[clue-talk] The stimulus bill

[David Rudder]

And that's a fine reason why the current stimulus bill is better than 
the TARP bill. With TARP, we gave the money to the people who screwed up 
in the first place, and then gave them no accountability. Obama's bill 
gives much more money to small businesses and the general contractors 
who worked so hard these past couple of decades. It doesn't pay out 
until a contract is reached for specific work, and even then the bulk of 
the money doesn't get paid until the work is done.

It helps with short-term economic stimulus by giving people jobs. It 
helps with long-term economic stimulus because we won't have to pay the 
billions of dollars we've paid for that bridge failing, the NYC 
electrical grid failing or for Katrina. It helps the credit crises, 
since small businesses should be better able to get short-term cash-flow 
oriented loans with a government contract backing their request. In 
theory, more risky loans should be more available once the loans are 
flowing for short-term loans.

-Dave


Brian Gibson wrote:
> 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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