A no BS, non partisan examination of the success of Obama's stimulus package

[OODA_Loop]

If I explained how a hole in your gas tank will cause fuel to leak, would you then conclude that plugging the hole will fill up the fuel tank?

No I would conclude the tank no longer leaks.

Hole = Leak

No hole = No Leak

No money in pocket = No demand thus no jobs.

Money in pocket = Demand thus jobs.

 

[The T]

If I explained how a hole in your gas tank will cause fuel to leak, would you then conclude that plugging the hole will fill up the fuel tank?

No I would conclude the tank no longer leaks.

Hole = Leak

No hole = No Leak

No money in pocket = No demand thus no jobs.

Money in pocket = Demand thus jobs.

You address a drone.

 

[asterism]

Well, I think Ifitsme is correct that a private sector job is created with debt, as is the UI benefit. However, there is a distinction. The UI benefit has a stimulus effect when the recipient spends the benefit. The private sector job has that same stimulus. But, it also has an econ effect in that the work created something. For example, a pool got cleaned. Someone swims and gets exercise; they buy a new bathing suit or sun screeen.

Moreover, in general the gop has an argument that the longer a person remains a long term unemployed statistic, the more likely it becomes he’ll never be employed.

HOWEVER, public debt is measured by debt/gnp. I just don’t see how in the current econ environment how the loss in gnp, caused by the decline in consumer demand from people on UI having less money to spend because they took low paying jobs, would not offset any lower amount of public debt from not paying the UI.

In short, we need more growth. Not extending UI would decrease demand.

I agree.

Also as a matter of policy this isn't extended Unemployment Insurance, it's welfare. That's fine if the priority is to provide people in need with basic subsistence, but don't call it something else for marketing purposes. Anyone unemployed for 5 years has something else going on beyond a shitty economic climate.

I'm not disagreeing, but I believe a lot of these people have had some kind of job dangled for them, but they pay is lousy and/or it's part time. Early social secuity and the low paying job are actually worth holding out for, in their view. The only moral judgment I'd make is the UI is a stimulus, and people should act in their own econ self-interest.

That's the problem, that they are being paid not to work when many could be working. I had to start over in life and my first new job paid a salary of $18,000 per year plus commissions. That led to other opportunities and I already make much more. People holding out for a job should not be doing so on the government's dime.

 

[Billy000]

I really don't understand why the cons here would be so against demand side economics like The Recovery Act. It is the most effective use of stimulus. Let's put the idea of tax cuts for the wealthy a rest. It doesn't work. Trickle down economics is the biggest political lie there is.

Well the "demand side economics like the Recovery Act" didn't work out. After the failure to meet the goals as communicated by the Administration the talking points changed to claim that without the program there would not be a recovery at all.

Also, the "most effective use of stimulus" is a moving target. First it was going to create high levels jobs and growth, then it "created or saved" millions of jobs and kept us from the brink, and now it's used to both justify more government welfare while at the same time saying it's necessary or there won't be a recovery - except we're being told how great the economy is.

So forgive me if I'm skeptical.

Youre so consumed with the political side of this issue. What really matters at this point is what the stimulus actually did. What it actually did was save us from an economic collapse and put us in a recovery. A slow one yes, but it is still a recovery.

Again, the reason why the stimulus didn't do all that was promised is because it was too small. Blame republicans for that. End of story.

 

[ScienceRocks]

If I explained how a hole in your gas tank will cause fuel to leak, would you then conclude that plugging the hole will fill up the fuel tank?

No I would conclude the tank no longer leaks.

Hole = Leak

No hole = No Leak

No money in pocket = No demand thus no jobs.

Money in pocket = Demand thus jobs.

Larger middle class with high paid tech, science and r@d jobs = more money to expand businesses and more wealth.

 

[Billy000]

More matter of fact statements from the one-variable economist ?

Okay, let's put the tax cut issue aside for now. How about you tell me why demand side economic policies shouldn't be utilized?

Artificially bolstering demand through debt is unsustainable. If it's short and targeted then it can be effective. 5 years of paying someone to not work is neither short nor targeted.

Boosting supply/demand through tax cuts also puts us in debt. The difference is that putting the focus on demand is what created the most stimulus.

The stimulus cost tax payers 10 billion per month, but it generated 16.7 billion a month in stimulus.

 

[Quantum Windbag]

I really don't understand why the cons here would be so against demand side economics like The Recovery Act. It is the most effective use of stimulus. Let's put the idea of tax cuts for the wealthy a rest. It doesn't work. Trickle down economics is the biggest political lie there is.

