadways, bridges, interchanges), according to the DOT and some of those firms are quite busy (there are still billions of DOT dollars still being doled out). We have just completed two major highway projects in the state, T-REX in Denver and COSMIX in Colorado Springs. A lot of other states can say the same thing. We have something on the board for I-70 through the mountains but that's an area that does not need economic revitalization, relatively speaking.

Let's look at utilities. That is going to have no economic impact because you cannot find workers for those type of jobs: electric linemen, gas pipe welders and water pipe fitters. Even if you were to give billions to public and private utility companies to help replace aging utility pipes and wires, all it would do is to add to the current backlog.

It seems that most of the people that were laid off, besides housing and commercial construction workers, were in retail, service industries and auto-related industries. You are not going to (or should not) have govt prop up failed retail companies or business models (like Macy's or Starbucks expansion) because they would not be profitable or at least sustainable. Big ticket items, which include auto, depends upon disposable income, or at least a working population willing to take on more personal debt. That will come in time, as consumer confidence rises again, but how long will that take?

[Buccaneer]

If our income taxes are going to pay for this stimulus, is that an inefficient way of doing it? I mean, the $800 I pay to FICA each month, how much of it will actually go to putting people back work - after the inefficient bureaucracy takes its large percentage? Would it make more sense not to even pay that in the first place and keep that money as part of a tax holiday? It seems the crux is to get consumer confidence back up (i.e., disposable income) so we can get all those people laid off in retail and autos (and housing construction) back to work.

[JPhillips]

I wish most of the tax cuts in this bill were a FICA holiday, but instead the tax cuts are going to be largely ineffective in terms of stimulus.

[SportsDino]

You would think the Dems would all line up behind a FICA cut, but it just shows where their loyalties lie (direct handouts to their friends, socialism of the political elite and their connections). I think my new hobby is finding spending proposals in the stimulus package and tracing them back to who profits from it and their circle of buddies.

For instance, if you do that with the financial bailout, it was so obvious even the MEDIA was pointing out the connections between distribution and political/business ties. Heck, bailout dollars + merger rumors made a decent stock tip a couple times (both ways).

[sterlingice]

I didn't use either the phrase "survival of the fittest" or "no concern for our fellow man" in my post, so I'm not sure what you're quoting.

The idea that anyone who opposes your specific view of how the economy works doesn't care about people is a little annoying. But its very standard around here.

That's why I worded it the way I did. It was building on what you said, not necessarily contradicting it. You said government intervention wasn't the answer. I said letting the market correct itself was similarly not the answer.

My goal isn't for people to starve to death. I don't want to see that happen. I feel its much more likely that people starve the way we're going. You disagree, and that's fine, but the relentless liberal bullshit that anyone thinks differently hates people, or doesn't care about human suffering, is stupid. It's identical to "if you criticize the government, you're unamerican", or if "you're against the war, you hate freedom".

And I think some kind of stimulus package might help. In this environment though, with the fear-mongering and panic and desperation to pass anything, it will be a disaster. It's only been a few months since the financial bailout and the flaws in that have already been made clear. At the time, many were already warning about the next bailout. Maybe we can just run an entire economy on bailouts with money that doesn't exist? That'll never come crashing down in any significant way, I'm sure.

I was just curious what your answer was to this problem as you don't think the stimulus is it. As I said, I don't think this one is either- hell, I put my proverbial pen to paper earlier this morning in way too much detail and length because I don't like this plan.

That said, I'm pretty sure sanctimoniously complaining about stimuli isn't going to solve the economic problems, so what's your plan?

SI

[flere-imsaho]

The problem with significant rail expansion in the U.S., as sterlingice describes on Page 3, is eminent domain. Specifically, to accomplish what you're proposing, you'd have to expand rail corridors all over the place, and even develop new ones. In either case you'd have to buy private land, and often you'd have to buy that land from citizens who don't want to sell. The costs (purchase, legal, etc...) would be astronomical.

[albionmoonlight]

I wish most of the tax cuts in this bill were a FICA holiday, but instead the tax cuts are going to be largely ineffective in terms of stimulus.

How are the tax cuts fashioned?

[JPhillips]

It's hard to piece it all together and the Senate and House versions differ, but here's what I've found from multiple sources.

500$ tax credit for workers, but paid through reduced withholding or on the 2009 tax return(in other words, slowly)

The above mentioned house purchase tax credit(imo this will just inflate house prices)

A Net Operating Loss extension(about 20 billion total)

A tax cut for companies buying back debt(this is a small dollar value)

Allowing companies greater ability to deduct depreciation

Reducing taxes on profits earned abroad

There's also a host of small tax cuts in each bill that I see mentioned, but not detailed. All in all it's a hodge podge of cuts bargained int the bill from various constituencies without a whole lot of thought about how they might benefit the economy in the short run. Many of the tax cuts are as special interest driven as the most egregious spending.

[kcchief19]

If our income taxes are going to pay for this stimulus, is that an inefficient way of doing it? I mean, the $800 I pay to FICA each month, how much of it will actually go to putting people back work - after the inefficient bureaucracy takes its large percentage? Would it make more sense not to even pay that in the first place and keep that money as part of a tax holiday? It seems the crux is to get consumer confidence back up (i.e., disposable income) so we can get all those people laid off in retail and autos (and housing construction) back to work.
If you're paying $800 a month in FICA taxes, you're making about $250,000 a year. Way to go, Bucc! :)

Let's say the stimulus is the $900 billion and we're going to cut a check for $3,000 to every man, woman and child in America. The typical household would get on average about $7,500. What are you going to do with it?

Give me $7,500 no strings attached right now and I have no choice but to sock it away, pay debts and save it. Some people would use it to catch up on their mortgage. So where does the money go? Saved in the bank (which does us no good because the banks are hording cash and won't lend it back out) or paid to the bank (mortgage and credit card payments). We haven't put anyone back to work and in 12 months everyone is going to be behind on their mortgage and stock piling credit card debt because the money is gone.

