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Stimulus package full of pork?

I'm reading through all 600+ pages and very little in the bill doesn't seem like it would be useful.

Can anyone point me to some specific instances of pork or waste spending?

So far all I found was a vague heading for "Aeronautics" under some NASA money.

Download the PDF:

http://readthestimulus.org/hr1_text.pdf

Re: Stimulus package full of pork?

quote:

Originally posted by Clovis I'm reading through all 600+ pages and very little in the bill doesn't seem like it would be useful. Can anyone point me to some specific instances of pork or waste spending? So far all I found was a vague heading for "Aeronautics" under some NASA money. Download the PDF: http://readthestimulus.org/hr1_text.pdf

I'm not being sarcastic, but did you not read the list of items where spending is going from the "stimulus" thread?

Aside from all of the previously listed examples below, here is a new blatant example of one uncovered today and discussed in the Washington Times about Democratic House Appropriations Committee Chairman David R. Obey. His son is the chief lobbyist for the National Parks Conservation Association, and it was uncovered that the "stimulus" bill had $2.25 billion in there for the National Park Service. This amount is equal to their entire yearly budget, and 3 times as much as what the Senate Appropriations Committee approved for them.

Only $30 billion is set aside for infrastructure. What's even more deceitful, in my opinion, is that 90% of the spending is not going to happen until 2010, which coincidentally happens to be a major election year...hmmmm. But anyway there are millions ($150 I think) for the Smithsonian, $400 million for the National Endowment of the Arts, $400 million to NASA for "climate change research" (I thought that science was settled), millions to re-sod the national mall, $4+ billion to ACORN and other groups of the like, $25 million for new ATV trails.... (from a different post) There's $81 billion for Medicaid, $36 billion for expanded unemployment benefits, $20 billion for food stamps, and $83 billion for the earned income credit for people who don't pay income tax. How are any of these things, not including several others not listed, going to help people get hired to do work? Even the infrastructure type jobs like road construction and bridges, etc. are just temporary things and not actual career jobs with businesses.

There's also a story in The Hill today that even illegal aliens will get between $500-$1000 checks from the government. It's in there. It's called, buying a massive block of voters. This is exactly why there's such an urgency to speed it through the voting process... they don't want people to keep uncovering all this shit.

The weak and the failing are being propped up at the expense of the private sector entities that succeed in their business practices, and that's going to kill economic growth.

Re: Re: Stimulus package full of pork?

quote:

Originally posted by The17sss I'm not being sarcastic, but did you not read the list of items where spending is going from the "stimulus" thread? Aside from all of the previously listed examples below, here is a new blatant example of one uncovered today and discussed in the Washington Times about Democratic House Appropriations Committee Chairman David R. Obey. His son is the chief lobbyist for the National Parks Conservation Association, and it was uncovered that the "stimulus" bill had $2.25 billion in there for the National Park Service. This amount is equal to their entire yearly budget, and 3 times as much as what the Senate Appropriations Committee approved for them. Only $30 billion is set aside for infrastructure. What's even more deceitful, in my opinion, is that 90% of the spending is not going to happen until 2010, which coincidentally happens to be a major election year...hmmmm. But anyway there are millions ($150 I think) for the Smithsonian, $400 million for the National Endowment of the Arts, $400 million to NASA for "climate change research" (I thought that science was settled), millions to re-sod the national mall, $4+ billion to ACORN and other groups of the like, $25 million for new ATV trails.... (from a different post) There's $81 billion for Medicaid, $36 billion for expanded unemployment benefits, $20 billion for food stamps, and $83 billion for the earned income credit for people who don't pay income tax. How are any of these things, not including several others not listed, going to help people get hired to do work? Even the infrastructure type jobs like road construction and bridges, etc. are just temporary things and not actual career jobs with businesses. There's also a story in The Hill today that even illegal aliens will get between $500-$1000 checks from the government. It's in there. It's called, buying a massive block of voters. This is exactly why there's such an urgency to speed it through the voting process... they don't want people to keep uncovering all this shit. The weak and the failing are being propped up at the expense of the private sector entities that succeed in their business practices, and that's going to kill economic growth.

So much of the spending packages you quote in the "millions" are for all intents and purposes irrelevant. I dunno if you've ever done a budget, but when you're stocking a budget plan there's always small things thrown in there for flexibility purposes in the event of cost overruns for critical projects. Granted this is the federal government which is different from a business, but let's focus ... it's a waste of time to argue a million here or a million there.

Many of the actual substantive parts of the bill that you mentioned, which numbered in the billions, such as the expansion of unemployment benefits are WELL KNOWN and WELL ESTABLISHED economic stabilizers. They help dampen fluctations in real GDP. If you think about it, these programs will maintain a minimum level of consumer spending because this spending is largely conduced through necessity. In other words, the savings rate adjustment from these programs have less elasticity than tax cutting programs for individuals who might have the luxury of saving.

You are correct that some of these initiatives are not going to actively get people back to work and thus provide sustainable increases in GDP. Some of them merely provide a floor that prevents things from deteriorating to shit until the business cycle naturally improves. However, if that's your primary concern I'm afraid your priorities are grossly misplaced. If you want truly fast acting stimulus, tax cuts are completely worthless. For one, in this environment, it will do NOTHING to restore consumer confidence and encourage investment. Companies and EVERYONE are scared shitless and it's NOT taxes which is why they're hesitant to spend/invest. We're seeing a very weird negative externality where the private sector is leaving HUGE swathes of business open that governments need to fill. It's the complete opposite of the economic theory of crowding out ... it's not completely weird, it just hasn't been seen since the great depression.