Well the "demand side economics like the Recovery Act" didn't work out. After the failure to meet the goals as communicated by the Administration the talking points changed to claim that without the program there would not be a recovery at all.

Also, the "most effective use of stimulus" is a moving target. First it was going to create high levels jobs and growth, then it "created or saved" millions of jobs and kept us from the brink, and now it's used to both justify more government welfare while at the same time saying it's necessary or there won't be a recovery - except we're being told how great the economy is.

So forgive me if I'm skeptical.

Youre so consumed with the political side of this issue. What really matters at this point is what the stimulus actually did. What it actually did was save us from an economic collapse and put us in a recovery. A slow one yes, but it is still a recovery.

Again, the reason why the stimulus didn't do all that was promised is because it was too small. Blame republicans for that. End of story.

I am supposed to blame Republicans for the fact that Democrats made the stimulus too small even though it was bigger than what Obama asked for?

No wonder you think the original article is non partisan.

 

[asterism]

I really don't understand why the cons here would be so against demand side economics like The Recovery Act. It is the most effective use of stimulus. Let's put the idea of tax cuts for the wealthy a rest. It doesn't work. Trickle down economics is the biggest political lie there is.

Well the "demand side economics like the Recovery Act" didn't work out. After the failure to meet the goals as communicated by the Administration the talking points changed to claim that without the program there would not be a recovery at all.

Also, the "most effective use of stimulus" is a moving target. First it was going to create high levels jobs and growth, then it "created or saved" millions of jobs and kept us from the brink, and now it's used to both justify more government welfare while at the same time saying it's necessary or there won't be a recovery - except we're being told how great the economy is.

So forgive me if I'm skeptical.

Youre so consumed with the political side of this issue. What really matters at this point is what the stimulus actually did. What it actually did was save us from an economic collapse and put us in a recovery. A slow one yes, but it is still a recovery.

Again, the reason why the stimulus didn't do all that was promised is because it was too small. Blame republicans for that. End of story.

I don't believe that the stimulus saved us from economic collapse because no economic collapse was forecast as a result of not passing the law and never in history has a stimulus program prevented economic collapse.

 

[asterism]

Okay, let's put the tax cut issue aside for now. How about you tell me why demand side economic policies shouldn't be utilized?

Artificially bolstering demand through debt is unsustainable. If it's short and targeted then it can be effective. 5 years of paying someone to not work is neither short nor targeted.

Boosting supply/demand through tax cuts also puts us in debt. The difference is that putting the focus on demand is what created the most stimulus.

The stimulus cost tax payers 10 billion per month, but it generated 16.7 billion a month in stimulus.

What's the net return on that 16.7 billion?

 

[ScienceRocks]

Artificially bolstering demand through debt is unsustainable. If it's short and targeted then it can be effective. 5 years of paying someone to not work is neither short nor targeted.

Boosting supply/demand through tax cuts also puts us in debt. The difference is that putting the focus on demand is what created the most stimulus.

The stimulus cost tax payers 10 billion per month, but it generated 16.7 billion a month in stimulus.

What's the net return on that 16.7 billion?

Someone lives in the 18th century

 

[Spoonman]

Okay, let's put the tax cut issue aside for now. How about you tell me why demand side economic policies shouldn't be utilized?

Artificially bolstering demand through debt is unsustainable. If it's short and targeted then it can be effective. 5 years of paying someone to not work is neither short nor targeted.

Boosting supply/demand through tax cuts also puts us in debt. The difference is that putting the focus on demand is what created the most stimulus.

The stimulus cost tax payers 10 billion per month, but it generated 16.7 billion a month in stimulus.

so if we made a profit why did the deficit mushroom to 17 trillion

 

[Spoonman]

 

[itfitzme]

Artificially bolstering demand through debt is unsustainable. If it's short and targeted then it can be effective. 5 years of paying someone to not work is neither short nor targeted.

Actually, unemployment insurance does not "pay someone to not work" either hypothetically, in implementation, or in factual outcome.

I believe you if you say that you would sit around doing nothing while collecting unpemloyment insurance and lying to the employment development department. Beyond that, you have created a fantacy with no basis in reality.

Also, all demand and supply, all of the money supply, all economic output exists because of borrowing. Every single dollar in the economy exists because it was borrowed. Every dollar is exactly accounted for by debt.