I've got half my office right now getting ready to look for a new house because of the tax credit proposal. Cities all across the country and fearing up to start projects once they get the greenlight that the money is there. That wouldn't happen any other way.

I don't disagree that this plan is far from perfect. It won't work the way we want. The federal money toward infrastructure won't really do anything that wasn't going to happen before until cities and states lost tax revenue and couldn't afford them -- now the federal government is picking up the tab. Some of the stimulus will take time -- infrastructure projects aren't really "shovel ready." They need permits and competitive bids, and that can take months or even years.

Personally I think the tax credits are a good way to go because they incentivize something that wouldn't have happened without the credit. I'd rather see those than an extra $20 bucks in my pocket by cutting payroll taxes that won't boost my confidence or anyone else's.

[kcchief19]

The above mentioned house purchase tax credit(imo this will just inflate house prices)
There's way too much supply right now and not enough demand, so there's more than downward pressure on prices. If prices did recover a bit because of this, a lot of people would think that's a good thing.

[albionmoonlight]

It's hard to piece it all together and the Senate and House versions differ, but here's what I've found from multiple sources.

500$ tax credit for workers, but paid through reduced withholding or on the 2009 tax return(in other words, slowly)

The above mentioned house purchase tax credit(imo this will just inflate house prices)

A Net Operating Loss extension(about 20 billion total)

A tax cut for companies buying back debt(this is a small dollar value)

Allowing companies greater ability to deduct depreciation

Reducing taxes on profits earned abroad

There's also a host of small tax cuts in each bill that I see mentioned, but not detailed. All in all it's a hodge podge of cuts bargained int the bill from various constituencies without a whole lot of thought about how they might benefit the economy in the short run. Many of the tax cuts are as special interest driven as the most egregious spending.

So about a year from now, I'll get $500.

My recollection is hazy, but I thought that Obama's campaign plan was for a $1,500 tax cut for middle income workers. Did I somehow manage to come out worse with a tax-cut driven stimulus bill than I would have in a normal economy? Sigh.

[JPhillips]

There's way too much supply right now and not enough demand, so there's more than downward pressure on prices. If prices did recover a bit because of this, a lot of people would think that's a good thing.

I'm going to be moving over the summer so I should get the benefit of this credit, but in general I think we have to many incentives in the tax code for buying homes. Those incentives are a part of what inflated the housing bubble in the first place.

[Buccaneer]

kcchief, I took out my payroll statement and looked at the wrong column. That obviously is way too high.

Hasn't Obama and his supposedly genius economic advisors learned from history? Everyone knows you cannot craft a major legislation in short amound of time, nor can you rush it. Congress is doing what it only knows how to do, keep piling on typical federal expenditures with some tax items in there. They did that with other spending bills that had to be rushed and certainly did it with the Patriot Act and the creation of the DHS. It's not a smart way to govern (simply just pushing to get something done regardless if it's beneficial, right or will make that much of a difference in terms of cost/benefits) and thought we would be expecting better of him.

[JPhillips]

I don't understand the more time argument. The problem with the legislation isn't time it's that that the opposition has a completely different economic philosophy. How will taking another week or month change that?

[Buccaneer]

I don't understand the more time argument. The problem with the legislation isn't time it's that that the opposition has a completely different economic philosophy. How will taking another week or month change that?

Considering that more people are believing that the huge non-stimulus parts of the bill will not stimulate anything except federal govt powers and coffers, why would they even push that in a hurry? There are known ways to stimulate economic situations, which takes a different thinking than typical Congressional spendings or lukewarm tax breaks. So, since you are not of the opposition, it should be acceptable to go ahead and do this? That;s your typical partisan BS since it becomes what's good for a party (which is to throw money at many things and claim success) as oppose to doing something smart and real (which history has shown the federal govt to have a poor to fair track record).

[SteveMax58]

I'm going to be moving over the summer so I should get the benefit of this credit, but in general I think we have to many incentives in the tax code for buying homes. Those incentives are a part of what inflated the housing bubble in the first place.

I have believed for quite some time that the previous administration, and now this one, believe that inflation is the only way to "correct" housing values. I don't know if there is a better way to correct it, but I lean towards that philosophy, given the impact that housing has to the entire economy.

Essentially, if we all pay 40 cents(arbitrary number) more for milk, food, gas, etc. this raises the amount of taxes that we are paying in. But tax "relief" is the right word, because it is very temporary as our wages will surely not follow the same rate of inflation. So...you get some degree of temporary financial relief and the ability to stay in your home(or sell it) by keeping the market propped up until inflation can catch up to it.

We aren't quite the same workforce we were in the 70's, 80's, and even the 90's to a degree. We don't all grow up, work, and retire in the same town, area, or region for our entire lives. More and more of us are moving to pursue opportunities elsewhere. Since the housing market is the single biggest investment(or saddlebag) most Americans have, it would make sense that stabilizing it would allow those who need to move(i.e. sell) to pursue employment without the need to choose between destroying their credit(and homebuying capability elsewhere) or working for a significantly discounted pay rate.

[JPhillips]

Considering that more people are believing that the huge non-stimulus parts of the bill will not stimulate anything except federal govt powers and coffers, why would they even push that in a hurry? There are known ways to stimulate economic situations, which takes a different thinking than typical Congressional spendings or lukewarm tax breaks. So, since you are not of the opposition, it should be acceptable to go ahead and do this? That;s your typical partisan BS since it becomes what's good for a party (which is to throw money at many things and claim success) as oppose to doing something smart and real (which history has shown the federal govt to have a poor to fair track record).

But again, why will more time make a difference? I'm all for recrafting large parts of this plan as I think a lot of it stinks, but the problems seem to have very little to do with a lack of time. For example, aid to the states, which seems to have a high multiplier effect, was cut in the Senate bill, but not for a lack of time.

[JPhillips]

And another thing! How do you expect a real compromise when 90% of the Senate Republicans and 95% of House Republicans favor an all tax cut approach. Even if you believe in capital gains tax cuts and reducing the estate tax, those items will have very little stimulative effect, and they'll cost well over three trillion over the next decade, well more than the current stimulus.

