Obama's Stimulus: A Colossal Waste?

Discussion in 'Politics' started by Skull Pilot, Feb 25, 2009.

  1. Skull Pilot
    Offline

    Skull Pilot Platinum Member

    Joined:
    Nov 17, 2007
    Messages:
    31,668
    Thanks Received:
    4,476
    Trophy Points:
    1,130
    Ratings:
    +10,011
    RealClearPolitics - Articles - Print Article

    WASHINGTON -- Judged by his own standards, President Obama's $787 billion economic stimulus program is deeply disappointing. For weeks, Obama has described the economy in grim terms. "This is not your ordinary run-of-the-mill recession," he said at his Feb. 9 news conference. It's "the worst economic crisis since the Great Depression." Given these dire warnings, you'd expect the stimulus package to focus almost exclusively on reviving the economy. It doesn't, and for that, Obama bears much of the blame.

    The case for a huge stimulus -- which I support -- is to prevent a devastating downward economic spiral. Spending is tumbling worldwide. In the fourth quarter of 2008, the U.S. economy contracted at a nearly 4 percent annual rate. In Japan, the economy fell at a nearly 13 percent rate; in Europe, the rate was about 6 percent. These are gruesome declines. If the economic outlook is as bleak as Obama says, there's no reason to dilute the upfront power of the stimulus. But that's what he's done.

    His politics compromise the program's economics. Look at the numbers. The Congressional Budget Office (CBO) estimates that about $200 billion will be spent in 2011 or later -- after it would do the most good. For starters, there's $8 billion for high-speed rail. "Everyone is saying this is (for) high-speed rail between Los Angeles and Las Vegas -- I don't know," says Ray Scheppach, executive director of the National Governors Association. Whatever's done, the design and construction will occupy many years. It's not a quick stimulus.

    Then there's $20.8 billion for improved health information technology -- more electronic records and the like. Probably most people regard this as desirable, but here, too, changes occur slowly. The CBO expects only 3 percent of the money ($595 million) to be spent in fiscal 2009 and 2010. The peak year of projected spending is 2014 at $14.2 billion.

    Big projects take time. They're included in the stimulus because Obama and Democratic congressional leaders are using the legislation to advance many political priorities instead of just spurring the economy. At his news conference, Obama argued (inaccurately) that the two goals don't conflict. Consider, he said, the retrofitting of federal buildings to make them more energy efficient. "We're creating jobs immediately," he said.

    Yes -- but not many. The stimulus package includes $5.5 billion for overhauling federal buildings. The CBO estimates that only 23 percent of that would be spent in 2009 and 2010.

    Worse, the economic impact of the stimulus is already smaller than advertised. The package includes an obscure tax provision: a "patch" for the alternative minimum tax (AMT). This protects many middle-class Americans against higher taxes and, on paper, adds $85 billion of "stimulus" in 2009 and 2010. One problem: "It's not stimulus," says Len Burman of the nonpartisan Tax Policy Center. "(Congress was) going to do it anyway. They do it every year." Strip out the AMT patch, and the stimulus drops to about $700 billion, with almost 30 percent spent after 2010.

    The purpose of the stimulus is to minimize declines in one part of the economy from dragging other sectors down. The next big vulnerable sector seems to be state and local governments. Weakening tax payments create massive budget shortfalls. From now until the end of fiscal 2011, these may total $350 billion, says the Center on Budget and Policy Priorities (CBPP), a liberal advocacy group. Required to balance their budgets, states face huge pressures to cut spending and jobs or to raise taxes. All would worsen the recession and deepen pessimism.

    Yet, the stimulus package offers only modest relief. Using funds from the stimulus, states might offset 40 percent of their looming deficits, says the CBPP's Nicholas Johnson. The effect on localities would probably be less. Congress might have done more by providing large, temporary block grants to states and localities and letting them decide how to spend the money. Instead, the stimulus provides most funds through specific programs. There's $90 billion more for Medicaid, $12 billion for special education, $2.8 billion for various policing programs. More power is being centralized in Washington.

