Which costs more- Obamas Stimulus/Iraq War - Page 2

Don't make me Google the impact of Bush's tax cuts for the top 1% (The Paris Hilton tax cut) on the deficit.

I love the timming on this. Do you know who Mark Zandi is? Moodys?
He's no Glen Beck.


Joining the backlash against House Majority leader John Boehner's (R-Ohio) economic speech yesterday, Mark Zandi, Moody's chief economist, said Boehner was "just wrong" to call the $787 billion stimulus spending "a failure."

If there was no stimulus at all, Zandi said, unemployment would be at around 11.5% rather than 9.5%.

"I think if we had not had the stimulus, estimates put forward by the Congressional Budget Office are absolutely right: we'd have 2.5-3 million fewer jobs than we'd have today," he said at a Christian Science Monitor breakfast briefing this morning.

"It's that key change that provides the economic juice...that's when the recession ended," Zandi said. "This is why the benefits of stimulus are fading, because we've gone from $100 billion in spending to zero."

In another excerpt from the briefing which you can view below, Zandi said unemployment could reach up to 10 percent by November elections.

We need 150,000 in monthly payroll gains to stabilize unemployment. We're running at 100,000 at best, probably south of that at the moment," he said. "The math, the arithmetic is clear: unemployment is going to rise."

So when can we expect to see those 8 million lost jobs again? "It'll probably take 5 years."

http://www.huffingtonpost.com/2010/0..._n_694506.html

Don't bother to go back to the "Deficits don't matter, Regan proved that" remarks quoted from Cheney in this thread, don't attempt to understand macroeconomics just turn off Fox News, don't listen to Beck or Hannity. They're fear mongering is getting to you.

I'm guessing it probably had the same effect the George H.W. Bush tax cuts and the Clinton tax cuts had: It improved hiring and increased revenue.

"In contrast to its positive near-term macroeconomic effects, the legislation would reduce output slightly in the long run, CBO estimates, as would other similar proposals. The principal channel for this effect is that the legislation would result in an increase in government debt. To the extent that people hold their wealth as government bonds rather than in a form that can be used to finance private investment, the increased debt would tend to reduce the stock of productive private capital. In economic parlance, the debt would “crowd out” private investment."

CBO report, Feb. 11, 2009

www.cbo.gov/doc.cfm?index=9987

Or, as they say in the "Wolf World" books, TANSTAFL. There Ain't No Such Thing As A Free Lunch

George H.W raised taxes. That's part of why he was a 1 termer. That and the little guy with the big ears and charts.

Clinton cut taxes but he also produced a surplus. But don't mistake coincidence for causation. We had a major new industries develop in the 90s, thanks to Al Gor inventing the intertubes.

Lowering taxes on the top 1% doesn't create jobs. A targeted lowering taxes on corporations could. Untargeted tax reductions didn't work for Hoover. Sorry, I don't want to argue Cliometrics. One of my undergrad degrees is in Economics and I like to stick to actual facts. Lowering taxes only helps if targeted to increase DEMAND. Supply side economics (Hovernomics) won't work now we're in a deflationary environment. No one hires when there's limited demand.

Gore didn't invent the internet, much like Ike didn't invent the interstate highway system for the United States.

"In the long run we're all dead"....Milton Friedman.

Ahhh "positive near-term macroeconomic effects".

You stoped before you got to this in the same paragraph

"Crowding out is unlikely to occur in the short run under current conditions, because most firms are lowering investment in
response to reduced demand, which stimulus can offset in part"

Classic Keynsian Economics. Flattening out the business cycle.

And a nice way to avoid the deflationary spiral that is a pleasant term for DEPRESSION.

Rut-Rho. The entire letter gives a very different impression from what was wrenched from context when you took only part of one paragraph.

"The crowding-out effect would be offset somewhat by other factors. Some of the legislation’s provisions, such as funding for improvements to roads and highways, might add to the economy’s potential output in much the same way that private capital investment does. Other provisions, such as funding for grants to increase access to college education, could raise long-term productivity by enhancing people’s skills. And some provisions would create incentives for increased private investment. According to CBO’s estimates, provisions that could add to long-term output account for between
one-fifth and one-quarter of the legislation’s budgetary cost.

The effect of individual provisions could vary greatly. For example, increased spending for basic research and education might affect output only after a number of years, but once those investments began to boost GDP, they might pay off over more years than would the average investment in physical capital (in economic terms, they have a low rate of depreciation). Therefore, in any one year, their contribution to output might be less than that of the average private investment, even if their overall contribution to productivity over their lifetime was just as high"

Oh my. It's hard to reach the conclusion you posted when you read the entire link. Please don't selectively edit data to claim a conclusion that isn't there. That's why I asked for the entire article.

Is this CBO summary from that document negative?


Can you say GROWTH!!!

