CBO: Stimulus "a net drag on the economy"

[imbalance]

Well imagine that.

The Congressional Budget Office on Tuesday downgraded its estimate of the benefits of President Obama’s 2009 stimulus package, saying it may have sustained as few as 700,000 jobs at its peak last year and that over the long run it will actually be a net drag on the economy.

CBO said that while the Recovery Act boosted the economy in the short run, the extra debt that the stimulus piled up “crowds out” private investment and “will reduce output slightly in the long run — by between 0 and 0.2 percent after 2016.”

The analysis confirms what CBO predicted before the stimulus passed in February 2009, though the top-end decline of two tenths of a percent is actually deeper than the agency predicted back then.

All told, the stimulus did boost jobs and the economy in the short run, according to CBO’s models. At the peak of spending from July through September 2010 it sustained anywhere from 700,000 to 3.6 million, which lowered the unemployment rate by between four-tenths of a percent to 2 percent.

The Obama administration had promised 3.5 million jobs would be produced at the peak of spending.

For this current quarter CBO said the stimulus is sustaining between 600,000 and 1.8 million jobs, which has improved the unemployment rate by as much as 1 percent versus what it otherwise would have been.

The White House did not return a message seeking comment Tuesday afternoon, but the president has defended the stimulus package as a bulwark against an even weaker economy.

Earlier this fall he proposed another round of spending, calling for $447 billion in expanded tax breaks, additional aid to states to hire teachers and emergency workers, and more infrastructure spending.

That broad effort has stalled, though on Monday Mr. Obama signed a slim portion of the package that offers tax breaks to businesses that hire veterans, and that repeals a 3 percent contract withholding requirement for government contractors.

CBO has re-evaluated the stimulus every three months, and its estimates for the total cost of varied. Initially the package was pegged at $787 billion, rose as high as $862 billion at one point, and it now projected to be $825 billion once all the money is paid out.

The non-partisan agency also has changed its model for the spending’s impact on the economy, and the new calculations show the Recovery Act did less than originally projected.

CBO said it has concluded there is less of an indirect multiplier effect of federal spending.

Those changes caused it to drop its estimates for total employment sustained by the spending in 2011 from between 1.2 million and 3.7 million down to between 600,000 and 3.6 million.

As for the long-term situation, CBO said its basic assumption is that each dollar of additional federal debt crowds out about a third of a dollar’s worth of private domestic capital.

CBO does not calculate crowding out in the short term, which is why the Recovery Act boosts the economy in the near term.

CBO: Stimulus hurts economy in the long run - Washington Times

 

[Dragon]

CBO said that while the Recovery Act boosted the economy in the short run, the extra debt that the stimulus piled up “crowds out” private investment

Assuming the CBO really said anything of the kind (and considering the source, that is far from certain), they just lost any credibility with any reputable reality-based economists with that statement. The idea that federal debt "crowds out" private investment -- ever -- has no basis in fact whatsoever. The only way it could POSSIBLY hurt private investment is by contributing to rising interest rates, which is obviously not the case at the moment, and even if it were, the phrase "crowds out" would still be inaccurate.

Here's a key to why this may have happened: "The non-partisan agency also has changed its model for the spending’s impact on the economy."

Well, isn't that interesting. The House changes hands, and suddenly, hey, presto! the CBO changes its model and comes out with a claim that the stimulus hurt the economy, and couches the statement in bogus right-wing economic doctrine with no basis in fact to boot.

Nonpartisan my ass.

 

[OODA_Loop]

Assuming the CBO really said anything of the kind (and considering the source, that is far from certain), they just lost any credibility with any reputable reality-based economists with that statement.

yes no reputable economists can go against your emotional based wisdom

they are not reality-based if they do

 

[Remodeling Maidiac]

Shit, now we can expect a bunch of nonsensical diversionary topics.

 

[Dragon]

Assuming the CBO really said anything of the kind (and considering the source, that is far from certain), they just lost any credibility with any reputable reality-based economists with that statement.

yes no reputable economists can go against your emotional based wisdom

they are not reality-based if they do

I've forgotten more about economics than most posters on this forum, definitely including yourself, ever knew.

There is no basis whatever for the claim that federal debt ever has, ever can, or ever will "crowd out" private investment, although IF it drives up interest rates that could increase the cost of capital and that might hurt investment. Except that interest rates are so low right now, obviously that isn't a problem.