    No one knows the economic effects of all this; estimates vary. But Obama's political strategy stunts the impact from what it might have been. By using the stimulus for unrelated policy goals, spending will be delayed and diluted. There's another downside: "Temporary" spending increases for specific programs, as opposed to block grants, will be harder to undo, worsening the long-term budget outlook.

    Politics cannot be removed from the political process. But here, partisan politics ran roughshod over pragmatic economic policy. Token concessions (including the AMT provision) to some Republicans weakened the package. Obama is gambling that his flawed stimulus will seem to work well enough that he'll receive credit for restarting the economy -- and not blamed for engineering a colossal waste.

    Copyright 2009, Washington Post Writers Group

    The economy probably would have started to rebound by 2010 anyway and obama will say it's all his doing. the funny part is you Dimocrats will believe him.
     
    Last edited: Feb 25, 2009
  2. jillian
    Offline

    jillian Princess Supporting Member

    Joined:
    Apr 4, 2006
    Messages:
    69,551
    Thanks Received:
    13,012
    Trophy Points:
    2,220
    Location:
    The Other Side of Paradise
    Ratings:
    +22,427
    cause we soooo don't have enough whining threads on this subject.

    ODS....
     
  3. Skull Pilot
    Offline

    Skull Pilot Platinum Member

    Joined:
    Nov 17, 2007
    Messages:
    31,668
    Thanks Received:
    4,476
    Trophy Points:
    1,130
    Ratings:
    +10,011
    Yes Jillian we all know you think criticism is whining.

    the only speech you approve of is the type that leaves lip prints on the nether regions of Dimocrats.
     
    • Thank You! Thank You! x 1
  4. LiveUninhibited
    Offline

    LiveUninhibited Caffeine Junkie

    Joined:
    Feb 16, 2009
    Messages:
    503
    Thanks Received:
    62
    Trophy Points:
    28
    Ratings:
    +62
    Interesting to see a criticism that isn't based entirely upon the premise that government spending is bad. I'd rather see specific suggestions though. I don't think doing things that are useful for our economy in the long-run and provide some jobs can be called a total waste, but I do see why we may want more of that money to hit the economy ASAP. How would one do that?
     
  5. Skull Pilot
    Offline

    Skull Pilot Platinum Member

    Joined:
    Nov 17, 2007
    Messages:
    31,668
    Thanks Received:
    4,476
    Trophy Points:
    1,130
    Ratings:
    +10,011
    not that i am in favor of massive spending that does nothing more than expand government programs and expense in the future (like the stimulus does). But to answer your question, rather than giving states money that is to be spent on specific entitlement program expansion that will be difficult if not impossible to end once the federal money runs out leaving states to find the funding to keep those new and expanded programs afloat, block grants of money from the federal government would allow states to spend that money directly and quickly in areas of each state deemed to be most in need by individual state legislatures.

    But in the stimulus as is, we have the bulk of the spending to be done sometime in the future and most likely after the economy would have started to recover on its own. the real purpose of this stimulus was to centralize power in Washington and to do an end run around states' rights. the expansion of government and continued expense of what was supposed to be a one time shot in the arm is the tell.
     
  6. RetiredGySgt
    Online

    RetiredGySgt Platinum Member

    Joined:
    May 6, 2007
    Messages:
    39,513
    Thanks Received:
    5,897
    Trophy Points:
    1,140
    Location:
    North Carolina
    Ratings:
    +8,922
    Jillian LOVES to whine, she just doesn't like it when someone points out her GREAT LEADER is a Fraud and a failure. I remember well all her whines about the republican Congress and President Bush. Now she whines about others doing what she did. Of course when she did it, it was patriotic and just looking out for the Country.
     