So saying "Artificially bolstering demand through debt" is completely meaningless on the outset because there is no "not debt".

Ok, I'll be more clear. Artificially bolstering demand through net increases in liabilities is unsustainable.

I get that you would like to use the implied subtext of "artificial" to attach a sense of "it is bad" but there is no merit to it. The money supply is "artificial". There is no such distinction as "natural" vs "artificial" here. There is no thing as "artificially bolstering demand". The stimulation of economic output is, in fact, sustainable. All liabilities in the economy are exactly matched by assets.

It sounds all great, this "artificial boltering of demand" but that is as far as it goes. The reality of the money supply is that it is all created from a liability which is exactly matched to an asset.

The reality is that there is no general distinction between what economic agent does the borrowing, whether it be gov't, households, or firms as long as the result is that of increasing employment amd output. The entire money supply is simply an artificial, man made tool, that increases the efficiency of economic transactions.

The difference between a GDP of $10 trillion and a GDP of $11 trillion is $1 trillion in additional money supply, consumption, income, production and the additional individuals who are working, receiving the income, producing the goods, and consuming the goods. It is entirely sustainable. How the economy gets there is irrelevant.

Once one more person is making the stuff that one more person consumes and the money supply has increased to the amount of money that accounts for that one more yearly income and consumption then it is physically indistinguishable from any other one more person working and consuming. As well, as the one more sum of money that accounts for that one more basket of goods and one more income are borrowed regardles of whether it is the govt, households, or firms doing the borrowing, how that additional money comes about is entirely irrelevant as it is physically indistinguishable from any other money.

The fundamental difference between a good economy and a bad economy is in the employment level. What is physically distinguishable is the difference between an individual working and producing as opposed to an individual not working and producing.

The money is simply an artificial tool that is used to measure the labor hours spent. In fact, in the final analysis, that is all it accounts for, labor hours. The labor hours are the real, natural thing. The money is an artificial tool.

 

[asterism]

Actually, unemployment insurance does not "pay someone to not work" either hypothetically, in implementation, or in factual outcome.

I believe you if you say that you would sit around doing nothing while collecting unpemloyment insurance and lying to the employment development department. Beyond that, you have created a fantacy with no basis in reality.

Also, all demand and supply, all of the money supply, all economic output exists because of borrowing. Every single dollar in the economy exists because it was borrowed. Every dollar is exactly accounted for by debt.

So saying "Artificially bolstering demand through debt" is completely meaningless on the outset because there is no "not debt".

Ok, I'll be more clear. Artificially bolstering demand through net increases in liabilities is unsustainable.

I get that you would like to use the implied subtext of "artificial" to attach a sense of "it is bad" but there is no merit to it. The money supply is "artificial". There is no such distinction as "natural" vs "artificial" here. There is no thing as "artificially bolstering demand". The stimulation of economic output is, in fact, sustainable. All liabilities in the economy are exactly matched by assets.

It sounds all great, this "artificial boltering of demand" but that is as far as it goes. The reality of the money supply is that it is all created from a liability which is exactly matched to an asset.

The reality is that there is no general distinction between what economic agent does the borrowing, whether it be gov't, households, or firms as long as the result is that of increasing employment amd output. The entire money supply is simply an artificial, man made tool, that increases the efficiency of economic transactions.

The difference between a GDP of $10 trillion and a GDP of $11 trillion is $1 trillion in additional money supply, consumption, income, production and the additional individuals who are working, receiving the income, producing the goods, and consuming the goods. It is entirely sustainable. How the economy gets there is irrelevant.

Once one more person is making the stuff that one more person consumes and the money supply has increased to the amount of money that accounts for that one more yearly income and consumption then it is physically indistinguishable from any other one more person working and consuming. As well, as the one more sum of money that accounts for that one more basket of goods and one more income are borrowed regardles of whether it is the govt, households, or firms doing the borrowing, how that additional money comes about is entirely irrelevant as it is physically indistinguishable from any other money.

The fundamental difference between a good economy and a bad economy is in the employment level. What is physically distinguishable is the difference between an individual working and producing as opposed to an individual not working and producing.

The money is simply an artificial tool that is used to measure the labor hours spent. In fact, in the final analysis, that is all it accounts for, labor hours. The labor hours are the real, natural thing. The money is an artificial tool.

Interesting. I don't think it's true, but let's see:

So why keep record of the debt at all, and why not monetize $20 Trillion today and distribute it equally to all citizens?