This is not fact based not because it goes against my "emotional based wisdom" but because it goes against, you know, the facts.

 

[Zander]

CBO said that while the Recovery Act boosted the economy in the short run, the extra debt that the stimulus piled up “crowds out” private investment

Assuming the CBO really said anything of the kind (and considering the source, that is far from certain), they just lost any credibility with any reputable reality-based economists with that statement. The idea that federal debt "crowds out" private investment -- ever -- has no basis in fact whatsoever. The only way it could POSSIBLY hurt private investment is by contributing to rising interest rates, which is obviously not the case at the moment, and even if it were, the phrase "crowds out" would still be inaccurate.

Here's a key to why this may have happened: "The non-partisan agency also has changed its model for the spending’s impact on the economy."

Well, isn't that interesting. The House changes hands, and suddenly, hey, presto! the CBO changes its model and comes out with a claim that the stimulus hurt the economy, and couches the statement in bogus right-wing economic doctrine with no basis in fact to boot.

Nonpartisan my ass.

Read it for yourself......
Director's Blog » Blog Archive » Estimates of ARRA
http://www.cbo.gov/ftpdocs/125xx/doc12564/11-22-ARRA.pdf

 

[francoHFW]

Rev Moon, shove the BS! Hurting from 0.0 to 0.2% is nothing compared to Pub dysfunction and fear mongering, 2 to 5%...

 

[Remodeling Maidiac]

Assuming the CBO really said anything of the kind (and considering the source, that is far from certain), they just lost any credibility with any reputable reality-based economists with that statement.

yes no reputable economists can go against your emotional based wisdom

they are not reality-based if they do

I've forgotten more about economics than most posters on this forum, definitely including yourself, ever knew.
There is no basis whatever for the claim that federal debt ever has, ever can, or ever will "crowd out" private investment, although IF it drives up interest rates that could increase the cost of capital and that might hurt investment. Except that interest rates are so low right now, obviously that isn't a problem.

This is not fact based not because it goes against my "emotional based wisdom" but because it goes against, you know, the facts.

For you to make that assertion is ridiculous. Do you know any of these posters or their education level? NO

You do know your own pompousity though dont you?

lol

 

[Leweman]

Assuming the CBO really said anything of the kind (and considering the source, that is far from certain), they just lost any credibility with any reputable reality-based economists with that statement.

yes no reputable economists can go against your emotional based wisdom

they are not reality-based if they do

I've forgotten more about economics than most posters on this forum, definitely including yourself, ever knew.

There is no basis whatever for the claim that federal debt ever has, ever can, or ever will "crowd out" private investment, although IF it drives up interest rates that could increase the cost of capital and that might hurt investment. Except that interest rates are so low right now, obviously that isn't a problem.

This is not fact based not because it goes against my "emotional based wisdom" but because it goes against, you know, the facts.

ahhhhhhhhhhhhhhhhhhhhhhaaaaaaaaahahahahahahahahaaaaaaaaaaaaaaaaaaaaaahhhhhhhhhhhhhhhhhhhhhhhhhahahahahaha

 

[CrusaderFrank]

Well imagine that.

The Congressional Budget Office on Tuesday downgraded its estimate of the benefits of President Obama’s 2009 stimulus package, saying it may have sustained as few as 700,000 jobs at its peak last year and that over the long run it will actually be a net drag on the economy.

CBO said that while the Recovery Act boosted the economy in the short run, the extra debt that the stimulus piled up “crowds out” private investment and “will reduce output slightly in the long run — by between 0 and 0.2 percent after 2016.”

The analysis confirms what CBO predicted before the stimulus passed in February 2009, though the top-end decline of two tenths of a percent is actually deeper than the agency predicted back then.

All told, the stimulus did boost jobs and the economy in the short run, according to CBO’s models. At the peak of spending from July through September 2010 it sustained anywhere from 700,000 to 3.6 million, which lowered the unemployment rate by between four-tenths of a percent to 2 percent.

The Obama administration had promised 3.5 million jobs would be produced at the peak of spending.

For this current quarter CBO said the stimulus is sustaining between 600,000 and 1.8 million jobs, which has improved the unemployment rate by as much as 1 percent versus what it otherwise would have been.

The White House did not return a message seeking comment Tuesday afternoon, but the president has defended the stimulus package as a bulwark against an even weaker economy.