Call it partisan BS all you want, but the reality of government is that ideology matters. The fundamental differences in economic ideology are always going to play a part in this legislation. A bill this big that has to have bipartisan support to pass is always going to be filled with some crap. If you know a way to only include evidence supported stimulative items, I'd love to hear it.

[sterlingice]

I have believed for quite some time that the previous administration, and now this one, believe that inflation is the only way to "correct" housing values. I don't know if there is a better way to correct it, but I lean towards that philosophy, given the impact that housing has to the entire economy.

Essentially, if we all pay 40 cents(arbitrary number) more for milk, food, gas, etc. this raises the amount of taxes that we are paying in.

I was a little scared this week when I went to the grocery store- I was seeing prices that were on par with what I saw in Kansas. Which was scary because every since moving to Richmond, it seemed everything costs 30-50% more. It wasn't on everything, but it was enough.


SI

[SteveMax58]

I was a little scared this week when I went to the grocery store- I was seeing prices that were on par with what I saw in Kansas. Which was scary because every since moving to Richmond, it seemed everything costs 30-50% more. It wasn't on everything, but it was enough.


SI

So you are (anecdotally) seeing deflation currently?

I suspect this is the fear of top economic advisors, since inflation (in theory) should be easier to curb by taxing it...but deflation is less intuitive to correct. I suspect this is the reason that Obama is not as concerned with what is in the stimulus bill(to a degree), but more concerned with getting it out there to help combat deflation in general.

Of course...I realize I'm throwing out conspiracy theories essentially.

[sterlingice]

So you are (anecdotally) seeing deflation currently?

I suspect this is the fear of top economic advisors, since inflation (in theory) should be easier to curb by taxing it...but deflation is less intuitive to correct. I suspect this is the reason that Obama is not as concerned with what is in the stimulus bill(to a degree), but more concerned with getting it out there to help combat deflation in general.

Of course...I realize I'm throwing out conspiracy theories essentially.

It's anecdotal, so take it with a boulder of salt. But, yeah.

SI

[JonInMiddleGA]

I was a little scared this week when I went to the grocery store- I was seeing prices that were on par with what I saw in Kansas. Which was scary because every since moving to Richmond, it seemed everything costs 30-50% more. It wasn't on everything, but it was enough.


If it'll make you feel better, you can shop in Athens, GA. Food prices here only seem to know one direction :(

[flounder]

I still haven't seen anyone explain why this bailout is going to work better than Japan's in the 90s (http://www.nytimes.com/2009/02/06/world/asia/06japan.html?_r=2&ref=world&pagewanted=all).


Nor is this remote port in western Japan unusual. Japan’s rural areas have been paved over and filled in with roads, dams and other big infrastructure projects, the legacy of trillions of dollars spent to lift the economy from a severe downturn caused by the bursting of a real estate bubble in the late 1980s. During those nearly two decades, Japan accumulated the largest public debt in the developed world — totaling 180 percent of its $5.5 trillion economy — while failing to generate a convincing recovery.

...

In the end, say economists, it was not public works but an expensive cleanup of the debt-ridden banking system, combined with growing exports to China and the United States, that brought a close to Japan’s Lost Decade. This has led many to conclude that spending did little more than sink Japan deeply into debt, leaving an enormous tax burden for future generations.

[Buccaneer]

flounder, that's a good history lesson for those that are rushing through this latest stimulus needs to learn. But it seems the attitude is to get this done NOW and deal with the consequences later and if you dare to bring up arguments, then you are simply an obstructionist opposition.

[SteveMax58]

I still haven't seen anyone explain why this bailout is going to work better than Japan's in the 90s (http://www.nytimes.com/2009/02/06/world/asia/06japan.html?_r=2&ref=world&pagewanted=all).


I think the only way a bill(and I purposely leave off the word "stimulus") of this magnitude can be successful is if it leverages current capital(or borrowed captial) to reduce future capital expenditure. Like for an upgraded and modern national energy grid. Nuclear, wind, solar, and other energy alternatives to oil would be another portion that can help to reduce outgoing captial in the future.

But simply printing money and hoping for increased purchasing of US Bonds is a recipe for hyper-inflation, tightened credit markets(much more severe than today), high interest rates in general, and huge taxes to pay this back.

I'm not optimistic about this bill doing anything other than a short-term housing stimulus...which may not help as much since it is structured as tax credits, as opposed to instant cash infusion for down payment assistance, or as a seller credit.

[Flasch186]

It's hard to piece it all together and the Senate and House versions differ, but here's what I've found from multiple sources.

500$ tax credit for workers, but paid through reduced withholding or on the 2009 tax return(in other words, slowly)

The above mentioned house purchase tax credit(imo this will just inflate house prices)

stabilize. Nothing will inflate them right now outside of a few anomalies. AAMOF, no homebuyer would be willing to pay for an inflating home price wise right now....the pendulum has swung.



A Net Operating Loss extension(about 20 billion total)

A tax cut for companies buying back debt(this is a small dollar value)

Allowing companies greater ability to deduct depreciation

Reducing taxes on profits earned abroad

There's also a host of small tax cuts in each bill that I see mentioned, but not detailed. All in all it's a hodge podge of cuts bargained int the bill from various constituencies without a whole lot of thought about how they might benefit the economy in the short run. Many of the tax cuts are as special interest driven as the most egregious spending.

And I have been saying that the biggest fear is a deflationary spiral which is the verbiage batted around in the back halls from what Ive been reading. If we're staring a deflationary spiral in the face than the ideology on either side of the aisle better get its shit together.

[Buccaneer]

from various constituencies without a whole lot of thought about how they might benefit the economy in the short run. Many of the tax cuts are as special interest driven as the most egregious spending.

imagine that.

[albionmoonlight]

YouTube - Stimulis: Because all economies have performance issues (http://www.youtube.com/watch?v=dEDIyztZGBA&eurl=http://reason.com/blog/)

[flere-imsaho]

kcchief, I took out my payroll statement and looked at the wrong column. That obviously is way too high.

