As Americans learned more about the stimulus package that proposes to put us $1 trillion deeper into debt, logical minds are beginning to question the wisdom of the plan. Public approval for the stimulus plan is at 38% and dropping.
Reasons for opposition to the plan
-Workers receive only a small tax cut
-The decline in home values, the insolvent banking industry and foreclosures are not addressed
- The majority of the money is to be spent on special interest group programs
-Little of the spending has a direct connection to job creation
Home values, the banks and foreclosures are to be addressed separately by Congress at a later date. My question is, how many trillion dollar plans can the country afford? Excessive debt and leverage is in large part responsible for the financial crisis. The cure cannot be the same as the disease.
As a nation, we need to do something – here’s what people are saying.
Thoughts From Around the Web
At this crucial juncture in the push to pass an economic recovery package, President Barack Obama finds himself in the most unlikely of places: He is losing the message war.
Despite Obama’s sky-high personal approval ratings, polls show support has declined for his stimulus bill since Republicans and their conservative talk-radio allies began railing against what they labeled as pork barrel spending within it.
The most serious charge against the stimulus package is that it does not pack enough punch. Two different camps have been making this argument over the last few weeks. Publicly, the Obama administration hasn’t really answered either one.
And Obama aides say they are open to adding some tax cuts that specifically encourage spending. They looked into the possibility of sending debit cards to all 150 million American households, but decided it was not yet logistically feasible. Instead, the final package may include some smaller programs, like a home-buying subsidy the Senate began discussing on Tuesday.
But targeted tax cuts — in effect, a bribe for households to spend more money — bring their own problems, officials say. One of the economy’s big weak spots right now is consumer indebtedness. Additional spending will help the economy this year, but it could also lead to more credit card and mortgage defaults — which would undermine the Treasury Department’s efforts to revive the financial system.
Third, as Mr. Summers said, “Fiscal measures are only one prong — one component — of our overall approach.” The response also “includes financial rescue, support for housing and global economic cooperation,” he said.
The Wall Street Journal edit page reckoned it out at about 12 percent stimulus. What about the other 88 percent? It was mostly the usual liberal special-interest spending, 40 years of pent-up pet projects. Things looked so bad that the Journal’s other edit page, the liberal news side, decided to put out a calming analysis piece. Obama aides “say this is a baseball game in its early innings, or a football game at halftime,” Gerald F. Seib assured us.You’d think the Democrats would do a better job of camouflaging their real agenda, given the effort they have put, starting with the 2006 mid-term elections, into wooing the middle class. According to pollster Alex Lundry, “middle class” is the number one positive thing that people associate with Democrats. But the stimulus bill proves that it’s not about the middle class. It’s about the Democratic patronage state. Always was, always will be.
There are a lot of people in my comments saying, apparently in all earnesty, “I really think the burden of proof is on the wackos who don’t want the stimulus.”
I am frankly flabbergasted. The proponents of the stimulus are proposing to spend nearly a trillion dollars. That’s about $3,000 for every man, woman, and child in the United States. Do you have $3,000 lying around that could just be spent on any old thing without you really caring? You may call me crazy, but in the McArdle household, we view $3,000 as quite a tidy sum, the kind of money we want to make sure is wisely spent.
At least with the tax cuts, there’s little risk that the money will, from the taxpayer’s standpoint, be wasted. It may not create much in the way of stimulus, but it’s essentially a neutral act–give them money now, take it later. Cash transfers, too, offer relatively few of those frictions; there’s some deadweight loss, but whatever those on unemployment or welfare buy, they presumably valued more highly than alternative uses for the money. Government spending, on the other hand, comes with no guarantee that whatever it buys will be worth as much to the polity as the alternative uses for the money. Hell, badly done government projects can actively destroy value–go up to Buffalo and look at the empty, useless subway that killed Main Street, for example.
Given that, it seems to me that the burden of proof ought naturally to be on the stimulus proponents to satisfy the public that their highly theoretical models are basically sound, especially for the parts of the bill that aren’t tax cuts or transfer payments. Let’s recall that the evidence for this kind of stimulus working in this kind of situation basically rests on a single instance (World War II)–the other two times it was tried (Japan in the 1990s and America in the 1930s) the economy basically rolled along in the doldrums for the rest of the decade.
As the economic stimulus package moves to the Senate, the drumbeat is growing louder for new provisions that directly address the housing crisis.
Key senators from both parties said they will push for measures intended to spur sales and help homeowners at risk of foreclosure.
Advocacy in the Senate for more housing measures in the stimulus bill comes while President Obama is expected to release a comprehensive plan to fix the financial system within the next two weeks.
Obama has been promising for the past month that he would soon propose a foreclosure prevention program, and many believe that could be part of a plan he announces in the coming week. Indeed, he said Saturday that his plan will include a proposal to lower mortgage costs.
Question: “If we just gave all the bailout money to taxpayers, how much would we each get? I’ve seen $25,000, $300,000, $1 million – what’s the real answer?” — Miranda Marquit, Logan, Utah
To arrive at that figure, CNNMoney.com took the total of the bank bailout, $700 billion, and added that to the proposed stimulus spending in the House of Representatives bill, $819 billion. That totals $1.519 trillion.
We then divide that number by 156.3 million, which was the total number of U.S. filers in 2008.
So: $1.519 trillion divided by 156.3 million equals $9,718.49 per U.S. taxpayer.
There were really only two glimmers of hope that the US could avoid a Japan-like multi-year stagnation. One was the offsetting effect of a strong global economy. Of course, we all know how that story ended. Poorly. The other was my certainty that US policymakers like NEC head Lawrence Summers and Treasury Secretary Timothy Geithner had studied the Japanese crisis up and down and realized that you needed to meet a banking crisis head-on, not with halfway measures that left the system crippled.
But today, reading CNBC’s coverage of the plan, it becomes painfully clear that we are headed full speed on a policy bullet train designed to repeat Japan’s errors.
The financial crisis has been so mismanaged that the public will not support package with a high price tag, a price tag that could climb into the trillions. And there is no way to even bring the issue to the public unless taxpayers effectively buy troubled banks, which can only be justified after first wiping out shareholders and bondholders. Then the
First you have our darling President Obama, who believes that his Porkulus will somehow create or save 3 million jobs. Did he pull that number out of his supreme ass? Nah. He’s using the most Bizarro math of all, the multiplier effect touted by our homie and economic slumlord John Maynard Keynes:
The multiplier theory, made famous by John Maynard Keynes in his 1936 book General Theory of Employment, Interest and Money, basically says that each dollar of government spending “injected” into the economy will create a larger increase in national output.
Indeed, it seems like multiplier madness is sweeping the nation, with Keynesian economic theory dominating political and mainstream economic thought once again.
With so many experts placing so much at stake on the basis of this theory, the multiplier must be a sound foundation for public policy, right?
As economic journalist Henry Hazlitt stated in his 1959 book, The Failure of the ‘New Economics’, “There are, in fact, so many things wrong with the multiplier concept that it is hard to know where to begin in dealing with them.”
You better love me forever for reading through 161 pages of absolute bullshit just so you can read what is actually ON this stimulus bill without having to read through 161 pages of absolute bullshit.
The anatomy of OMGObama’s stimulus (that word never gets old): Pages 1 – 50:
Pro & Con
President Obama: “A failure to act and to act now will turn crisis into catastrophe and guarantee a longer recession.”
Senator Graham (R) South Carolina: “Scaring people is not leadership”.