Doing Nothing is Actually Better Than Passing Stimulus in the Long Run

[KMAN]

Obama Stimulus Plan Worse than Doing Nothing - Political Machine - Politics Blog, Opinion and Analysis - AOL News

 

[jillian]

Because, of course, a propagandist for RedState has been right so often over the past eight years.

Don't you wingnuts get it??? YOU FAILED!!!

 

[dilloduck]

Because, of course, a propagandist for RedState has been right so often over the past eight years.

Don't you wingnuts get it??? YOU FAILED!!!

and that somehow gives Obama a pass to fail also ? Cmon Jillian. Nuff of the partisan crap.

 

[Skull Pilot]

that's the lawyer's version of critical thinking?

we won you lost nya nya nya

 

[Kevin_Kennedy]

Because, of course, a propagandist for RedState has been right so often over the past eight years.

Don't you wingnuts get it??? YOU FAILED!!!

Except that Bush and Congress didn't do nothing over the past eight years, and certainly didn't do nothing once this crisis hit. So I'm curious why anyone could possibly think that this round of hundreds of billions of wasted dollars will do any more than the last round of hundreds of billions of wasted dollars.

 

[driveby]

Because, of course, a propagandist for RedState has been right so often over the past eight years.

Don't you wingnuts get it??? YOU FAILED!!!

lather, rinse, repeat ........

 

[KMAN]

Because, of course, a propagandist for RedState has been right so often over the past eight years.

Don't you wingnuts get it??? YOU FAILED!!!

and that somehow gives Obama a pass to fail also ? Cmon Jillian. Nuff of the partisan crap.

She can't help it... Obama could commit murder (oh wait he does everyday with his abortion views)... Obama could break into a house and kill a couple of people and jillian would blame the people he killed... just ignore her like I do. Maybe she will leave if we do.

 

[Andrew2382]

Because, of course, a propagandist for RedState has been right so often over the past eight years.

Don't you wingnuts get it??? YOU FAILED!!!

you do realize these facts and stats come from the CBO (Congressional Budget Office)

Fail

 

[Jon]

Because, of course, a propagandist for RedState has been right so often over the past eight years.

Don't you wingnuts get it??? YOU FAILED!!!

If you actually believe that this stimulus is going to work, I question your sanity. The fact that you're buying everything these people say is pathetic. I almost pity you, but I know you're smart enough to know better.

 

[WillowTree]

Democrats won't be able to fix it.. They broke it, and deny it,, so they cannot fix it.. all they can do is blame Bush! They say it each and every day while burying their part in it.. No insight whatsoever.

 

[Jon]

Willow, your blaming Democrats for breaking it is just as bad as their thinking they are the only ones who can fix it.

 

[Munin]

I find it hard to believe that everyone here is an expert on economic matters and knows better then the economist experts that have been working on this plan probably for months or maybe even a year before Obama became the actual president.

So please, enlighten me what exactly is the reason that anyone would just want the government just do do nothing and watch at the following negative circle:
Too few spending (demand of products/services is dropping) -> Companies are oversupplying (Companies are making losses) -> Companies have to fire people in big numbers -> People all over the economy fear for their Jobs and are avoiding big spending (You don't spend big if you know you could loose your job next week or if your small business doesn't have any income) + unemployed people don't spend much either -> Too few spending -> ...

IMO this will lead to a depression if the government doesn't spend and breaks this circle and I really don't believe tax cuts alone will cut it because you don't buy something with a discount if you re not even sure you will have a job next week. Or is it that you don't see this circle of events happening? I agree that it may be a bit simplified, but that is in big lines the situation of economic deterioration. Normally I should have put the credit-crisis in there too (but that might have made it too complicated), because it is also one of the major factors (but you already know that that was the wall street bailout).

 

[editec]

Did it REALLY say that?

Or is this just more REPUBLICAN SPIN?

This from the REPORT, itself...

Principles for Fiscal Stimulus​

In the absence of any changes in policy, CBO projects
that the economy will produce about $1 trillion less output
per year than its estimated potential in each of 2009
and 2010 and significantly less than its potential in 2011
and 2012 as well (see Figure 12). The unemployment rate
is forecast to rise above 9 percent by early next year.
Many economists believe that a stimulative fiscal policy
(that is, an increase in spending or reduction in taxes
designed to foster faster economic growth in the short
run) is desirable under the current economic conditions.
Recessions are characterized by a self-reinforcing cycle—
firms cut production and employment because of a
shock, such as a falloff in sales—and the resulting reduction
in income and confidence among workers leads
them to reduce purchases, and sales fall even further. Fiscal
stimulus may dampen that cycle by increasing spending
by households, businesses, or governments. Some
degree of fiscal stimulus is automatic in a recession, as
lower incomes mean lower taxes and increased spending
for unemployment insurance benefits and nutrition assistance
(as described on page 4). Additional stimulus can
be provided through tax cuts or transfer payments (such
as expanded unemployment insurance) or by direct purchases
of goods and services by the federal government or
state and local governments.
Another significant source of economic stimulus is monetary
policy. The Federal Reserve has provided substantial
monetary stimulus, but with the financial sector in such
turmoil and a broad lack of confidence in the economy,
easing the availability of credit may not be enough to
both stabilize the financial system and provide a significant
boost to economic activity.
The uncertainty of the economic outlook suggests
another possible justification for a stimulative fiscal policy.
The problems in financial markets could be worse
than CBO’s forecast anticipates, and, as a result, the
economy could experience a more protracted period of
recession and subpar growth than indicated by that forecast.
An effective fiscal stimulus could serve as an insurance
policy against that risk.
In general, fiscal stimulus policies are most effective if
they are timely, cost-effective, and consistent with longrun
budget objectives:​