Damnit! I was hoping to peg you as one of the idle bourgeoisie! :D

I still haven't seen anyone explain why this bailout is going to work better than Japan's in the 90s (http://www.nytimes.com/2009/02/06/world/asia/06japan.html?_r=2&ref=world&pagewanted=all).

I'm afraid I have to agree, though I think we're conflating two things here, still. One is a still-needed "bailout" of the financial industry and the other is the need for stimulus.

If we take ourselves back to September, when the feces really hit the flabellum, it seemed everyone was in agreement that what really needed to happen was to identify the bad assets on the banks' books, and get them off of those books in some way or another so that everyone could go back to trusting the banks (well, trusting them in a day-to-day way, not in a do-what's-good-for-the-economy-in-a-long-term way) which would have a knock-on effect of unfreezing the credit markets.

I think the main problem was that it turned out to be too complicated to figure out quickly, and so Paulson punted and spent the money "re-capitalizing" the banks instead. And I put that in quotes because I don't think that's what he really did.

So here we are. I still think the #1 problem is that there are billions if not trillions of dollars of assets out there sitting on balance sheets that are worth nothing, and the fear of these toxic assets still hangs like a cloud over the financial system, and continues to impact the economy at large. A "bailout" bill should address this, and address this specifically. Take what's left of TARP, re-prioritize it (or bring it back to its original priority) and try to clean out those assets.

The question of stimulus should be different. We're clearly in a recession, we clearly need some government investment to get the economy moving again, the real question is how much to spend, and how. The Republicans, who all of a sudden seem to have found fiscal conservatism again after 8 years, want it all in tax cuts. The Democrats, influenced by their own desire for pork and the neo-Keynesians on Obama's staff, want government deficit spending. Here I agree with JPhillips. Obama and the Democrats are going to have to pass this over the objection of 95% of GOP legislators, so just do it already. The viewpoints are diametrically opposed. Put enough in to flip 3-4 votes in the Senate and call it a day.

Meanwhile, on the political side, the Democrats really need to respond to this "mortgaging the future of our young people" argument. Frankly, I think they should do nothing but repeat that the GOP thought it was just A-OK to spend $1 trillion to invade and rebuild Iraq, but apparently it's not OK to spend $1 trillion to rebuild the U.S.

[JPhillips]

Somehow Obama needs to hit the Republicans on the all tax cut alternative. They're against 900 billion in spending, but for trillions in tax cuts over the next decade, cuts that include a capital gains reduction and estate tax reductions. They've managed to portray themselves as suddenly fiscally sound when in reality over 90% of them in Congress want to increase the deficit significantly more than the stimulus package would.

[Mizzou B-ball fan]

It's unbelievable how much money the government continues to toss around just assuming things will magically fix themselves if you just keep pumping out cash.

U.S. Taxpayers Risk $9.7 Trillion on Bailouts as Senate Votes (http://www.bloomberg.com/apps/news?pid=washingtonstory&sid=aGq2B3XeGKok)

[sterlingice]

It's unbelievable how much money the government continues to toss around just assuming things will magically fix themselves if you just keep pumping out cash.

U.S. Taxpayers Risk $9.7 Trillion on Bailouts as Senate Votes (http://www.bloomberg.com/apps/news?pid=washingtonstory&sid=aGq2B3XeGKok)

Last I checked, roughly $9T of that $9.7T was done by the last President (all except ARRA; if you want, you can tag the second $300B of TARP to Obama since he let it go through even tho Bush signed it).

SI

[Noop]

I heard our economy(and our country as a matter of fact) is similar to a house of cards. I am seriously concerned about my future because I haven't even started work yet and fear by the time I finish with school their won't be any work available. I think I might head straight to work after graduation and put law school off for a year and hope the economy gets better.

[Mizzou B-ball fan]

Last I checked, roughly $9T of that $9.7T was done by the last President (all except ARRA; if you want, you can tag the second $300B of TARP to Obama since he let it go through even tho Bush signed it).

SI

The Democratic Congress passed those bills. With that said, I was a vocal opponent of Bush's fiscal policies. He should have vetoed that crap that the Democratic Congress was pushing through over the previous two years. You're talking to the wrong guy if you're looking for a defender of those veto decisions (or the lack thereof).

[Ronnie Dobbs2]

I heard our economy(and our country as a matter of fact) is similar to a house of cards. I am seriously concerned about my future because I haven't even started work yet and fear by the time I finish with school their won't be any work available. I think I might head straight to work after graduation and put law school off for a year and hope the economy gets better.

FWIW most people try to hide in graduate school during bad times like these. Of course, they're operating under the assumption things will get better. If you don't feel that way, I'd say robbing banks might be the best way to go.

[JPhillips]

Last I checked, roughly $9T of that $9.7T was done by the last President (all except ARRA; if you want, you can tag the second $300B of TARP to Obama since he let it go through even tho Bush signed it).

SI

Most of the 9.7 trillion wasn't even debated by Congress. Treasury and the Fed made most of those commitments unilaterally.

[miked]

FWIW most people try to hide in graduate school during bad times like these. Of course, they're operating under the assumption things will get better. If you don't feel that way, I'd say robbing banks might be the best way to go.

Graduate schools are hurting too. I won't say how much, but there are significant budget cuts and lower enrollment planned due to various factors. I won't get over-political, but the NIH budget has remained flat (actually decreases in most areas) and tax revenues (funding state schools) as well as endowments (funding private schools) are largely decreased.

[Ronnie Dobbs2]

Yeah, I work in higher education and it's not pretty right now. Luckily the NIH looks to get a good boost in the stimulus bill, which could have a nice trickle down effect if the number of training grants increases.

[JonInMiddleGA]

But it seems the attitude is to get this done NOW and deal with the consequences later

This reminds me to mention an email I got last week, urging my support of another spending bill. It came not from any overtly political organization but rather from the state historic preservation guru. It specifically urged contacting legislators to ask them to approve the bill without amendments as there were concerns over what might be cut if the measure was line-itemed.
Never mind that the preservation related element of the package was a tiny drop in the bucket compared to everything else we were being told to just ignore.