Anyway in the immortal words of Keynes:

quote:

�To dig holes in the ground,� paid for out of savings, will increase, not only employment, but the real national dividend of useful goods and services. It is not reasonable, however, that a sensible community should be content to remain dependent on such fortuitous and often wasteful mitigations when once we understand the influences upon which effective demand depends.

In other words, we're experiencing a severe market externality where the private sector has buckled. We need to stimulate demand via the public sector by spending a crapload of money quickly otherwise we're going to be screwed in the long run for far more than doing nothing at all (case in point Japan's lost decade).

I haven't posted here in a while but does ANYONE still thing that we didn't need the bailouts and that we don't need this fiscal stimulus bill??? I mean shit, when I sounded the warnings back in 2008 that this shit was going to get REALLY bad and it was going to translate down from wall street to mainstreet very quickly I think I was confronted with a lot of skepticicism.

I don't think there's any better way to put it.

This article sums up nicely why I'm pissed off at this pork filled "stimulus" bill

quote:

January 30, 2009 Op-Ed Columnist Cleaner and Faster By DAVID BROOKS Throughout 2008, Larry Summers, the Harvard economist, built the case for a big but surgical stimulus package. Summers warned that a �poorly provided fiscal stimulus can have worse side effects than the disease that is to be cured.� So his proposal had three clear guidelines. First, the stimulus should be timely. The money should go out �almost immediately.� Second, it should be targeted. It should help low- and middle-income people. Third, it should be temporary. Stimulus measures should not raise the deficits �beyond a short horizon of a year or at most two.� Summers was proposing bold action, but his concept came with safeguards: focus on the task at hand, prevent the usual Washington splurge and limit long-term fiscal damage. Now Barack Obama is president, and Summers has become a top economic adviser. Yet the stimulus approach that has emerged on Capitol Hill abandoned the Summers parameters. In a fateful decision, Democratic leaders merged the temporary stimulus measure with their permanent domestic agenda � including big increases for Pell Grants, alternative energy subsidies and health and entitlement spending. The resulting package is part temporary and part permanent, part timely and part untimely, part targeted and part untargeted. It�s easy to see why Democrats decided to do this. They could rush through permanent policies they believe in. Plus, they could pay for them with borrowed money. By putting a little of everything in the stimulus package, they avoid the pay-as-you-go rules that might otherwise apply to recurring costs. But they�ve created a sprawling, undisciplined smorgasbord, which has spun off a series of unintended consequences. First, by trying to do everything all it once, the bill does nothing well. The money spent on long-term domestic programs means there may not be enough to jolt the economy now (about $290 billion in spending is pushed off into 2011 and later). The money spent on stimulus, meanwhile, means there�s not enough to truly reform domestic programs like health technology, schools and infrastructure. The measure mostly pumps more money into old arrangements. Second, by pumping so much money through government programs, the bill unleashes a tidal wave on state governments. A governor with a few-hundred-million-dollar shortfall will suddenly have to administer an additional $4 billion or $5 billion. That money will be corrosive both when washing in, and when it disappears in a few years time. Third, the muddle assures ideological confrontation. A stimulus package was always going to be controversial, because economists differ widely about whether or how a stimulus can work. But this bill also permanently alters the role of the federal government, thus guaranteeing a polarizing brawl at the very start of the Obama presidency. Fourth, Summers�s warnings about deficits have been put aside. There is no fiscal exit strategy. Instead, permanent spending commitments are entailed with no permanent funding stream to pay for them. Fifth, new government expenditures on complex matters are being designed on a hasty, reckless timetable. As readers may know, the policy I am most passionate about is pre-K education. Yet I fervently hope that the Head Start expansion is dropped from this bill. A slapdash and shambolic expansion could discredit the whole idea. Wise heads are now trying to restore structure and safeguards to the enterprise. In testimony this week, Alice Rivlin, Bill Clinton�s former budget director, raised the possibility of separating the temporary from the permanent measures and focusing independently on each. �A long-term investment program should not be put together hastily and lumped in with the anti-recession package,� Rivlin testified. �The elements of the investment program must be carefully planned and will not create many jobs right away.� The best course is to return to the original Summers parameters � temporary, targeted and timely � thus making the stimulus cleaner and faster. Strip out the permanent government programs. Many of them are worthy, but we can have that debate another day. Make the short-term stimulus bigger. Many liberal economists have been complaining it is too small, so replace the permanent programs with something like a big payroll tax cut, which would help the working class. Add in a fiscal exit strategy so the whole thing is budget neutral over the medium term. Finally, coordinate the stimulus package with plans to shore up the housing and financial markets. Until those come to life, no amount of stimulus will do any good. This recession is scary and complicated. It�s insane to try to tackle it and dozens of other complicated problems, all in one piece of legislation. Leadership involves prioritizing. Those who try to do everything at once will end up with a sprawling, lobbyist-driven mess that does nothing well.

http://www.nytimes.com/2009/01/30/o...r=1&ref=opinion

quote:

Second, by pumping so much money through government programs, the bill unleashes a tidal wave on state governments. A governor with a few-hundred-million-dollar shortfall will suddenly have to administer an additional $4 billion or $5 billion. That money will be corrosive both when washing in, and when it disappears in a few years time.

I don't understand this at all. With the huge slump in the economy many states need this money badly to keep their schools and projects funded. In CA we're talking about billion dollar cuts to education. Any assistance from the federal government will be a godsend.