"Taking all of the short- and long-run effects into account, CBO estimates that the legislation implies an increase in GDP relative to the agency’s baseline forecast of between 1.4 percent and 3.8 percent by the fourth quarter of 2009, between 1.1 percent and 3.3 percent by the fourth quarter of 2010, between 0.4 percent and 1.3 percent by the fourth quarter of 2011, and declining amounts in later years (see Table 1). Beyond 2014, the legislation is estimated to reduce GDP by between zero and 0.2 percent. .......
.....
Correspondingly, the legislation would increase employment by 0.8 million to 2.3 million by the fourth quarter of 2009, by 1.2 million to 3.6 million by the fourth quarter of 2010, by 0.6 million to 1.9 million by the fourth quarter of 2011, and by declining numbers in later years. The effect on employment is never estimated to be negative, despite lower GDP in later years, because CBO expects that the U.S. labor market will be at nearly full employment in the long run. The reduction in GDP is therefore estimated to be reflected in lower wages rather than lower employment, as workers will be less productive because the capital stock is smaller."

It said exactly what I said it said (how's that for redundancy?). In the long term, the stimulus will cause there to be less growth than there would be without it, even though there will be more growth in the short term. It borrows future growth for current growth, and lowers the average growth baseline. In addition, if it creates enough debt, it can seriously depress that average baseline of growth.

You'll notice I was a nice guy and didn't quote their previous estimate from the week before this particular letter, which was much more negative about the stimulus package.

And careful reading also shows that they're not talking about GDP growth in the fourth quarter of "1.4% to 3.8%." They're talking about that much more growth than their baseline, which was actually a decrease in GDP. In other words, it would be less negative than it might have been. In fact, US growth in GDP was .25% for 2009. It was in negative numbers until August of 2009 and was pulled up by a 5% growth in the fourth quarter which fell to 3.7% in 1st quarter 2010 and only 2.4% in the 2nd quarter. In other words, as the CBO predicted, there was a spurt of growth initially (coming off a low of -4.9% in 1st quarter 2009) but that spurt has fizzled. Unless, of course, the later revisions to come show that it was more even than it looks right now.

The CBO is not allowed to like or dislike, approve or disapprove of legislation. They make their estimates, which they seriously undershot (the unemployment rate went much higher than they predicted), but they did warn that the stimulus was not a permanent, long-term fix. They also warned that the debt was a much longer-term problem than Congress and the White House were estimating and a much less stimulative factor in the short run, since the spending would take over 3 years to achieve, rather than the less than 2 years the White House was claiming.

That's funny, Ronald Reagan said the same thing! As, by the way, did Dick Armey, who had a PhD in Economics.

I liked what I heard one wag say: If you laid all the economists in the U.S. end to end, they'd still all point in different directions."

No you wrenched a single a portion of a paragraph and misconstrued the meaning. It was an egregiousedit.


No, go back an read it again.

QUOTE=mrblanche;2919967] They're talking about that much more growth than their baseline, which was actually a decrease in GDP. In other words, it would be less negative than it might have been. [/quote]

Yes, the stimulus prevented much lower GDP


QUOTE=mrblanche;2919967] They make their estimates, which they seriously undershot (the unemployment .[/quote]

Not so seriously. Can you say PREDICTION. And that isn't even relevant. Please try to stay on subject.

QUOTE=mrblanche;2919967] In addition, if it creates enough debt, it can seriously depress that average baseline of growth.

You'll notice I was a nice guy and didn't quote their previous estimate from the week before this particular letter, which was much more negative about the stimulus package.

QUOTE]

They explained the shift. Minor reductions in future growth. Toal growth higher. Deflationary spiral (Depression) avoided. Don't twist what was there.

No, please. No more studies that you've misrepresented. Post any full text from a reputable source it's entirety but don't ever do this again.

You should aplogize to all the members for what you've done.

Ronald Reagan. A degree in Sociology and Economics from the prestigious Eureka College. In 1932

Dick Armey. The University of Oklahoma ,
The University of North Dakota.

It wasn't even an egregious edit. I lifted one of the first, summary paragraphs of the letter that stated the position of the CBO.

Apologize? Not a chance. It said exactly what I said it said. Enough said. You think that the subsequent paragraphs take away that meaning, but they don't. They merely put more precise numbers to the guess about how much it will cost in future growth to have more growth now. I'm guessing they are very nervous right now, since the dip after the zoom is looking to be sharper than they hoped.

They state a fact: Deficit spending will stimulate the economy now at the cost of growth later, a simple economic principal you say you understand. Everything after that is just playing with the numbers.

But to get back to the original subject of the thread, the effect of military spending is much harder to guess. It's probably safe to assume it will have a similar effect of stimulating the economy now but depressing the economy later. Kind of like the Nixon balanced budget, caused by the end of Vietnam spending, just before one of the deepenst recessions in our history (with the added impetus of the 1973 Arab oil embargo).

Do you make a habit of belittling everyone's education but your own?

The University of Oklahoma and The University of North Dakota. They are what they are.