After reading it I just sat here & banged my head on my desk for a while, because the clear message was "damn whether it's a good bill, we're gonna get paid so we have to back it to the hilt". And I had to work to suppress the urge to go find the author of the email & bitchslap him into unconsciousness for being such a shortsighted prick. (He lives here in Athens, it wouldn't be that tough to find him).

I think there's probably a lot of that going on in countless small ways, trying to curry support with a side of pork here & a side of pork there.

[SFL Cat]

I don't understand the more time argument. The problem with the legislation isn't time it's that that the opposition has a completely different economic philosophy. How will taking another week or month change that?

Considering how well the initial bailout thwarted all those "dire consequences" that would occur if the government sat around and did nothing...I'm not oppossed to taking a lot of time on this one as opposed to rushing something through. Let the press and public examine the details. Of course, that ain't gonna happen.

[Flasch186]

The Democratic Congress passed those bills. With that said, I was a vocal opponent of Bush's fiscal policies. He should have vetoed that crap that the Democratic Congress was pushing through over the previous two years. You're talking to the wrong guy if you're looking for a defender of those veto decisions (or the lack thereof).

ROFLMAO!! Democratic Congress? Where was I when the GOP locked the Dems out of a meeting? This record is running short of songs but with a selective memory and selective listening you can put it on repeat for a long long time. What JPhillips said, and than I agree with SFL Cat that the first tranche did keep us from going headlong off of a cliff much earlier in this game.

[nole4sho]

I heard our economy(and our country as a matter of fact) is similar to a house of cards. I am seriously concerned about my future because I haven't even started work yet and fear by the time I finish with school their won't be any work available. I think I might head straight to work after graduation and put law school off for a year and hope the economy gets better.

Marvin, Marvin, Marvin you can not possibly be considering putting off law school for a year to work. Take my advice work is no fun and I can not wait until I go back to school in the summer. I miss being free to walk around with flip flops and an unshaven face.

:(

[SportsDino]

I like in that article that it mentions that the mortgages in the US are measured at around 10.5 trillion (estimated), and that we are already on the hook for 9+ trillion in bailouts.

Considering there has been enough money thrown around to pretty much buy every mortgage in existance and zero it out, does anyone really doubt that instead of massive bank loans and buying 'troubled assets', that redoing any loan that needed to be redone with government assistance... thereby make the illiquid subprime assets either liquid/profitable or purely defaulted... would have had a lot more bang for the buck in stabilizing the economy?

Instead we have been and continue to try and play games to stabilize stock prices in a manner so indirect that we couldn't even prove it was the bailout that did it if they somehow did recover.

I think in hindsight we will find that ironically, its the banks own greed and attempts to hang on to their flawed business strategies that caused their destruction, whereas the real answer would have been intuitively obvious from the peanut gallery with a little common sense.

[Mizzou B-ball fan]

I like in that article that it mentions that the mortgages in the US are measured at around 10.5 trillion (estimated), and that we are already on the hook for 9+ trillion in bailouts.

Considering there has been enough money thrown around to pretty much buy every mortgage in existance and zero it out, does anyone really doubt that instead of massive bank loans and buying 'troubled assets', that redoing any loan that needed to be redone with government assistance... thereby make the illiquid subprime assets either liquid/profitable or purely defaulted... would have had a lot more bang for the buck in stabilizing the economy?

Instead we have been and continue to try and play games to stabilize stock prices in a manner so indirect that we couldn't even prove it was the bailout that did it if they somehow did recover.

I think in hindsight we will find that ironically, its the banks own greed and attempts to hang on to their flawed business strategies that caused their destruction, whereas the real answer would have been intuitively obvious from the peanut gallery with a little common sense.

Agreed. At some point, businesses need to be held accountable rather than continuing to bail them out. Bush and the Democratic Congress have this on their heads. If Obama continues on this path, he'll join the squad.

[SteveMax58]

Considering there has been enough money thrown around to pretty much buy every mortgage in existance and zero it out, does anyone really doubt that instead of massive bank loans and buying 'troubled assets', that redoing any loan that needed to be redone with government assistance... thereby make the illiquid subprime assets either liquid/profitable or purely defaulted... would have had a lot more bang for the buck in stabilizing the economy?

Instead we have been and continue to try and play games to stabilize stock prices in a manner so indirect that we couldn't even prove it was the bailout that did it if they somehow did recover.

I think in hindsight we will find that ironically, its the banks own greed and attempts to hang on to their flawed business strategies that caused their destruction, whereas the real answer would have been intuitively obvious from the peanut gallery with a little common sense.

This was my contention from the moment I saw that ridiculous TARP plan. I think the problem is a combination of the Dems and Repubs firmly believing that, we the people, are entirely too small in our thinking to understand the "best solution" when we see it(i.e. unpopular to give money to stupid people who borrowed too much)...and mix in the fact that they(the Bureaucrats) also need to appear to be helping their constituencies.

It's fool's gold-diggers at their finest. Everybody wants $1mil...but if "everybody" actually had $1mil...then $1mil would be worth nothing. These bailouts are just picking and choosing who gets their (figurative) $1mil before the rest.

[sterlingice]

I like in that article that it mentions that the mortgages in the US are measured at around 10.5 trillion (estimated), and that we are already on the hook for 9+ trillion in bailouts.

To be fair, the 9 trillion is misleading as I assume it counts the FDIC increase as a huge chunk of that and the only way that is tapped is if banks start failing. And, frankly, if that happens then they'll be nationalized anyways. It's not as if that money will likely be tapped so saying that we could instead pay off mortgages with that money- that's a bit of a false argument since one case is insured money while the other is guaranteed money.

SI

[SportsDino]

I'd venture the majority of it is actually Fed loans at low interest rates (which is practically a bailout). Also the number of loans that would actually fail is probably not the full 10.5 trillion worth.