The universal agreement on the need for these multi trillion dollar spending plans makes me cry. Folks, the economy needs to correct...Prices need to FALL FALL FALL! Unemployment in the needs to rise. All of the malinvestment needs to be cleansed out of the system. Until that happens there will be no "natural business recovery"..only artificial growth funded by government debt.

If a person swallows poison, the natural thing for them to do is puke it up and feel like shit for a few days.. No, it's not a pleasant remedy but it is necessary and it's the only thing that works. All of these bailouts and stimulus plans are like a doctor giving painkillers and anti-regurgitation drugs to that sick patient so he doesn't need to deal with the unpleasantness of puking. Sure it might make the patient feel better and lead a normal life for a while, but it's disastrous in the long run..because the doctor is not letting nature take it's course. The federal government is doing exactly the same thing to our country now..pumping it full of drugs using debt, inflation, and more debt. These spending programs are like jolts of cocaine which will prop things up temporarily, but the longer we avoid the real CURE (an unpleasant recession), the worse off we will be in the long run. If we keep trying to borrow and inflate our way into prosperity, eventually the patient will die.

quote:

Originally posted by Capitalizt The universal agreement on the need for these multi trillion dollar spending plans makes me cry. Folks, the economy needs to correct...Prices need to FALL FALL FALL! Unemployment in the needs to rise. All of the malinvestment needs to be cleansed out of the system. Until that happens there will be no "natural business recovery"..only artificial growth funded by government debt. If a person swallows poison, the natural thing for them to do is puke it up and feel like shit for a few days.. No, it's not a pleasant remedy but it is necessary and it's the only thing that works. All of these bailouts and stimulus plans are like a doctor giving painkillers and anti-regurgitation drugs to that sick patient so he doesn't need to deal with the unpleasantness of puking. Sure it might make the patient feel better and lead a normal life for a while, but it's disastrous in the long run..because the doctor is not letting nature take it's course. The federal government is doing exactly the same thing to our country now..pumping it full of drugs using debt, inflation, and more debt. These spending programs are like jolts of cocaine which will prop things up temporarily, but the longer we avoid the real CURE (an unpleasant recession), the worse off we will be in the long run. If we keep trying to borrow and inflate our way into prosperity, eventually the patient will die.

well now I feel good about the future...... buzzkiller

http://www.reuters.com/article/news...E50T5Y820090130

Any thoughts on the protectionist "buy American" bill added to the stimulus package?

I don't know much about how this stuff works, but on the surface it does seem quite hypocritical, dangerous and selfish.

US manufacturers have been off-shoring jobs for so long with tacit government approval under the whole "globalisation" and competitivenss labels, but now that's all gotta change?

Re: Re: Re: Stimulus package full of pork?

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Originally posted by occrider If you want truly fast acting stimulus, tax cuts are completely worthless. For one, in this environment, it will do NOTHING to restore consumer confidence and encourage investment.

Nice post... well thought out. My only retort would be to this statement above. I posted this in a different thread yesterday but it applies to what you just said.

quote:

As for the claim that tax cuts haven't worked, I've been waiting for someone to bring this up. Consider this study put out last week explaining in detail how tax cuts work and rebates don't. First, the explanation of how tax rebates do not stimulate: quote: By definition, an economy grows when it produces more goods and services than it did the year before. In 2007, Americans produced $13 trillion worth of goods and services, up 3 percent over 2006. Economic growth requires four main factors: (1) an educated, trained, and motivated workforce; (2) sufficient levels of capital equipment and technology; (3) a solid infrastructure; and (4) a legal system and rule of law sufficient to enforce contracts and contain a functioning price system. High tax rates reduce economic growth, because they make it less profitable to work, save, and invest. This translates into less work, saving, investment, and capital--and ultimately fewer goods and services. Reducing marginal income tax rates has been shown to motivate people to work more. Lower corporate and investment taxes encourage the savings and investment vital to producing more and better plants, equipment, and technology. By contrast, tax rebates fail, because they do not encourage productivity or wealth creation. To receive a rebate, nobody has to work, save, invest, or create any new wealth. Supporters of rebates argue that they "inject" new money into the economy, increasing demand and therefore production. But every dollar that government rebates "inject" into the economy must first be taxed or borrowed out of the economy. No new spending power is created. It is merely redistributed from one group of people to another. (Even money borrowed from foreigners brings a reduction in net exports.) Supporters of rebates respond that redistributing money from "savers" to "spenders" will lead to additional spending. That assumes that savers store their savings in mattresses, thereby removing it from the economy. In reality, nearly all Americans either invest their savings (which finances business investment) or deposit it in banks (which quickly lend it to others to spend). Therefore, the money is spent whether it is initially consumed or saved. Given that reality it is more responsible to let the savers keep that money for a new home or their children's education, rather than to have Washington redistribute it to someone else to spend at Best Buy. Simply put, low tax rates encourage working, saving, and investing, which in turn encourages job creation and wage growth. Tax rebates merely redistribute existing wealth. Now, an example of the 2001 FAILED tax rebate: quote: While the 2001 tax cuts reduced some marginal tax rates, the centerpiece was tax rebates. These rebates were rationalized as a pre-payment of the reduction of the lowest marginal income tax bracket from 15 percent to 10 percent. Yet because they were not based on encouraging productive behavior, the rebates had little economic impact. In the spring and summer of 2001, Washington borrowed billions from the capital/investment markets, and then mailed it to families in the form of $600 checks. In the fourth quarter of that year, consumer spending responded with 7 percent annualized growth, and investment spending correspondingly decreased by 23 percent. The economy grew at a sluggish 1.6 percent annualized rate.[1] The simple redistribution from investment to consumption did not create new wealth. All traces of the rebate policy effectively disappeared by the next quarter. Consumer spending retreated to 1.4 percent annualized growth, and investment spending partially recovered from its steep decline with a 13.6 percent annual growth. The economy remained stagnant through much of 2002. ... and now lets contrast the 2003 SUCCESSFUL tax cuts: quote: By contrast, the 2003 tax cuts lowered income, capital gains, and dividend tax rates. These policies were designed to increase market incentives to work, save, and invest, thus creating jobs and increasing economic growth. An analysis of the six quarters before and after the 2003 tax cuts (a short enough time frame to exclude the 2001 recession) shows that the policies worked: -GDP grew at an annual rate of just 1.7 percent in the six quarters before the 2003 tax cuts. In the six quarters following the tax cuts, the growth rate was 4.1 percent. -Non-residential fixed investment declined for 13 consecutive quarters before the 2003 tax cuts. Since then, it has expanded for 13 consecutive quarters. -The S&P 500 dropped 18 percent in the six quarters before the 2003 tax cuts but increased by 32 percent over the next six quarters. Dividend payouts increased as well. -The economy lost 267,000 jobs in the six quarters before the 2003 tax cuts. In the next six quarters, it added 307,000 jobs--and 5.3 million jobs over 13 quarters. Critics contend that the economy was already recovering and that this strong expansion would have occurred even without the tax cuts. While some growth was occurring naturally, critics do not explain why such a sudden and dramatic turnaround began at the exact moment that these pro-growth policies were enacted. They do not explain why business investment, the stock market, and job numbers suddenly turned around in spring 2003. It is no coincidence that the expansion was powered by strong investment growth, exactly as the tax cuts intended. The conclusion? The 2003 tax rate cuts succeeded, because they increased incentives to work, save, and invest, thereby creating new wealth. The 2001 tax cuts, based more on demand-side tax rebates and redistribution, did not significantly increase economic growth. Lawmakers currently examining economic stimulus proposals should reject rebates in favor of tax rate reductions. http://www.heritage.org/research/economy/wm1776.cfm