Earlier this fall he proposed another round of spending, calling for $447 billion in expanded tax breaks, additional aid to states to hire teachers and emergency workers, and more infrastructure spending.

That broad effort has stalled, though on Monday Mr. Obama signed a slim portion of the package that offers tax breaks to businesses that hire veterans, and that repeals a 3 percent contract withholding requirement for government contractors.

CBO has re-evaluated the stimulus every three months, and its estimates for the total cost of varied. Initially the package was pegged at $787 billion, rose as high as $862 billion at one point, and it now projected to be $825 billion once all the money is paid out.

The non-partisan agency also has changed its model for the spending’s impact on the economy, and the new calculations show the Recovery Act did less than originally projected.

CBO said it has concluded there is less of an indirect multiplier effect of federal spending.

Those changes caused it to drop its estimates for total employment sustained by the spending in 2011 from between 1.2 million and 3.7 million down to between 600,000 and 3.6 million.

As for the long-term situation, CBO said its basic assumption is that each dollar of additional federal debt crowds out about a third of a dollar’s worth of private domestic capital.

CBO does not calculate crowding out in the short term, which is why the Recovery Act boosts the economy in the near term.

CBO: Stimulus hurts economy in the long run - Washington Times

"Ha, Barry! I tanked the US economy and made off with $1.2Billion maybe more!"

 

[McDowell's]

Assuming the CBO really said anything of the kind (and considering the source, that is far from certain), they just lost any credibility with any reputable reality-based economists with that statement.

yes no reputable economists can go against your emotional based wisdom

they are not reality-based if they do

I've forgotten more about economics than most posters on this forum, definitely including yourself, ever knew.

There is no basis whatever for the claim that federal debt ever has, ever can, or ever will "crowd out" private investment, although IF it drives up interest rates that could increase the cost of capital and that might hurt investment. Except that interest rates are so low right now, obviously that isn't a problem.

This is not fact based not because it goes against my "emotional based wisdom" but because it goes against, you know, the facts.

Economic facts...are you sure you haven't forgetten everything you ever knew about economics?

 

[Remodeling Maidiac]

yes no reputable economists can go against your emotional based wisdom

they are not reality-based if they do

I've forgotten more about economics than most posters on this forum, definitely including yourself, ever knew.

There is no basis whatever for the claim that federal debt ever has, ever can, or ever will "crowd out" private investment, although IF it drives up interest rates that could increase the cost of capital and that might hurt investment. Except that interest rates are so low right now, obviously that isn't a problem.

This is not fact based not because it goes against my "emotional based wisdom" but because it goes against, you know, the facts.

ahhhhhhhhhhhhhhhhhhhhhhaaaaaaaaahahahahahahahahaaaaaaaaaaaaaaaaaaaaaahhhhhhhhhhhhhhhhhhhhhhhhhahahahahaha

It is funny, but I usually like this poster. He usually seems level minded. This is the first time ive seen his crown.

 

[WatertheTree]

Well imagine that.

The Congressional Budget Office on Tuesday downgraded its estimate of the benefits of President Obama’s 2009 stimulus package, saying it may have sustained as few as 700,000 jobs at its peak last year and that over the long run it will actually be a net drag on the economy.

CBO said that while the Recovery Act boosted the economy in the short run, the extra debt that the stimulus piled up “crowds out” private investment and “will reduce output slightly in the long run — by between 0 and 0.2 percent after 2016.”

The analysis confirms what CBO predicted before the stimulus passed in February 2009, though the top-end decline of two tenths of a percent is actually deeper than the agency predicted back then.

All told, the stimulus did boost jobs and the economy in the short run, according to CBO’s models. At the peak of spending from July through September 2010 it sustained anywhere from 700,000 to 3.6 million, which lowered the unemployment rate by between four-tenths of a percent to 2 percent.

The Obama administration had promised 3.5 million jobs would be produced at the peak of spending.

For this current quarter CBO said the stimulus is sustaining between 600,000 and 1.8 million jobs, which has improved the unemployment rate by as much as 1 percent versus what it otherwise would have been.

The White House did not return a message seeking comment Tuesday afternoon, but the president has defended the stimulus package as a bulwark against an even weaker economy.

Earlier this fall he proposed another round of spending, calling for $447 billion in expanded tax breaks, additional aid to states to hire teachers and emergency workers, and more infrastructure spending.