[Mizzou B-ball fan]

Jesus H. Christ! For the love of God, someone tell the government to just stop "helping"! This is becoming a government-created nightmare.

Stocks Tumble as Bailout Plan Is Unveiled - Market Overview * US * News * Story - CNBC.com (http://www.cnbc.com/id/29119665)

[gstelmack]

Woohoo! The Mutual Fund shares I was going to buy today are going to be even CHEAPER!

[JPhillips]

It would suck, but I'm convinced we need to publicly state the reality that most of our major financial institutions are insolvent and work from there.

[Flasch186]

MBBF - doing nothing is not a choice.

[SteveMax58]

It would suck, but I'm convinced we need to publicly state the reality that most of our major financial institutions are insolvent and work from there.

Despite my nausea at the mere notion of having government running anything....my contention from the first bailout has been to let the private banks that are doomed to fail(without a bailout) just fail...and create a FED bank for 3-5 years to absorb the lending market share that would be necessary to keep things semi-running. Then begin privatization of the FED Bank once [insert criteria here] has been met.

The alternative, as has been chosen, is to bailout the investors in banks (i.e. China, Japan, and other foreign investments, etc.) in the hopes that they will continue to buy our debt.

I don't think the latter solution really works, though admittedly, I can't prove the former works either (nor can I find an historic precedent).

[sterlingice]

Jesus H. Christ! For the love of God, someone tell the government to just stop "helping"! This is becoming a government-created nightmare.

Stocks Tumble as Bailout Plan Is Unveiled - Market Overview * US * News * Story - CNBC.com (http://www.cnbc.com/id/29119665)

Yes, the single morning stock market change by many investors hedging for a complete handout is a clear indicator of the validity of any plan.

SI

[Flasch186]

MBBF will continue to grab whatever stat or nugget supports his claim instead of garnering info and then building a case. I have stated over and over again, to him generally, that the market (singularly) is not an indicator unto itself and one needs to take a look at market(S) to get enough info to speculate on an outcome or path to take. For some reason he doesnt do this, seemingly ever and not just with the topic at hand.

[Mizzou B-ball fan]

MBBF - doing nothing is not a choice.

It is a choice. There's just debate on whether it's a better option than what the government is currently pursuing. You don't need to do something just for the sake of doing something. It has to improve over the status quo.

[albionmoonlight]

I'd rather a fairly valued market than one that is 1,000 points higher than it should be because people don't understand what is going on.

I don't know if that is what is happening, but I hope so.

If companies and houses have gone down in value because they were horribly over-valued in the first place, then I would rather just take the medicine now rather than use artificial means to keep them inflated.

[Flasch186]

an organized and tempered depreciation is one thing, a deflationary cycle is another.

[SportsDino]

I think the market is over-reacting because they didn't get irresponsibly huge handouts like they wanted. Irritating, but business as usual once the shock runs off. I'll just use this as an opportunity for quick cash (I love hedges + volatility, bwahahaa, evil shorter inside me is cackling with glee as he prepares buy to covers).

[Fighter of Foo]

an organized and tempered depreciation is one thing, a deflationary cycle is another.

And the inevitable hyperinflation is better?

[Flasch186]

youre argument is that we'll rebound so dramatically that the hyperinflation is on the other side. I'd argue that were heading down so fast that we're printing money only to plateau on the other side and that this "hyper" inflation will be able to be affected on the other side much easier than what we're attacking right now. my $.02 and I have no evidence to support it so it's just speculative thinking but it's as accurate as the other side which you state. {shrug}

[SportsDino]

The other side of the argument is the Great Depression, particularly the experience outside the US. You think people are crying about the stock market being down? Wait until their entire life savings, even if they followed sound 'safe' investments... can be contained on a single piece of currency.

Just think, to match up to say Fannie Mae, we need what, ten times leverage... that is generous... To print that much money we would literally decimate (in the archaic sense) every man, woman, and child in the country. You would be better off taking your whole life savings and investing in guns and ammo, rather than it evaporating to hyperinflation.

[JonInMiddleGA]

You would be better off taking your whole life savings and investing in guns and ammo, rather than it evaporating to hyperinflation.

Which is a conversation that my wife & I had briefly earlier tonight, in slightly less dramatic terms. We were talking about some land up in the backwoods of Tennessee that's been in her family for several generations & what it might take to both work it and defend it.

[BishopMVP]

I think in hindsight we will find that ironically, its the banks own greed and attempts to hang on to their flawed business strategies that caused their destruction, whereas the real answer would have been intuitively obvious from the peanut gallery with a little common sense.Take out in hindsight and the quote is spot on. It's creative destruction as poor business models fail and new ones rise. Or if you prefer to compare it to stocks, the inevitable pullbacks of ~10% of value that always occur when a stock doubles in price, even if it has doubled multiple times and will continue doing so in the future. Unfortunately way too many people - probably the same people who argue the American standard of living is going down because they're worried about/spending too much on health insurance no previous generation had - are unprepared for and terrified of even a small drop in a naturally cyclical economy.

"All I want is a little more safety, a little more security, a lot less uncertainty." It disgusts me.MBBF - doing nothing is not a choice.Yes, it most certainly is. You can argue (plausibly) that deficit spending will be helpful for the economic health and general welfare of the populace going forward, but the onus is on you to show it. Otherwise, when prominent economists haven't even gotten their story straight on what happened in hindsight, and have absolutely no common ground for any plan going forward, you're just throwing trillion after trillion dollar amounts in the mere hope that it will salvage a problem you can't even identify.