Re: Re: Re: Stimulus package full of pork?

quote:

Originally posted by occrider So much of the spending packages you quote in the "millions" are for all intents and purposes irrelevant. I dunno if you've ever done a budget, but when you're stocking a budget plan there's always small things thrown in there for flexibility purposes in the event of cost overruns for critical projects. Granted this is the federal government which is different from a business, but let's focus ... it's a waste of time to argue a million here or a million there. Many of the actual substantive parts of the bill that you mentioned, which numbered in the billions, such as the expansion of unemployment benefits are WELL KNOWN and WELL ESTABLISHED economic stabilizers. They help dampen fluctations in real GDP. If you think about it, these programs will maintain a minimum level of consumer spending because this spending is largely conduced through necessity. In other words, the savings rate adjustment from these programs have less elasticity than tax cutting programs for individuals who might have the luxury of saving. You are correct that some of these initiatives are not going to actively get people back to work and thus provide sustainable increases in GDP. Some of them merely provide a floor that prevents things from deteriorating to shit until the business cycle naturally improves. However, if that's your primary concern I'm afraid your priorities are grossly misplaced. If you want truly fast acting stimulus, tax cuts are completely worthless. For one, in this environment, it will do NOTHING to restore consumer confidence and encourage investment. Companies and EVERYONE are scared shitless and it's NOT taxes which is why they're hesitant to spend/invest. We're seeing a very weird negative externality where the private sector is leaving HUGE swathes of business open that governments need to fill. It's the complete opposite of the economic theory of crowding out ... it's not completely weird, it just hasn't been seen since the great depression. Anyway in the immortal words of Keynes: In other words, we're experiencing a severe market externality where the private sector has buckled. We need to stimulate demand via the public sector by spending a crapload of money quickly otherwise we're going to be screwed in the long run for far more than doing nothing at all (case in point Japan's lost decade). I haven't posted here in a while but does ANYONE still thing that we didn't need the bailouts and that we don't need this fiscal stimulus bill??? I mean shit, when I sounded the warnings back in 2008 that this shit was going to get REALLY bad and it was going to translate down from wall street to mainstreet very quickly I think I was confronted with a lot of skepticicism.

I've always enjoyed reading your posts Occ, you should come by more often.

However, I have one question. You mention negative externalities left by private business that needs to be filled by government. I'm not quite sure how the potential collapse of General Motors and co. will create negative externalities, but would rather take a step in eliminating them. (or am I missing the point?)

quote:

Originally posted by Capitalizt The universal agreement on the need for these multi trillion dollar spending plans makes me cry. Folks, the economy needs to correct...Prices need to FALL FALL FALL! Unemployment in the needs to rise. All of the malinvestment needs to be cleansed out of the system. Until that happens there will be no "natural business recovery"..only artificial growth funded by government debt. If a person swallows poison, the natural thing for them to do is puke it up and feel like shit for a few days.. No, it's not a pleasant remedy but it is necessary and it's the only thing that works. All of these bailouts and stimulus plans are like a doctor giving painkillers and anti-regurgitation drugs to that sick patient so he doesn't need to deal with the unpleasantness of puking. Sure it might make the patient feel better and lead a normal life for a while, but it's disastrous in the long run..because the doctor is not letting nature take it's course. The federal government is doing exactly the same thing to our country now..pumping it full of drugs using debt, inflation, and more debt. These spending programs are like jolts of cocaine which will prop things up temporarily, but the longer we avoid the real CURE (an unpleasant recession), the worse off we will be in the long run. If we keep trying to borrow and inflate our way into prosperity, eventually the patient will die.