That broad effort has stalled, though on Monday Mr. Obama signed a slim portion of the package that offers tax breaks to businesses that hire veterans, and that repeals a 3 percent contract withholding requirement for government contractors.

CBO has re-evaluated the stimulus every three months, and its estimates for the total cost of varied. Initially the package was pegged at $787 billion, rose as high as $862 billion at one point, and it now projected to be $825 billion once all the money is paid out.

The non-partisan agency also has changed its model for the spending’s impact on the economy, and the new calculations show the Recovery Act did less than originally projected.

CBO said it has concluded there is less of an indirect multiplier effect of federal spending.

Those changes caused it to drop its estimates for total employment sustained by the spending in 2011 from between 1.2 million and 3.7 million down to between 600,000 and 3.6 million.

As for the long-term situation, CBO said its basic assumption is that each dollar of additional federal debt crowds out about a third of a dollar’s worth of private domestic capital.

CBO does not calculate crowding out in the short term, which is why the Recovery Act boosts the economy in the near term.

CBO: Stimulus hurts economy in the long run - Washington Times

Oh look! Another reason Ron Paul should be in charge!

 

[paulitician]

Really? What a bunch of braniacs they have working for the CBO these days. I could have told people that paying $250,000 per job created would be a drag on our Economy. Man,gotta see if there's any job openings at the CBO. I bet those dudes bank. These few jobs that were created will be a big net loss for Taxpayers in the long run. Who do people think pays for all these jobs? Here's a hint...It's not Obama.

 

[Ragnar]

CBO: Stimulus "a net drag on the economy"

Well duh.

The "stimulus" is really nothing more than "Cash for Clunkers" writ (extra extra) large. Waste, fraud and what should be felony battery of all future tax payers is all it ever was.

 

[Avorysuds]

For many it was never an issue of "how many jobs the stimulus created" as it was the sustainability of these jobs. If the Government could spend money forever and have no consequences then we could have 0% UE, however the issues in doing that are obvious. The problem some have is they can't understand that the problems will occur even in the short run.

And yes, Ron Paul has talked about this since the begging.

 

[BillyV]

I've forgotten more about economics than most posters on this forum, definitely including yourself, ever knew.
There is no basis whatever for the claim that federal debt ever has, ever can, or ever will "crowd out" private investment, although IF it drives up interest rates that could increase the cost of capital and that might hurt investment. Except that interest rates are so low right now, obviously that isn't a problem.
This is not fact based not because it goes against my "emotional based wisdom" but because it goes against, you know, the facts.

From the CBO report (Page 9):

ARRA’s long-run impact on the economy stems primarily from the resulting increase in government debt. To the extent that people hold their wealth in government securities rather than in a form that can be used to finance private investment, the increased debt tends to reduce the stock of productive private capital. In the long run, each dollar of additional debt crowds out about a third of a dollar’s worth of private domestic capital, CBO estimates. (The remainder of the rise in debt is offset by increases in private saving and inflows of foreign capital.) Because of uncertainty about the degree of crowding out, however, CBO’s range of estimates of ARRA’s long-run effects reflects the possibility that the extent of crowding out could be more or less than one-third of the added debt. Over the long term, the output of the economy depends on the stock of productive capital, the supply of labor, and productivity. The less productive capital there is as a result of lower private investment, the smaller will be the nation’s output over the long run.

Sounds reasonable to me; more debt in the hands of government, given a limited amount of capital, means less debt available to private enterprise.

 

[Conservative]

Well imagine that.

The Congressional Budget Office on Tuesday downgraded its estimate of the benefits of President Obama’s 2009 stimulus package, saying it may have sustained as few as 700,000 jobs at its peak last year and that over the long run it will actually be a net drag on the economy.

CBO said that while the Recovery Act boosted the economy in the short run, the extra debt that the stimulus piled up “crowds out” private investment and “will reduce output slightly in the long run — by between 0 and 0.2 percent after 2016.”

The analysis confirms what CBO predicted before the stimulus passed in February 2009, though the top-end decline of two tenths of a percent is actually deeper than the agency predicted back then.

All told, the stimulus did boost jobs and the economy in the short run, according to CBO’s models. At the peak of spending from July through September 2010 it sustained anywhere from 700,000 to 3.6 million, which lowered the unemployment rate by between four-tenths of a percent to 2 percent.

The Obama administration had promised 3.5 million jobs would be produced at the peak of spending.