If you were sick, the doctors couldn't figure out what was wrong, and someone offered you a pill that they said would cure it for half your life savings with absolutely no documentation backing it up, would you pay them the money? Unless you're an idiot, no, you wouldn't. These stimuli are nothing more than a multi-trillion dollar placebo.Just think, to match up to say Fannie Mae, we need what, ten times leverage... that is generous... To print that much money we would literally decimate (in the archaic sense) every man, woman, and child in the country.Technically no. To literally decimate every person's net worth (I assume you're talking net worth ;) ) would be to reduce it by 10% - i.e. to 90% of its current level, not to 1/10th its current level. Unless you're going for the old Roman sense and trying to claim the hyperinflation would prove so catastrophic 10% of the population died (or 100% of the population lost 10% of their body I suppose). And I don't think you're arguing there will be that much starvation. The next poster on the other hand....Which is a conversation that my wife & I had briefly earlier tonight, in slightly less dramatic terms. We were talking about some land up in the backwoods of Tennessee that's been in her family for several generations & what it might take to both work it and defend it.Backwoods? I got me an island. Water keeps the zombies and plagues away too.

[JonInMiddleGA]

Backwoods? I got me an island. Water keeps the zombies and plagues away too.

Alas, we got what we got, so it's that or stay here in lovely Athens which ought to be a real hoot if the shiznit hits the fan.

[DaddyTorgo]

Nice summation of some of the flaws (or perceived flaws if you want to be kind) in the Geithner "plan" by one of the fortune.com editors - first thing I've seen today, so I'm sure there's better out there.

Why the Geithner plan won't work - Feb. 10, 2009 (http://money.cnn.com/2009/02/10/news/companies/geithner_plan.fortune/index.htm?postversion=2009021017)



The Geithner plan would achieve a major goal of any rescue: Raising the banks' depleted capital, the raw material for making loans. Let's return to our example. Because of the government subsidy, private investors overpay by $1 billion, which our bank adds to its capital position. As a rule of thumb, $1 billion extra capital translates into $10 billion in credit card receivables or home equity lines. So far, it sounds pretty good for America.
Don't be fooled. The government can achieve the same objective far more directly, at far lower cost. It can directly inject equity capital in the banks without the complication of acting as a giant lender and guarantor. The best method is to purchase either common stock or preferred shares from the banks. Then, the taxpayers would either share in the banks' earnings -- and benefit from their revival -- or reap dividends.

The real problem in the housing market is the rampant job loss. Most Americans whose homes are worth less than their mortgages keep paying. The Boston Fed found that during the crushing downturn in Boston in the early 1990s, only 6% of the underwater homeowners defaulted.
People default when they're pummeled by a life event like a divorce, a serious illness, and most of all, job loss. This go-round, the foreclosure rate will jump to as much as 15%, triggered by soaring unemployment.
Hence, the right plan should focus on crafting a break for people who've just lost their jobs, not the 85%-plus of Americans who keep paying even with negative equity.
But the Geithner plan is an invitation for people who don't need relief to get it anyway.



Seems pretty obvious. Shit, I've been calling since the beginning for the government to take preferred stock for TARP $, and although I didn't know the statistics, one could logically assume that laid-off people are going to result in a huge jump in defaults.

But that's okay, we'll just bail out the people who were irresponsible in taking on mortgages they couldn't afford

[sterlingice]

The other side of the argument is the Great Depression, particularly the experience outside the US. You think people are crying about the stock market being down? Wait until their entire life savings, even if they followed sound 'safe' investments... can be contained on a single piece of currency.

Just think, to match up to say Fannie Mae, we need what, ten times leverage... that is generous... To print that much money we would literally decimate (in the archaic sense) every man, woman, and child in the country. You would be better off taking your whole life savings and investing in guns and ammo, rather than it evaporating to hyperinflation.

Let's say society doesn't collapse (which is no certainty at this point)- what would be the answer? Would it be to take any money you have at this point and turn it into something of value- something of which to "barter" on the other side, be it land/house (maybe), gold, commodities- some sort of hard item?

If you just keep it in "money" form (as, if a dollar is worth, I dunno, 20c in 10 years) or some sort of commodity that will be rapidly deflated and then, once the inflation happens, doesn't get re-inflated as much due to it being a flawed system (say, stocks or real estate market)- you'd have a lot of value wiped out.

So what becomes "safest" in a situation like that?

SI

[DaddyTorgo]

and somewhat more insightful from the WSJ

Andy Kessler Explains Why Markets Rejected the Geithner Plan - WSJ.com (http://online.wsj.com/article/SB123431465155370931.html)

[Fighter of Foo]

Let's say society doesn't collapse (which is no certainty at this point)- what would be the answer? Would it be to take any money you have at this point and turn it into something of value- something of which to "barter" on the other side, be it land/house (maybe), gold, commodities- some sort of hard item?

If you just keep it in "money" form (as, if a dollar is worth, I dunno, 20c in 10 years) or some sort of commodity that will be rapidly deflated and then, once the inflation happens, doesn't get re-inflated as much due to it being a flawed system (say, stocks or real estate market)- you'd have a lot of value wiped out.

So what becomes "safest" in a situation like that?

SI

During deflation, cash is where you want to be. The higher inflation gets, the more you want to get out of cash and into assets. And anecdotally, this makes sense. If your currency is useless like Zimbabwe, the only economy that exists is bartering.

As far as what asset classes are best I'm not really sure. Just starting to read about it now

[sterlingice]

During deflation, cash is where you want to be. The higher inflation gets, the more you want to get out of cash and into assets. And anecdotally, this makes sense. If your currency is useless like Zimbabwe, the only economy that exists is bartering.

As far as what asset classes are best I'm not really sure. Just starting to read about it now

Yeah, the deflation part I already knew. It's the where to go from there that's my problem :)

SI

[JPhillips]

Water keeps the zombies and plagues away too.

Water is no protection against the zombie hordes.

[Flasch186]

not even holy water?

[Flasch186]

I just heard that the stimulus compromise stripped out the homeowner tax incentive to buy.....welp, that sucks if its true.

[JonInMiddleGA]

I just heard that the stimulus compromise stripped out the homeowner tax incentive to buy.....welp, that sucks if its true.

House Democratic leaders promised to fight to restore some of $16 billion for school construction cut by the Senate. Those funds could create more than 100,000 jobs, according to Will Straw, an economist at the liberal Center for American Progress.

{scratches head for a bit}

When are these alleged jobs supposed to happen?