I have no idea what to say to you except that both history and the theory of economics would beg to differ. Out of curiosity, are your conclusions solely ideologically driven or did you take lessons learned from studying monetary or fiscal policy from ANY of the following recessions/panics in United States history:

Panic of 1797
Depression of 1807
Panic of 1819
Panic of 1837
Panic of 1857
Panic of 1873
Long Depression (1873-1896)
Panic of 1893
Panic of 1907
Post WW1 Recession
Great Depression
Recession of 1953
Recession of 1957
Recession of 1960-61
1973 oil crisis
1980-82 recession
90-91 recession
2001-2003 recession

Perhaps if your muse was a foreign economic crises such as Sweden's bank failure in the 90's or Japan's lost decade please feel free to reference one of those.

quote:

Nice post... well thought out. My only retort would be to this statement above. I posted this in a different thread yesterday but it applies to what you just said.

Your post does raise valid points. Generally I am far more of a believer in tax cuts as a fiscal stimulus tool than I believe in expenditure increases. I think the private sector is, for the most part, far better at allocating capital more efficiently than the government. The only possible rationale I could give that warrant government intervention would be externalities such as pollution (carbon cap and trade scheme), high barriers to entry or national security concerns (energy dependency on fossil fuels), or issues where private markets break down and bubble contractions are unnecessarily severe due to irrational behavior or the speed of correction (what is going on now). Basically what is happening now needed to have happened. Why we need to act is because it's not happening at a very slow pace from which markets can quickly adjust (for example a gradual drop in the value of the dollar is not a bad thing in and of itself ... it should make us more competive to other currencies and increase exports, reducing our current account deficit and thus raise the value of the dollar. A RAPID devaluing of the dollar on the other hand could result in a panic flight from the dollar resulting in a complete currency crash ... a self-fulfilling prophecy if you will no matter what the legitimate value of the currency might be). That said, we are in one of those situations where rationale economic behaviour does not apply. Tax cuts will not encourage consumer spending or corporate investments because everyone is scared shitless and they are hording what capital they have. Just look at the results of the government's Capital Purchase Program (CPP aka TARP), Treasury is making massive injections of capital in banks (not EXACTLY the same as a tax cut because they're buying preferred shares rather than common equity but that's pseudo splitting hairs) ... there are some 9 different programs and facilities to stimulate lending ... and despite all of that whilst credit markets have become unblocked from their worst, clearly the credit markets are NOWHERE near normal. As such, to rely on private markets and believe that tax cuts would do anything to resolve this issue ... well I'm skeptical.

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I've always enjoyed reading your posts Occ, you should come by more often.

Thanks! Unfortunately I can't ... work is a killer nowadays that everyone wants to talk to the risk management folks. When I get laid off I will for sure

quote:

However, I have one question. You mention negative externalities left by private business that needs to be filled by government. I'm not quite sure how the potential collapse of General Motors and co. will create negative externalities, but would rather take a step in eliminating them. (or am I missing the point?)

I'm tired ... I'll try to respond to this tomorrow or eventually

quote:

Originally posted by occrider Thanks! Unfortunately I can't ... work is a killer nowadays that everyone wants to talk to the risk management folks. When I get laid off I will for sure

Ah, you risk management blokes. I dont know how you'd cope with all those idiots begging at your feet nowadays (even though some of you blokes were a bit shady over the past few years ). I wouldnt have the patience - i'd just pimp slap them for being greedy pricks and throw them The Black Swan for a leisurely read, and be done with it (and then the boss would fire me).

quote:

I'm tired ... I'll try to respond to this tomorrow or eventually

oh c'mon mate, you're just being lazy now

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Originally posted by Clovis I don't think there's any better way to put it.

there isn't...if this was the actual budget. it's not. it's a "stimulus".

that said, i can't wait to see this year's budget

quote:

Originally posted by occrider Out of curiosity, are your conclusions solely ideologically driven

gee, that was quick!!

quote:

Originally posted by occrider work is a killer nowadays that everyone wants to talk to the risk management folks. When I get laid off I will for sure

i'm sure we'd all hate for you to lose your job occrider, but if it happens im sure all of us in the PDD will be smarter for it

Re: Re: Re: Re: Stimulus package full of pork?

quote:

Originally posted by Dupz However, I have one question. You mention negative externalities left by private business that needs to be filled by government. I'm not quite sure how the potential collapse of General Motors and co. will create negative externalities, but would rather take a step in eliminating them. (or am I missing the point?)

So it's not so much the specific case of GM that I would categorize as a negative externality so much as the broader economic malaise that we are currently seeing. Don't get me wrong, I would LOVE to see GM and Chrysler fail in any other environment because I think they were poorly managed and they made stupid decisions. As a result they should be penalized with bankruptcy and allow capital to flow elsewhere that yields greater efficiencies. However, as much as I am a free marketer, I ultimately understand Keynesian economics and realize that allowing them to fail would exacerbate the economic woes in this environment.

