[clue-talk] The stimulus bill

[Brian Gibson]

A bill's objective doesn't always coincide with what it says nor the final results.  Just look at the first half of TARP.  The public wanted mortgage restructuring and loosening of credit.  Instead, banks bought each other up and shored up their own finances.  Let's not forget the continued payout of what many would regard as discretionary spending---bonuses for middle managers (execs were excluded by the bill), business trips, new private jets, etc.  The EU did it "right" by limiting how the money could be spent.  It'll be interesting to see if and how the other $350 million will be divvied up.

So in this case, I suppose this stimulus bill should be applauded in part for having specific targets.   However, even if I agree with some of the aims of these riders, I don't see how they are supposed to help the main objective of economic stimulus.  They should probably be in a separate bill.  Were the writers so politically astute as to add these riders on purpose as negotiating chips?  As one political commentator pointed out, that's probably giving more credit than is due.

We had two roads to take, let things work out on their own or meddle
with it.  Since both methods work, the difference between the two is who are the ones left standing at the end.  It was going to hurt either way, and I was personally in favor of the former because you shouldn't reward failure.  Instead we went with the latter, and the way we chose to do it was
through economic stimulation through deficit spending.  Now that we've
started on this road, let's hope we don't make the same mistake the
Japanese did, and that is to cutoff the stimulus at the first sign of
improvement because that sent their economy into another recession.  You don't remove the braces until you're sure the building can stand on its own.



----- Original Message ----
From: David Rudder <david.rudder at reliableresponse.net>
To: CLUE talk <clue-talk at cluedenver.org>
Sent: Monday, February 2, 2009 7:33:33 AM
Subject: Re: [clue-talk] The stimulus bill

This is how I understand the stimulus bill.

It's based in pretty classic Keynesian economics.  Keynes was an
economist who promoted spending on capital projects to boost the
economy.  He's famous for advising the government pay people to "dig
holes and then fill them up again".  I'm pretty sure that was hyperbole.

In theory, when businesses are in desperate need of improvements, when
machinery is out of date or basic investment has been neglected, then
you lower taxes.  This gives business the capital they need to invest in
new computers, upgrades to their manufacturing, R&D on their software or
internal processes, etc.  This is "supply-side economics", because it
concentrates on the people who supply the goods.

But, when businesses have full warehouses and no one's buying product,
you give money to the consumers.  This could be called "consumption-side
economics".  Find needed improvements, places where we can get real
value for our money.  And then pay a crap-ton of people to work on that.
Gets money into the hands of the consumers, creates jobs, and gets the
improvements fixed.

This is the situation we're in now.  Businesses have been making capital
improvements for a decade now, starting with the rush to replace
computers for Y2K and continued by the Bush tax cuts.  But, warehouses
are full and no one's buying. Houses are empty, fiber is dark, cars are
sitting on their lots, unsold.  Before the economy improves, people need
to start spending again.  Before people start spending, they need jobs.

But, it's worse.  Right now, we also have real infrastructure problems.
Bridges are falling, levees are failing, the electrical grid is
overloaded and roads are crumbling.  If the government pays American
companies to fix all this stuff, then people get jobs and companies
survive.  Plus, we get fixed bridges and levees, etc.

It's not government jobs.  We're not hiring bureaucrats.  The government
is paying private companies to do the work that government needs done.

It's like Obama said.  "We have so much to do, while so many are in need
of a job".

-Dave


Collins Richey wrote:
> On Sun, Feb 1, 2009 at 6:14 PM, Angelo Bertolli
> <angelo.bertolli at gmail.com> wrote:
> 
>> Speaking of entertainment, this was written recently.
>>
>> http://www.commondreams.org/view/2009/01/26-0
>>
>> I'm not informed enough to know which parts might be stretched or untrue,
>> but I definitely found it interesting.  And the reason I bring it up is
>> because it has a part in it about "deregulated media" which your email
>> reminded me of.  I'm not sure what was deregulated though.
>>
> 
> I, too, am not sufficiently informed. On the surface, it appears to be
> motivated by the classic "the rich need to have the bulk of their
> income confiscated" type drivel. I would love to see the factual
> comments debated by someone with a real understanding of economics.
> 
> In any case, it's somewhat eloquent proof that the Republicans are the
> root of all evil. most especially of all economic collapse. I believe
> I've heard that mantra elsewhere.
> 
> 

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