 

[velvtacheeze]

Well, the GOP's policies led to their deserved loss of Congress in 2006, followed by their deserved loss of the White House in 2008.

The conservative "no stimulus" was a total flop.

 

[Listening]

Well, the GOP's policies led to their deserved loss of Congress in 2006, followed by their deserved loss of the White House in 2008.

The conservative "no stimulus" was a total flop.

And what happened in 2010 ?

Get a clue cheesebrain.

 

[Billy000]

Well the "demand side economics like the Recovery Act" didn't work out. After the failure to meet the goals as communicated by the Administration the talking points changed to claim that without the program there would not be a recovery at all.

Also, the "most effective use of stimulus" is a moving target. First it was going to create high levels jobs and growth, then it "created or saved" millions of jobs and kept us from the brink, and now it's used to both justify more government welfare while at the same time saying it's necessary or there won't be a recovery - except we're being told how great the economy is.

So forgive me if I'm skeptical.

Youre so consumed with the political side of this issue. What really matters at this point is what the stimulus actually did. What it actually did was save us from an economic collapse and put us in a recovery. A slow one yes, but it is still a recovery.

Again, the reason why the stimulus didn't do all that was promised is because it was too small. Blame republicans for that. End of story.

I don't believe that the stimulus saved us from economic collapse because no economic collapse was forecast as a result of not passing the law and never in history has a stimulus program prevented economic collapse.

You're just making things up. We were losing 500,000+ jobs a month. There was no recovery on sight. And even if there was a recovery in sight, obviously it was going to take a long time to start.

 

[Londoner]

Many of you believe The Recovery Act was a failure simply because it fell short of expectations, but that does not mean it was a failure - not by a long shot.

Here is an interesting point.

Most people don't know what economic stimulus is (at the practical or theoretical level) - nor do they know how it is designed to protect against the demand shortfalls that lead to spiraling job loss.

Let's construct a hypothetical universe so we can see spiraling job loss in action:
Let's imagine the elderly parents of middle class consumers get sick. Let's further imagine that because of this sickness those aforementioned middle consumers have to help mom and dad with medical expenses, which means that they can no longer afford to eat at the local restaurant, which means the local restaurant owner has to layoff waiters and cooks, which means that the waiters and cooks can no longer afford to go to the shoe store, which means the shoe store owner has to layoff his workers, which means those workers can no longer afford to go to the movie theater, which means the movie theater owner has to layoff his employees, which means his employees can't afford to go to the ice cream parlor, which means the ice cream parlor owner has to layoff his employees who now can't afford to buy new clothes, which means that the owner of the clothing store has to lay off his workers, etc., etc. job loss ad infinitum . . .

In this imaginary world we are allowed to go back in time. So we go back to the point where middle-class consumers are having trouble paying for their parent's healthcare and we create a "demand-side" stimulus program to helps old people with some of their health costs. Call it MedicaSecurity. As a result of MedicaSecurity, middle class families are less burdened with the high cost of parental health care, and, as a result, they now have more spending money. This means they can go the restaurant, which means the restaurant owner doesn't have to layoff restaurant workers, which means the restaurant workers can still afford to go out to the movie theater, which means the movie theater owner doesn't have to layoff his movie theater workers, which means the movie theater workers can still afford to go to the bakery, which means the bakery owner doesn't have to layoff his bakery workers, which means the bakery workers can still afford to go to the clothing store, and on and until the economy grows ever upward on the heals of glorious spending . . . which jump starts the economy . . . and leads to increased revenue . . . which allows us pay for MedicaSecurity... and then some.

Problem solved.

Wait if people keep more of their own money in their pockets they create jobs ?

If your middle class doesn't make sufficient wages to consume what the capitalist produces, the economy will eventually die (because consumers will be unable to buy in sufficient volume to justify Capital investment and job growth). The American Economy Depends on Robust Consumption. But you can't fuel robust consumption by trying to cut labor costs to compete with Chinese, Taiwanese and Vietnamese sweatshops. Why? Because workers are also consumers, and American consumers could not perform the necessary consumption with sweatshop wages. (this has always been a very tricky problem for capitalism. Its desire for ultra cheap labor costs ends up undermining the consumer demand it requires to sustain job growth)

This is why need to balance supply side policies with demand-side - which we did in the postwar years, which is why we saw such spectacular growth. What are demand side policies and why does the Conservative Movement never mention them? (Hint: they are owned by the suppliers)

The Demand-Side policies of the postwar years (high wages/benefits, solid entitlements, government programs that stimulate demand) put tons of money in middle class wallets. As a result, Capital had an incentive to invest hugely, even with Eisenhower's tax rates over 90% on the 1%.