Basically, we're in a deflationary spiral. Private industry is not creating jobs, not because of high taxes, but because of panic in the system. In this situation the government has to step in to create jobs in order to limit the freefall. Now technically, these don't have to be productive jobs. Government intervention is really only needed to smooth the negative downturn of the business cycle in order to minimize the damage and positively move confidence in an upwards direction ... it can accomplish this by paying people dance in circles all day so long as these people keep spending thus keeping firms in business and thus keeping their employees in business who thus continue spending to further stimulate other areas of the economy. I'm very fond of quoting Keynes on this:

quote:

"To dig holes in the ground," paid for out of savings, will increase, not only employment, but the real national dividend of useful goods and services. (p. 220) http://www.amazon.com/exec/obidos/t...94/lewrockwell/

Keynes is basically saying that you could pay half the people to dig holes in the ground, pay the second half to fill the holes again, and it would still have a positive effect on the economy in aggregate.

GM follows this same tract. The bankruptcy of GM would undoubtedly lead to massive layoffs that would extend FAR beyond GM to their parts suppliers that it would be sheer folly to allow it to happen. It would simply exacerbate the economic malaise, in other words the potential cost of doing nothing might outweigh the cost of bailing them out all things considered.

quote:

Ah, you risk management blokes. I dont know how you'd cope with all those idiots begging at your feet nowadays (even though some of you blokes were a bit shady over the past few years ). I wouldnt have the patience - i'd just pimp slap them for being greedy pricks and throw them The Black Swan for a leisurely read, and be done with it (and then the boss would fire me).

It is nice to finally have some clout over the front office I must admit. Thankfully I'm ops risk management not credit risk management so I don't have to have that shit hanging over my shoulders.

quote:

Keynes is basically saying that you could pay half the people to dig holes in the ground, pay the second half to fill the holes again, and it would still have a positive effect on the economy in aggregate.

No one should trust a theory that predicts greater prosperity from digging holes. Come on Occ, I can't believe you really agree with this. You've fallen into the classic "there really is a free lunch" trap that modern economists like Krugman have also fallen into. Government spending cannot create new wealth, it can only reallocate existing wealth. Yes government can temporarily stimulate the economy, but there is always a COST involved that most people ignore.

Your hole quote is appropriate in one way at least...In the world of government budgets, the �hole� is deficit spending, and the deficit is filled in � financed with borrowed money. When the feds engage massive spending of any type, they crowd out private investment. With these spending programs and bailouts, you can't just look at the businesses being artificially propped up (the workers being paid to dig holes in your example) and say "See? They have money..They are better off..wooohoooo!!" There are always unintended consequences and invisible victims of such government boondoggles.. A good economist understands that government by its very nature, cannot give except what it first takes. It cannot create real prosperity out of thin air. Our government is trying to buy false prosperity today by punishing anyone who holds US dollars and the taxpayers of the next generation.

Keynesianism says that saving = bad and spending = good. Keynes believed that having money constantly circulating through the economy (even in unproductive government projects) would keep things on an upward trajectory. What he didn't understand is that money communicates information not by moving, but by differences in prices. He was like a naive individual who discovers that phones lines carry information with electricity. He then decides that pushing more electricity will send more information. In reality, all he would get is a squeal. Likewise, moving money through the economy does nothing if that movement does not transmit INFORMATION about the real value of economic choices. When people and businesses tighten their belts in a recession, they are sending crucial signals throughout the economy which eventually have an effect on prices. The most basic law of economics is supply and demand.. Falling prices will eventually trigger consumer demand and increased buying. The correction process will be painful (which is why allowing it to occur is not a popular idea), but the economy will recover as it always has. Government intervention can only hamper and prolong this natural recovery process, while making future generations much, much poorer.

It just needs to happen buddy. The bubble popped and we need to accept a little pain before things need to return to normal. In the case of GM, you are right in saying they are a poorly managed company. Union employees have basically created their own welfare state inside GM. The benefits and salaries are wildly extravagant for manual laborers. I have a feeling that if GM abandoned their guaranteed pensions of $50,000/yr for retirees and reduced the wage of line workers from $60/hr to a more reasonable $15-20, their financial woes would be eliminated overnight. The market has been telling GM that their costs are too high and they are in a financial mess today because they've ignored those signals. It is within their power to correct the situation. Government doesn't need to get involved.

quote:

Originally posted by Capitalizt The universal agreement on the need for these multi trillion dollar spending plans makes me cry. Folks, the economy needs to correct...Prices need to FALL FALL FALL! Unemployment in the needs to rise. All of the malinvestment needs to be cleansed out of the system. Until that happens there will be no "natural business recovery"..only artificial growth funded by government debt. If a person swallows poison, the natural thing for them to do is puke it up and feel like shit for a few days.. No, it's not a pleasant remedy but it is necessary and it's the only thing that works. All of these bailouts and stimulus plans are like a doctor giving painkillers and anti-regurgitation drugs to that sick patient so he doesn't need to deal with the unpleasantness of puking. Sure it might make the patient feel better and lead a normal life for a while, but it's disastrous in the long run..because the doctor is not letting nature take it's course. The federal government is doing exactly the same thing to our country now..pumping it full of drugs using debt, inflation, and more debt. These spending programs are like jolts of cocaine which will prop things up temporarily, but the longer we avoid the real CURE (an unpleasant recession), the worse off we will be in the long run. If we keep trying to borrow and inflate our way into prosperity, eventually the patient will die.

if part of that 'natural process' was you losing your job and ability to provide for your basic needs, would you feel the same?

quote:

Originally posted by Capitalizt No one should trust a theory that predicts greater prosperity from digging holes. Come on Occ, I can't believe you really agree with this. You've fallen into the classic "there really is a free lunch" trap that modern economists like Krugman have also fallen into. Government spending cannot create new wealth, it can only reallocate existing wealth. Yes government can temporarily stimulate the economy, but there is always a COST involved that most people ignore. Your hole quote is appropriate in one way at least...In the world of government budgets, the �hole� is deficit spending, and the deficit is filled in � financed with borrowed money. When the feds engage massive spending of any type, they crowd out private investment. With these spending programs and bailouts, you can't just look at the businesses being artificially propped up (the workers being paid to dig holes in your example) and say "See? They have money..They are better off..wooohoooo!!" There are always unintended consequences and invisible victims of such government boondoggles.. A good economist understands that government by its very nature, cannot give except what it first takes. It cannot create real prosperity out of thin air. Our government is trying to buy false prosperity today by punishing anyone who holds US dollars and the taxpayers of the next generation. Keynesianism says that saving = bad and spending = good. Keynes believed that having money constantly circulating through the economy (even in unproductive government projects) would keep things on an upward trajectory. What he didn't understand is that money communicates information not by moving, but by differences in prices. He was like a naive individual who discovers that phones lines carry information with electricity. He then decides that pushing more electricity will send more information. In reality, all he would get is a squeal. Likewise, moving money through the economy does nothing if that movement does not transmit INFORMATION about the real value of economic choices. When people and businesses tighten their belts in a recession, they are sending crucial signals throughout the economy which eventually have an effect on prices. The most basic law of economics is supply and demand.. Falling prices will eventually trigger consumer demand and increased buying. The correction process will be painful (which is why allowing it to occur is not a popular idea), but the economy will recover as it always has. Government intervention can only hamper and prolong this natural recovery process, while making future generations much, much poorer. It just needs to happen buddy. The bubble popped and we need to accept a little pain before things need to return to normal. In the case of GM, you are right in saying they are a poorly managed company. Union employees have basically created their own welfare state inside GM. The benefits and salaries are wildly extravagant for manual laborers. I have a feeling that if GM abandoned their guaranteed pensions of $50,000/yr for retirees and reduced the wage of line workers from $60/hr to a more reasonable $15-20, their financial woes would be eliminated overnight. The market has been telling GM that their costs are too high and they are in a financial mess today because they've ignored those signals. It is within their power to correct the situation. Government doesn't need to get involved.

A simple question before I proceed to respond to your post. Do you believe in market externalities? If so, to what extent do you believe in market externalities?

quote:

Originally posted by jerZ07002 if part of that 'natural process' was you losing your job and ability to provide for your basic needs, would you feel the same?

I work for one of those big banks and it has affected me. I was forced to cut back from 40 to 30 hours per week and got a lousy 2.1% pay raise this year which is less than the rate of inflation. This makes it very difficult to pay bills, but I'm not about to ask you to do it for me. It's not your fault or responsibility.

quote:

Originally posted by occrider A simple question before I proceed to respond to your post. Do you believe in market externalities? If so, to what extent do you believe in market externalities?

Yes of course oc..I know we don't live in bubbles and markets are not 100% perfect. Innocent people will be hurt in a downturn and that is very unfortunate..but this does not mean the market is going to fail. Like I said earlier, it all boils down to prices. After a bit of pain, an equilibrium will eventually be reached. I'm just saying despite the sometimes messy and sloppy way that people deal with negative externalities, it is better to let them get on with it and muddle through themselves than impose a grand "solution" using government..which sends false signals and distorts everything on a much larger scale. The sheer size of these bailouts and stimulus plans is what gets me.. I wouldn't be so worried if we were talking about a one time $200-300 billion injection in infrastructure or something that is not profitable for private industry...but when you include what was done last year, over $3 trillion new dollars have been printed for these bailouts. This is major overkill..more than 500% what we've wasted in Iraq over the past 6 years..and by all accounts this spending has done nothing but prop up failed enterprises and postpone the correction. The economy has cancer, and an ugly recession is the only cure in my view. All of these spending programs are nothing more than expensive aspirin pills. I say bring on the chemotherapy.

From cnn.com, the GOP list of "pork" items from the stimulus package

quote:

� $2 billion earmark to re-start FutureGen, a near-zero emissions coal power plant in Illinois that the Department of Energy defunded last year because it said the project was inefficient. � A $246 million tax break for Hollywood movie producers to buy motion picture film. � $650 million for the digital television converter box coupon program. � $88 million for the Coast Guard to design a new polar icebreaker (arctic ship). � $448 million for constructing the Department of Homeland Security headquarters. � $248 million for furniture at the new Homeland Security headquarters. � $600 million to buy hybrid vehicles for federal employees. � $400 million for the Centers for Disease Control to screen and prevent STD's. � $1.4 billion for rural waste disposal programs. � $125 million for the Washington sewer system. � $150 million for Smithsonian museum facilities. � $1 billion for the 2010 Census, which has a projected cost overrun of $3 billion. � $75 million for "smoking cessation activities." � $200 million for public computer centers at community colleges. � $75 million for salaries of employees at the FBI. � $25 million for tribal alcohol and substance abuse reduction. � $500 million for flood reduction projects on the Mississippi River. � $10 million to inspect canals in urban areas. � $6 billion to turn federal buildings into "green" buildings. � $500 million for state and local fire stations. � $650 million for wildland fire management on forest service lands. � $1.2 billion for "youth activities," including youth summer job programs. � $88 million for renovating the headquarters of the Public Health Service. � $412 million for CDC buildings and property. � $500 million for building and repairing National Institutes of Health facilities in Bethesda, Maryland. � $160 million for "paid volunteers" at the Corporation for National and Community Service. � $5.5 million for "energy efficiency initiatives" at the Department of Veterans Affairs National Cemetery Administration. � $850 million for Amtrak. � $100 million for reducing the hazard of lead-based paint. � $75 million to construct a "security training" facility for State Department Security officers when they can be trained at existing facilities of other agencies. � $110 million to the Farm Service Agency to upgrade computer systems. � $200 million in funding for the lease of alternative energy vehicles for use on military installations.

