Friday, February 06, 2009


John McCain points out that the new stimulus plan will spend $900,000 for each job it hopes to create. Why not just give every unemployed person $900k and see what happens? At least that chaos would be entertaining.

"Mr. Obama said the legislation was not perfect, but rejected criticism that it was full of pet projects. Responding to the Republican criticism that it was a big spending bill, the president said: “What do you think a stimulus is? That’s the whole point.”"

The President doesn't know of any way of stimulate the economy other than having the government spend giant piles of money. Disconcerting.

Also, for those of you who might be interested, check out this exchange in the third debate:
"Give us some specifics on what you're going to cut back.

Senator Obama?

OBAMA: Well, first of all, I think it's important for the American public to understand that the $750 billion rescue package, if it's structured properly, and, as president, I will make sure it's structured properly, means that ultimately taxpayers get their money back, and that's important to understand.

But there is no doubt that we've been living beyond our means and we're going to have to make some adjustments.

Now, what I've done throughout this campaign is to propose a net spending cut."


dcat said...

McCain's math simply does not work. Actually, it's not even math -- it's arithmetic. Divide the stimulus package by 900,000. I seriously challenge anyone to do so.

I actually have no idea what this post means. I have no idea what the supposed disjunction is. Now we're worried about government spending?

Please, people here smarter than I -- explain. Because I honestly have no idea what the argument is, and I am trying to figure it out. If you oppose a stimulus package, how about making an argument, with your own words, based on your own arguments.

By the way -- I can reaonably say that no one at Big Tent, and I'll include me, is an expert on economics. And frankly, experts on economics in the last few years have sort of been fuckups.

I have no idea if any of this will work. None whatsoever. But neither does anyone here. And given that McCain's grand solution to the problem was the gimmick of stopping his campaign to push a proposal that failed, he may not be the best voice on this matter? he might, actually, be the worst.


Stephen said...

My three arguments:
1. The spending plan as proposed is a bad idea.
2. It is disconcerting that the President cannot think of any way to stimulate the economy other than government spending.
3. When he was a candidate, President Obama said he was proposing a net spending cut. Clearly, he is no longer in favor of a net spending cut.

Stephen said...

As for the math (and it is both math and arithmetic since it involves the application of a concept to a problem and not just the division of numbers), it works out if you only count the unemployed who have lost jobs recently. If you want to do your own math (or arithmetic--who cares?), take the total size of the spending plan and divide it by the 4 million jobs it is supposed to create. Another fun way to crunch the numbers is to divide $800 billion by 11.6 million (total number of unemployed in January). We could give every unemployed person in America a check larger than my yearly household income-- before taxes.

Robert C. said...

Yes, the numbers are huge and disconcerting.

It's not that President Obama doesn't know of other ways to stimulate the economy, just (presumably) that he thinks that spending money on the projects in the stimulus bill is a more effective way of stimulating the economy than just cutting checks to people. (Though some tax rebates are already a part of the stimulus package.)

jeff b said...

From my understanding govt. spending is stimulative (the multiplier effect) in ways that tax cuts, tax holidays, or rebates are not. For example, if I get a $500 tax cut I might spend it at the mall (often on foreign made goods), save it, or pay off debt--that is not stimulative in the way a govt. spending on highways and broadband is. I tend to agree with some of the blue dogs who want slightly less spending and blanch at some of the dumber budget lines. Nonetheless, govt. spending (done well) has greater stimulative effect than the GOP plan.

Bottom line--Reagan wasn't perfect but his conservative philosophy was a necessary corrective to liberal ideological excesses. I see Obama in the same light. Tax cuts and GOP economic philosophies have become more ideology and theology than sound policy at this point (this happened to liberals in the 70s as well).

Paul said...

How does printing more money or raising taxes stimulate the economy? That's what's gonna have to happen to pay for this monstrosity.
850,000,000,000 + interest.

Paul said...
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Stephen said...

Government spending can be stimulative over the long term, as in the infrastructure spending you cite. However, most government spending (and most of the spending in this particular bill) is not that kind of spending. And even that kind of spending has to be done responsibly.

Every dollar spent by the government creates a distortion in the market. The market can absorb many of these distortions, but spending on the scale of the current proposal will not help the economy recover in the long term because it will create an unsustainable burden on the government and the American taxpayer. Tax cuts, rebates, and holidays would allow millions of Americans to make millions of small decisions about how to spend their money. They will make these decisions based on feelings and needs so complicated that it would be impossible for a government, or program, to duplicate those processes.

If you'd like to see what this looks like on a smaller scale, look at what is going on with the California budget. We have a $40ish billion shortfall and the legislature has simply refused to make the necessary cuts. The non-action has been going on for months.

This is a bad plan. It is expensive now and might be crushing in the future. The needed corrective is that spending needs to be reigned in--not tax cuts. Through the Bush years tax revenue continued to go up, but it was outpaced by spending-- particularly after the Democrats took control of Congress in 2006. This is unsustainable.

Paul said...
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Robert C. said...

My understanding is that reining in spending (N.B. Steve, not "reigning") will not stimulate the economy. Large scale tax cuts still cost money! And they're less efficient at stimulating the economy than many forms govt spending.

That's my belief, but it's just based on blogs I read, not on any underlying economic knowledge. Though I feel confident about reining vs. reigning.

Stephen said...

Thanks for the tip on reigning v. reining.

Stephen said...

When horses rule the world it won't matter