I mean, the typical planning/bid/design/approval cycle I've seen for new school construction in measured in years instead of months, the land acquisition process alone usually takes more than a year in my anecdotal experience. Even for renovations/repairs I'd think six months to a year would be the quickest possible, unless these are unfunded projects sitting around ready to go somewhere or something like that.

[albionmoonlight]

FiveThirtyEight.com: Politics Done Right: Give Geithner a Break (http://www.fivethirtyeight.com/2009/02/give-geithner-break.html)


Give Geithner a Break (http://www.fivethirtyeight.com/2009/02/give-geithner-break.html)


I don't think he did well yesterday. I don't know that he's the right guy for the job. But what I do know is the following:

1. Nobody, absolutely nobody, has more incentive to get this right than the Obama Administration. If the economy collapses -- well, more than it already has collapsed -- then the Democrats get slaughtered in 2010, Obama is a one-termer, health care doesn't happen, the poverty rate increases by a couple orders of magnitude, and the imperative to fix the environment gets put on the backburner. To suggest that Obama or Geithner are tools of Wall Street and are looking out for something other than the country's best interest is freaking asinine. Maybe their ideas are wrong -- but their hearts are in the right place.

2. If the banks fail, then rich people lose a lot of money, and poor people lose a lot of jobs (and also much of what money they have). But I swear to God, there's a lunatic fringe (http://www.dailykos.com/story/2009/2/10/22110/4933) out there that would take this trade and call it "progress".

2a. At the end of the day, a great deal of the debate between liberals and conservatives is about how to apportion wealth. It seems so banal to talk about it that way, and so we put all sorts of window dressing on it, but that's really what it's all about. But on this issue of the banking crisis -- and to a lesser extent this was true of the stimulus -- there is a much larger delta on the aggregate amount of wealth that the United States stands to gain (or lose) than on how that wealth is distributed. Over the next 6-18 months, the outcomes for everyone from the top of the economic ladder to the bottom rung are very strongly correlated.

3. I'm sorry, but somewhere between 99.9% and 99.999999% of us are severely underqualified to be making policy recommendations on this particular issue. And I'm certainly in the majority on this one. My anecdotal experience for the past several months has been that the more someone knows about the economy, the more they know (or at least are willing to admit to) what they don't know. Anyone who is professing with certainty that this or that will work -- nationalizing the banks, for instance -- is an idiot.

4. So if I'm telling you to lay off the ideological smelling salts (not that you will) and that your ideas on policy are probably not contributing very much to the discussion (don't worry -- neither are mine) then what, exactly, do I want you to do?

What I'm asking you to do is to clear the playing field. This is neither the time nor the place for mass movements -- this is the time for expert opinion. Once the experts (and I'm not one of them) have reached some kind of a consensus about what the best course of action is (and they haven't yet), then figure out who is impeding that action for political or other disingenuous reasons and tackle them -- do whatever you can to remove them from the playing field. But we're not at that stage yet.

[flere-imsaho]

unless these are unfunded projects sitting around ready to go somewhere or something like that.

From what I understand, this is likely. NPR had a story on this last week (about "shovel-ready" projects) and it would appear there are plenty of projects where states/municipalities/whatever have already done all the pre-work (environmental studies, land acquisition, design, etc...) and just need the money in order for work to start. In some cases work was about to start but was dependent on the town being able to sell construction bonds and suddenly, because of the financial system, they can't sell construction bonds (or at least not at a rate that makes prudent fiscal sense).

So, yeah.

[SteveMax58]

not even holy water?

Common misnomer...wholly water is needed...meaning without contaminents.

Zombies will indeed be repelled by wholly water...but the stuff that the local priest peddles is just from the tap.

[JonInMiddleGA]

From what I understand, this is likely. NPR had a story on this last week (about "shovel-ready" projects) and it would appear there are plenty of projects where states/municipalities/whatever have already done all the pre-work (environmental studies, land acquisition, design, etc...) and just need the money in order for work to start.

Thanks, was hard to discern from that brief description I saw & I didn't really have the time nor the energy to dig for details today.

I don't particularly agree with the allocation, but at least that detail of it makes more sense in that context that it did without it.

[cartman]

Yeah, I'm aware of several projects in Texas for the Army Corps of Engineers that are on hold (some of them for years) because they were approved, but never fully funded.

[Fighter of Foo]

To suggest that Obama or Geithner are tools of Wall Street and are looking out for something other than the country's best interest is freaking asinine. Maybe their ideas are wrong -- but their hearts are in the right place.


Yeah, it's really asinine to suggest that maybe, possibly, a politician and his appointee are looking out for their best interest.

[JonInMiddleGA]

Yeah, it's really asinine to suggest that maybe, possibly, a politician and his appointee are looking out for their best interest.

Or the interests of the people who pull their strings.

That sort of thing simply doesn't happen in American politics, never has.

[SportsDino]

Damn, incorrect use of the word decimate, i wanted to say only one tenth remains, not one tenth is destroyed. Doh!

Right, stand back and let the 'experts' decide. All of these experts are interested in their own positions, they don't care about the best reality... they care about any one where they still have their massive billion dollar fortune. The longer they keep their claws onto that position, the more damage the economy is going through.

The experts to this point have clearly been making moves to save special interests first. That is why you only see the occiasonal carrot being thrown out to the masses, while the big bucks are going direct into some wealthy person's books. Most of Obama's stimulus can even be seen as throwing shout outs to the standard Dem special interests that have been ignored during the Bush years.

[albionmoonlight]

I think that the point made above was that, no matter how cynical one is about Obama's motives, he has much more to gain by doing this well and building political capital than by screwing the pooch and ending up with 6 months as president and 3.5 years as the lame duck.

Thinking short term to scratch some backs would make sense for a president at the end of his tenure, not the beginning.

[Chubby]

I just heard that the stimulus compromise stripped out the homeowner tax incentive to buy.....welp, that sucks if its true.

That's what is being reported by yahoo and others (basically everyone taking the same AP article) which, yes, does suck if it's true.