B

The timeliness of fiscal stimulus is critical. Ideally, the​

economic effects of the stimulus should match the​

period of economic weakness.​

• ​

The timing of the economic effects of fiscal stimulus​

will depend both on when the policies are​

enacted and when the policies affect spending by​

consumers, firms, and governments. When a recession​

is already under way and aggregate demand is

declining, the most effective stimulus policy would

be one that was enacted rapidly and that would
affect spending quickly; otherwise, the policy
would risk postponing stimulative effects until the
economy was already recovering.
• ​

A fiscal stimulus that continues after the period​

of economic weakness runs the risk of causing​

higher inflation and interest rates. (That period,​

however, could encompass some time after the​

recession when the economy may still be producing

well below its potential output.) But a fiscal

stimulus that ends before the economy has started
to regain its footing runs the risk of exacerbating
that weakness when the stimulus ends.
B ​

A desirable stimulus policy should increase aggregate​

demand as much as possible for a given budgetary​

cost; that is, it should be cost-effective.​

• ​

The most cost-effective policies would provide​

additional resources to the households, firms, or​

governments most likely to use them for additional​

purchases of goods and services. Different policies​

that might be included in a stimulus package differ

widely in this respect.

• ​

Efforts to push out spending too quickly may​

result in a less well considered or less efficient use​

of taxpayers’ money.​

• ​

Policies that accelerate costs that the government​

will ultimately incur in any event (for example, ​

delaying tax liabilities or accelerating planned​

spending) would have little net cost but might provide​

economic benefits.

B ​

It is desirable that efforts at short-term fiscal stimulus​

not significantly exacerbate the nation’s long-run​

fiscal imbalance.​

• ​

Policies that may be desirable and beneficial in the​

short term may or may not be beneficial in addressing​

the nation’s long-term fiscal challenges.​

• ​

Fiscal stimulus adds to the federal debt, already a​

concern in the light of growing demands on the​

federal budget from the aging of the baby boomers​

and, especially, from the rising cost of health care.​

For every $100 billion in additional federal debt,

future taxpayers will probably have to pay about $5

billion a year in interest costs.
• ​

Large and persistent federal deficits tend to slow​

economic growth in the long term. They reduce​

the national saving rate and capital accumulation​

and thereby slow the growth of the economy’s​

capacity to produce.

• ​

Spending and tax policies that enhance future productive​

capacity offset some of the potential​

adverse long-run effects of the additional debt associated​

with short-term stimulus.​

• ​

A large increase in debt poses risks. At some point​

investors here and abroad might decide that they​

have enough Treasury securities in their portfolios:​

From then on, they might continue to purchase​

those securities only if offered higher interest rates.

The accumulation of Treasury debt risks the possibility

that, in some future financial crisis, investors
might not “flee to quality” by buying U.S. Treasury
securities but would instead purchase some other
assets, leaving the government with less flexibility
or much higher costs for dealing with such a
situation.
• ​

Finally, spending or tax changes intended to be​

temporary may be difficult to reverse later.​

The size of the effects of fiscal stimulus on the economy is​

quite uncertain and subject to considerable debate among​

economists. Some argue, for example, that last summer’s​

fiscal stimulus had little effect; others argue that it had a

more significant effect. But there is generally little dispute

that spending increases or tax cuts would increase GDP
in the short run under the current circumstances.​

source

I don't know about you guys, but what I read from the above is basically this:

Done well, it might help. Done badly it might hurt.

Well no shit, sherlock!

How many fucking years does one have to study economics to understand that?

 

[Kevin_Kennedy]

Why would they have been working on this plan a year before Obama took office when no mainstream economists knew this recession was coming? Why is government spending all of a sudden a cure-all for our economic woes, when we certainly didn't have a lack of government spending beforehand?

Now I don't know if we have any professional economists on this board, despite having some members who certainly do know a lot about economics. That being said, there are plenty of professional economists who predicted this recession years ago, and are now saying that less taxes and less government spending is the way to go.

 

[Munin]

Did it REALLY say that?

Or is this just more REPUBLICAN SPIN?

This from the REPORT, itself...

source

I don't know about you guys, but what I read from the above is basically this:

Done well, it might help. Done badly it might hurt.

Well no shit, sherlock!

How many fucking years does one have to study economics to understand that?

I would have given you another rep for this good post (I can't anymore), but I ll say thx instead for this useful post .

"Recessions are characterized by a self-reinforcing cycle—
firms cut production and employment because of a
shock, such as a falloff in sales—and the resulting reduction
in income and confidence among workers leads
them to reduce purchases, and sales fall even further."

This report also seems to confirm the circle that I described .

 

[editec]

The more economic forcasts I read, the more I think that our economists are the astrologers of our age.

Revered by kings as wise pronosticators of the future and completely and totally full of shit.

Nobody knows nuttin, folks.

The genuiuses are all flying by the seat of their pants and praying that they have a clue.

 

[Munin]

The more economic forcasts I read, the more I think that our economists are the astrologers of our age.

Revered by kings as wise pronosticators of the future and completely and totally full of shit.

Nobody knows nuttin, folks.

The genuiuses are all flying by the seat of their pants and praying that they have a clue.

There was at least one guy who actually predicted this recession in detail: Nouriel Roubini: The economist who predicted worldwide recession | Business | The Guardian