Some are obvious pork and need to be removed, others I'm less sure about. I like McCain's test for pork:

1. will it create jobs?
2. will it be implemented in the next 12 months

If you can't answer yes to both, get it out of the stimulus bill because it isn't economic stimulus it is just regular government spending.

My favorite obvious pork item is the democrats big "thank you" to hollywood for supporting Obama:

quote:

� A $246 million tax break for Hollywood movie producers to buy motion picture film.

please, how stupid do you think the American people are?

quote:

CBO Report Debunks GOP's Stimulus Talking Point By Elana Schor - February 2, 2009, 4:50PM Remember last week, when Republicans were beating their chests over a Congressional Budget Office report that showed 64% of the money in the House stimulus bill would be spent during the first 18 months after its enactment? After all, the GOP told us in no uncertain terms, the Obama administration had vowed to spend 75% of the stimulus in 18 months -- so the 64% spend-out rate of the House bill represented total failure. Given that agita, one wonders how the GOP will respond to the CBO's newest report on the Senate stimulus bill. The budget office found that $694 billion of the bill's total $884 billion cost would be spent during the first 18 months after enactment, or a spend-out rate of 78%. By the Republicans' own metric, that makes the bill a smashing success! Does that mean you'll promise not to filibuster it, guys?

http://tpmdc.talkingpointsmemo.com/...lking-point.php

The report:
http://cboblog.cbo.gov/?p=204

wamp wamp

quote:

Originally posted by Capitalizt I work for one of those big banks and it has affected me. I was forced to cut back from 40 to 30 hours per week and got a lousy 2.1% pay raise this year which is less than the rate of inflation. This makes it very difficult to pay bills, but I'm not about to ask you to do it for me. It's not your fault or responsibility.

fair enough....although cutting hours and getting a smaller raise than expected doesn't give you the same perspective as a recently laid-off father of 2 children with a $1,500 mortgage payment.

I'm usually for market correction, but when the market is so dysfunctional corrections are often widly extreme at both ends. A gentle push in the right direction is necessary to soften those extreme effects.

quote:

Originally posted by Capitalizt I work for one of those big banks and it has affected me. I was forced to cut back from 40 to 30 hours per week and got a lousy 2.1% pay raise this year which is less than the rate of inflation. This makes it very difficult to pay bills, but I'm not about to ask you to do it for me. It's not your fault or responsibility.

Ha, that beats my salary freeze.

quote:

Yes of course oc..I know we don't live in bubbles and markets are not 100% perfect. Innocent people will be hurt in a downturn and that is very unfortunate..but this does not mean the market is going to fail. Like I said earlier, it all boils down to prices. After a bit of pain, an equilibrium will eventually be reached. I'm just saying despite the sometimes messy and sloppy way that people deal with negative externalities, it is better to let them get on with it and muddle through themselves than impose a grand "solution" using government..which sends false signals and distorts everything on a much larger scale. The sheer size of these bailouts and stimulus plans is what gets me.. I wouldn't be so worried if we were talking about a one time $200-300 billion injection in infrastructure or something that is not profitable for private industry...but when you include what was done last year, over $3 trillion new dollars have been printed for these bailouts. This is major overkill..more than 500% what we've wasted in Iraq over the past 6 years..and by all accounts this spending has done nothing but prop up failed enterprises and postpone the correction. The economy has cancer, and an ugly recession is the only cure in my view. All of these spending programs are nothing more than expensive aspirin pills. I say bring on the chemotherapy.

Ok now you've clarified your position somewhat let's get into the nitty gritty. I'm going to divide your argument into two different areas since that will be easier to discuss, the bailout package and the fiscal stimulus package.

Let's start with the fiscal stimulus package: So you say you're an advocate of some forms of fiscal stimulus, primarily infrastructure enhancement projects providing that they are not profitable to private industry. I would disagree with that last bit since infrastrcture enhancements will typically benefit private industry in some respect (for example enhancing roads or railroads will naturally reduce costs for the transportation industry) however, that's unimportant to me. What are your opinions on the other components? There's really only two components to fiscal stimulus: reduced taxation or increased spending. Increased spending can be subdivided into infrastructure enahancements or social welfare programs (unemployment, welfare, medicaid, etc.). So you've already indicated support for infrastructure stimulus programs, what about reduced taxation or increased spending on social welfare programs?

edit: and after re-reading your argument allow me to throw it out there that it might not be the tools of fiscal stimulus you're opposed to but simply the size?

The next component of your argument is the bailout. What part of the bailout are you opposed to? The $700 billion capital injections via the CPP? You kind of reference a $3 trillion figure so it sounds like you're referencing one of the Federal Reserve's programs to expand lending (Term Auction Facility, Term Securities Lending Facility, Primary Dealer Credit Facility, Asset Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, Commercial Paper Funding Facility, Money Market Investor Funding Facility ...) I dunno, you're going to have to be more specific about whether you disagree with any one in particular, ALL of them, or whatever in order for me to give a proper response.

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