For this current quarter CBO said the stimulus is sustaining between 600,000 and 1.8 million jobs, which has improved the unemployment rate by as much as 1 percent versus what it otherwise would have been.

The White House did not return a message seeking comment Tuesday afternoon, but the president has defended the stimulus package as a bulwark against an even weaker economy.

Earlier this fall he proposed another round of spending, calling for $447 billion in expanded tax breaks, additional aid to states to hire teachers and emergency workers, and more infrastructure spending.

That broad effort has stalled, though on Monday Mr. Obama signed a slim portion of the package that offers tax breaks to businesses that hire veterans, and that repeals a 3 percent contract withholding requirement for government contractors.

CBO has re-evaluated the stimulus every three months, and its estimates for the total cost of varied. Initially the package was pegged at $787 billion, rose as high as $862 billion at one point, and it now projected to be $825 billion once all the money is paid out.

The non-partisan agency also has changed its model for the spending’s impact on the economy, and the new calculations show the Recovery Act did less than originally projected.

CBO said it has concluded there is less of an indirect multiplier effect of federal spending.

Those changes caused it to drop its estimates for total employment sustained by the spending in 2011 from between 1.2 million and 3.7 million down to between 600,000 and 3.6 million.

As for the long-term situation, CBO said its basic assumption is that each dollar of additional federal debt crowds out about a third of a dollar’s worth of private domestic capital.

CBO does not calculate crowding out in the short term, which is why the Recovery Act boosts the economy in the near term.

CBO: Stimulus hurts economy in the long run - Washington Times

No shit! Really? No one (except possibly EVERY Republican on the planet) could have predicted any of that...

 

[The T]

Well imagine that.

The Congressional Budget Office on Tuesday downgraded its estimate of the benefits of President Obama’s 2009 stimulus package, saying it may have sustained as few as 700,000 jobs at its peak last year and that over the long run it will actually be a net drag on the economy.

CBO said that while the Recovery Act boosted the economy in the short run, the extra debt that the stimulus piled up “crowds out” private investment and “will reduce output slightly in the long run — by between 0 and 0.2 percent after 2016.”

The analysis confirms what CBO predicted before the stimulus passed in February 2009, though the top-end decline of two tenths of a percent is actually deeper than the agency predicted back then.

All told, the stimulus did boost jobs and the economy in the short run, according to CBO’s models. At the peak of spending from July through September 2010 it sustained anywhere from 700,000 to 3.6 million, which lowered the unemployment rate by between four-tenths of a percent to 2 percent.

The Obama administration had promised 3.5 million jobs would be produced at the peak of spending.

For this current quarter CBO said the stimulus is sustaining between 600,000 and 1.8 million jobs, which has improved the unemployment rate by as much as 1 percent versus what it otherwise would have been.

The White House did not return a message seeking comment Tuesday afternoon, but the president has defended the stimulus package as a bulwark against an even weaker economy.

Earlier this fall he proposed another round of spending, calling for $447 billion in expanded tax breaks, additional aid to states to hire teachers and emergency workers, and more infrastructure spending.

That broad effort has stalled, though on Monday Mr. Obama signed a slim portion of the package that offers tax breaks to businesses that hire veterans, and that repeals a 3 percent contract withholding requirement for government contractors.

CBO has re-evaluated the stimulus every three months, and its estimates for the total cost of varied. Initially the package was pegged at $787 billion, rose as high as $862 billion at one point, and it now projected to be $825 billion once all the money is paid out.

The non-partisan agency also has changed its model for the spending’s impact on the economy, and the new calculations show the Recovery Act did less than originally projected.

CBO said it has concluded there is less of an indirect multiplier effect of federal spending.

Those changes caused it to drop its estimates for total employment sustained by the spending in 2011 from between 1.2 million and 3.7 million down to between 600,000 and 3.6 million.

As for the long-term situation, CBO said its basic assumption is that each dollar of additional federal debt crowds out about a third of a dollar’s worth of private domestic capital.

CBO does not calculate crowding out in the short term, which is why the Recovery Act boosts the economy in the near term.

CBO: Stimulus hurts economy in the long run - Washington Times

No shit! Really? No one (except possibly EVERY Republican on the planet) could have predicted any of that...

Every Red-Blooded American Conservative-Classical Liberal that belives in the Republic and what the Founders gave us...

 

[paulitician]

Is anyone really surprised by this? Many future generations will be paying for this awful mess. It's very sad.