  7. editec
    Offline

    editec Mr. Forgot-it-All

    Joined:
    Jun 5, 2008
    Messages:
    41,427
    Thanks Received:
    5,598
    Trophy Points:
    48
    Location:
    Maine
    Ratings:
    +5,617
    Longer term economic stimulus projects like building large infrastructure projects are a good idea.

    They provide stimulation immediately and over time, too. As it is the ability to count on longer term projects which gives confidence to people.

    Give how we've pissed away trillions of foolishness, my major complain about this stimulus is that it probably isn't large enough.

    But as I know that we can and will go back to this well, I'm not too upset about that.

    Of course, the converatives complain and warn us that if we overstimulate we will experience hyperinflation.

    But as long as the inflation doesn't become STAGFLATION, that's actually a good thing.

    Inflation will reduce the amount of goods we import and increase the amount of goods we export.

    Additionally, that means that the dollars we pay back are worth less than the dollars we borrowed.

    PART of what has been screwing this nation is the fact that our currency's value was too high compared to other nation's currencies.

    Since CHINA (as one example..the largest one, too) refuses to revalue their currency exchange with ours, they have benefitted by exporting to us.

    In essance they have been exporting their unemployment problems to us.

    I think we need to spend more, to borrow more and to drive down the value of the US dollar.

    The other added benefit of that (assuming again we don't go into stagflation) is the the american people, who are in DEBT will be paying back their mortgages and other debts with devalued dollars, too.
     
  8. KMAN
    Offline

    KMAN Senior Member

    Joined:
    Jul 9, 2008
    Messages:
    2,683
    Thanks Received:
    268
    Trophy Points:
    48
    Ratings:
    +269
    What sucks is we are going to be out of the recession by the time this money kicks in... This is piss poor planning by Obama, " the smartest man in the World"... It's no wonder Democrats don't run businesses... They would be broke before they even got the company up and running.
     
  9. Skull Pilot
    Offline

    Skull Pilot Platinum Member

    Joined:
    Nov 17, 2007
    Messages:
    31,668
    Thanks Received:
    4,476
    Trophy Points:
    1,130
    Ratings:
    +10,011
    Stimuli building projects that take years to plan don't do squat.

    not one infrastructure project that was not already in the works before the last election will see one shovelful of dirt turned over for at least 18 months if not 24 or 30.

    the the stimulus becomes what we should have been doing all along. there are billions collected at the state and federal level that were supposed to be specifically designated for highway and bridge maintenance.

    i ask you where has all that money been spent that our infrastructure is crumbling around our ears?

    taxes on utilities should be used to improve those utilities but have they?

    so the answer is as always more taxes. maybe not income taxes except for on those evil rich people and businesses of course but other taxes will rise because merely taking a couple hundred thousand more a year from the rich ain't gonna cut it. And since we've seen that government can't seem to spend taxes where they are supposed to be spent, that you believe giving even more money to those who have been nothing but irresponsible with the money they've already confiscated from us to spend as irresponsibly as they have done in the past boggles my mind.
     
    Last edited: Feb 25, 2009
  10. editec
    Offline

    editec Mr. Forgot-it-All

    Joined:
    Jun 5, 2008
    Messages:
    41,427
    Thanks Received:
    5,598
    Trophy Points:
    48
    Location:
    Maine
    Ratings:
    +5,617
    A reasonable complaint. Hence the emphasis by this ADmin on "shovel ready" projects.

    Yeah, that's probably true.

    No argument from me on that front. If any of you really want to see gangsterism on the state level, go look at your DOTS.
    I've been asking myself that question for many years.
    I don't know.

    Taxes deferred, of course.

    That's how the USA has been working for a mighty long time regardless of whether the Republicans or Democrats were at the helm.


    What you mean the $5 trillion in taxes on the superwealthy that have not collected in the last 8 years, thanks to Bush II's tax cuts, might have been a mistake?

    I'm shocked to read you finally are beginning to understand that.



    My complaints were more about the money that was NOT given to our government all along, actually.

    Both are minds are boggled, but apparently for slightly different reasons.
     

Share This Page