Yes, the University of Oklahoma has such incompetent professors as Anita Hill. Oh, wait, she's moved on to those bottom-feeding second-class schools, UC Berkeley and then Brandeis.

A university produces both good and bad students, which is the reason for a grading system. I doubt average GRE scores at either of those universities is any worse than whatever university your or I attended. The reputation of the university's graduates has more to do with the history of the school than their actual education. And, after all, not everyone can attend Harvard, Yale, and Princeton.

"In 2007 The Princeton Review named the University of Oklahoma one of its "Best Value" colleges. The school is ranked first per capita among public universities in enrollment of National Merit Scholars and among the top five in the graduation of Rhodes Scholars. PC Magazine and the Princeton Review rated it one of the "20 Most Wired Colleges" in both 2006 and 2008, while the Carnegie Foundation classifies it as a research university with "high research activity."

North Dakota is a nice place to visit in July, but I wouldn't want to live or go to college there. However, one interesting point--Ronald Davies, a graduate of UND, was the federal judge who ordered the desegregation of Little Rock Central High School.

Back on topic...

I totally don't get the point of comparing the Iraq war and the economic stimulus, that article makes no sense to me.

And unlike Keycube, I am blaming Bush for Iraq. His Dad didn't do the job and he wanted a reason to get back in there - he also needed a distraction from the blow up of the technology bubble back then, if anyone remembers that one.

On March 25th, 2008 I started this thread: No Matter Who Wins the Election - We're Going to Have to Pay the Piper The link to the article in there still works.

The fact of the matter is that Obama is stuck with the bills for decisions and macroeconomic trends set into motion long before he got to office. It wouldn't matter WHO was President now from that perspective.

As I've written in this forum before, Alan Greenspan is (primarily) responsible for the financial structure and the "era of deregulation" that resulted.... in this, let's call it, "situation." It was intentional policy to allow the fall of the U.S. $ and thus long term real interest rates - which enabled the asset inflation, particularly in housing, in the first place.

The question is - when do we want to pay the bill? That's what political and policy decisions decide.

One other quick note ...the reason WWII finally helped pull us out of the Great Depression was because the economy was manufacturing-based. The transition to a consumer economy began - really - in the 80s, and now our GDP is approximately 70% based on consumer spending.

We all knew that back then but facts don't matter here. People just make shiest up and ignore what's written on a CBO page in favor of their fantasy.

The collapse of our financial system began in 2007 but became apparent in 2008. I believe all of the subprime lenders went bankrupt (Countrywide Credit being the largest, though if I remember correctly, in the end they were purchased by Bank of America?).

VERY simply, the problem was that mortgages that people couldn't afford were made. Those mortgages were packaged and sold in various ways by the financial institutions that made them. Those packages were insured by other firms, and THOSE financial instruments were subsequently packaged and sold in various ways. The details get complicated, but the end result is that the financial risk on bad loans was spread ALL OVER THE PLACE, and multiplied, so that when people began not being able to make their mortgage payments, not just the local bank was affected. Banks and securities firms all over the world were affected.

Big banks failed. Securities firms that no one ever believed would fail went under, including Bear Stearns and Lehman Brothers. The mortgage agencies Fannie Mae and Freddie Mac would have gone under with out the $300 billion that was spent on them alone. That was in 2008. The stock market completely fell apart, and the government threw what looked like massive amounts of money (approximately $3 trillion) into failing firms and other packages designed to stimulate spending.

TARP stands for Troubled Asset Relief Program, and was part of a series of bailout packages put into place by the previous administration, and continued by this one. Here is a "Bail-Out Tracker" started in 2008 by CNN: http://money.cnn.com/news/storysuppl...ker/index.html

The very, very basic problem is that in the US, most people viewed their home as a form of savings, and were basically spending more than they made by borrowing against their homes.

Again, very simplified, about 70% of the "income" of our country - as measured by GDP, which stands for Gross Domestic Product - is generated by consumer spending. When the banks had financial problems, they stopped lending. They stopped lending to people who wanted to buy new homes, they stopped lending to people who wanted to borrow against equity in their homes, and they stopped lending to businesses that wanted to invest in growing.

The growth of our economy has been based on debt - which in and of itself isn't necessarily a bad thing. The problem is that it depended upon everything continuing to grow, and that has stopped.

And as a result, home values have collapsed, home sales have collapsed, consumer spending has collapsed, and corporations have to cut back - and without government intervention, the forces that make incomes and investment balance up with spending and savings happens a lot faster, but hurts individuals now a lot more. With the government throwing money into the system, it helps now, but it delays the problem, because ultimately we do have to pay for it.

So as I pointed out in the previous post, all the politicians decide is when the pain comes. Unfortunately, tightening the purse strings is what would CAUSE a depression to arrive much more quickly. Continuing deficit funding and stimulus packages is what will put it off, or stretch it out, depending upon how much money is thrown into the system.