Lesson one: Capital will always find a way to innovate and add jobs if consumers have a lot of spendin' money.

In 1980, because of the stagflation that started in 1973, Reagan convinced us to abandon the postwar Demand-Side policies that accompanied wild growth in the 50s-60s. So we waged war against the expensive American wage/benefit system by destroying unions and shipping jobs to ultra cheap and profitable labor markets in freedom-hating dictatorships like Communist China. (This delivered massive profits to big business, including Walmart, which gets its products manufactured by workers making under $3/day. FYI: no amount of tax cuts and deregulation could enable an American workforce to compete for those jobs, unless they were willing to accept $2/day and living under a bridge, eating dog food. Don't take my word for it about where out biggest retailer gets its products made, go into any Walmart and read the labels on the clothing)

In addition to moving production to country's that talk radio ironically teaches us to hate, the Reagan Revolution cut the majority of "Demand" centered programs. Meaning: the Gipper destroyed programs that, during the postwar years, effectively reduced middle class cost of living so that consumers had more purchasing power (which lead to spectacular economic growth. Again: capitalists will do anything to capture the disposable income in middle class wallets. They will innovate and add jobs as long as people are robustly buying their products. This is why demand centered policies are so effective - because if there is more money in the wallets of consumers, Capital will always pour into the system to get that money).

In the pre-Reagan era, the postwar consumer was protected partly through the enforcement of antitrust laws, which made it harder for companies to form no-compete zones where they could hold consumers hostage to ever rising prices. Reagan, funded heavily by big business, replaced the antitrust era with an era of mega-mergers, thus awarding most major sectors of the American economy to highly centralized and politically connected monopolies. This made a narrow class of Americans ultra wealthy while cannibalizing average consumers inside a poorly hidden network of big business monopolies. Additionally, we slowly weakened the safety net so that recessionary cycles claimed more victims, and thus pulled more consumers out of the economy. Finally, we changed the role of the Federal Reserve from its postwar focus on full employment to it's post-Carter focus on fighting inflation through the imposition of austerity on the middle and lower classes. As a result of all the Reagan-era policies, the middle and lower class had far less spending money. This meant they couldn't buy what the capitalist was selling, a fact which severely dampened economic growth. In response to this, the Reagan Revolution greatly expanded credit to the consumption classes, effectively replacing wage-based consumption with debt based consumption. This created strong economic growth in the 80s & 90s, but it eventually crashed when the consumer debt levels finally reached a tipping point under Bush. Americans finally ran out of the ability to borrow. It got so bad that they leveraged the last thing with any value, their homes.

We were sold a pack of poisonous lies in 1980. We were told that we only had to worry about suppliers (through tax cuts, deregulation, subsidies and bailouts), and that demand would take care of itself. We bought into it hook line and sinker. And then we watched the suppliers take their historic Reagan Tax Cuts and slowly start shifting their production to Communist China... leaving the middle class having to borrow money they used to get in wages. Reagan's great credit boom certainly did fuel economic growth . . . but the middle class eventually bumped into its borrowed-against future. And now the game is over. The great American Consumer is Dead. His job is in China, and his country is owned by a very small group of corporations (and their investors) who fund elections, staff government and control Washington.

 

[velvtacheeze]

Well, the GOP's policies led to their deserved loss of Congress in 2006, followed by their deserved loss of the White House in 2008.

The conservative "no stimulus" was a total flop.

And what happened in 2010 ?

Get a clue cheesebrain.

40 million fewer voters showed up, leaving the vote up to angry, bitter old whites who miss the crappy 1950s. That's the only mistake Democrats made, was not voting in the numbers they did in 2008 and 2012.

 

[Listening]

Well, the GOP's policies led to their deserved loss of Congress in 2006, followed by their deserved loss of the White House in 2008.

The conservative "no stimulus" was a total flop.

And what happened in 2010 ?

Get a clue cheesebrain.

40 million fewer voters showed up, leaving the vote up to angry, bitter old whites who miss the crappy 1950s. That's the only mistake Democrats made, was not voting in the numbers they did in 2008 and 2012.

And.....

That means you Affirmative Action Failure got his just deserts.

Don't look for one dynamic on one day and then play to another the next.

Obama got his ass handed to him in 2010....same as the GOP did in 2006/2008.

Pure and simple.