10 Reasons To Oppose Stimulus Package

[UNTflyer]

Some people are going to oppose President Obama's ginormous stimulus package just because they're on a different political team. But when you look at the economic evidence, it sure seems like an economic recovery package that's heavy on government spending and light on tax cuts is just the opposite of what we should be doing right now. Try this closing argument on for size:

1) A 2005 study by Andrew Mountford and Harald Uhlig "analyzed three types of policy shocks: a deficit-financed spending increase, a balanced budget spending increase (financed with higher taxes) and a deficit-financed tax cut, in which revenues increase but government spending stays unchanged. We found that a deficit-spending shock stimulates the economy for the first 4 quarters but only weakly compared to that for a deficit-financed tax cut." In other words, FDR vs. Clinton vs. Reagan, Reagan wins.

2) Harvard economist Robert Barro looked at the multiplier effect of World War II military spending -- supposedly the Mother of All Stimulus Plans and found that "wartime production siphoned off resources from other economic uses -- there was a dampener, rather than a multiplier." Barro prefers eliminating the corporate income tax to massive government spending.

3) Alberto Alesina of Harvard and Luigi Zingales of the University of Chicago want to adress the fear and confidence issue by creating "the incentive for people to take more risk and move their savings from government bonds to risky assets. There is no better way to encourage this than a temporary elimination of the capital-gains tax for all the investments begun during 2009 and held for at least two years."

4) An initial CBO analysis found that a mere $26 billion out of $274 billion in infrastructure spending, just 7 percent, would be delivered into the economy by next fall. An update determined that just 64 percent of the stimulus would reach the economy by 2011.

5) University of Chicago economist and Nobel laureate Gary Becker doubts whether all this stimulus spending will do much to lower unemployment: "For one thing, the true value of these government programs may be limited because they will be put together hastily, and are likely to contain a lot of political pork and other inefficiencies. For another thing, with unemployment at 7% to 8% of the labor force, it is impossible to target effective spending programs that primarily utilize unemployed workers, or underemployed capital. Spending on infrastructure, and especially on health, energy, and education, will mainly attract employed persons from other activities to the activities stimulated by the government spending. The net job creation from these and related spending is likely to be rather small. In addition, if the private activities crowded out are more valuable than the activities hastily stimulated by this plan, the value of the increase in employment and GDP could be very small, even negative."

6) Christina Romer, the new head of the Council of Economic Advisers, coauthored a paper in which the following was written about taxes: "Tax increases appear to have a very large, sustained, and highly significant negative impact on output. Since most of our exogenous tax changes are in fact reductions, the more intuitive way to express this result is that tax cuts have very large and persistent positive output effects." And former Bush economic adviser Lawrence Lindsey tack on this addendum: "The macroeconomic benefits of tax cuts can be two to three times larger than common estimates of the benefits related to spending increases. The relative advantage of tax cuts over spending is even clearer when the recession is centered on the household balance sheet."

7) Economists Susan Woodward and Robert Hall find that the multiplier effect from infrastructure spending maybe just 1-for-1, less than that 3-to-1 ratio for tax cuts that Romer found: "We believe that the one-for-one rule derived from wartime increases in military spending would also apply to increases in infrastructure spending in a stimulus package. We should not count on any inducement of higher consumption from the infrastructure stimulus."

8) Economist John Taylor thinks it better to let the Federal Reserve deal with the short-term problems in the economy, while fiscal policy should attend to long-term issues: "In the current context of the U.S. economy, it seems best to let fiscal policy have its main countercyclical impact through the automatic stabilizer ... It seems hard to improve on this performance with a more active discretionary fiscal policy, and an activist discretionary fiscal policy might even make the job of monetary authorities more difficult. It would be appropriate in the present American context, for discretionary fiscal policy to be saved explicitly for longer-term issues, requiring less frequent changes. Examples of such a longer-term focus include fiscal policy proposals to balance the non-Social Security budget over the next ten years, to reduce marginal tax rates for long run economic efficiency, or even to reform the tax system and Social Security."

9) Massive stimulus didn't work in the Great Depression. As this Heritage Foundation study notes: "After the stock market collapse in 1929, the Hoover Administration increased federal spending by 47 percent over the following three years. As a result, federal spending increased from 3.4 percent of GDP in 1930 to 6.9 percent in 1932 and reached 9.8 percent by 1940. That same year-- 10 years into the Great Depression--America's unemployment rate stood at 14.6 percent." Same goes for Japan and its Great Stagnation of the 1990s.

10) Olivier Blanchard, the chief economist of the International Monetary Fund, coauthored a paper which found "that both increases in taxes and increases in government spending have a strong negative effect on private investment spending."

Bottom line: There is another model out there. One that worked in 2003, 1997 and 1981. But will America use it?

[GreenBat]

Where was this information when Dubya proposed his stimulus package, which triggered the problem the country is in now. The President is just attempting to correct what was F'd up during the previous 8 years.

[UNTFan23]

Where was this information when Dubya proposed his stimulus package, which triggered the problem the country is in now. The President is just attempting to correct what was F'd up during the previous 8 years.

W had nothing to do with people buying more house than they can afford. W had nothing to do with the negative savings rate we've had for a number of years. W had nothing to do with people living above their means by buying everything under the sun with credit.

No one has held a gun to people's head making them do the above things. They did it on their own. I wish people would own up to their bad choices rather than blame someone else.

[meangreendork]

I like how this has Obama's name on it even though he's only been in office about a week. You know, because this stimulus package hasn't been in discussion since around July of 2008. Just sayin' is all.

Still, the package needs to be trimmed down by a lot and there needs to be a crapton of oversight on where the money is going. Supposedly, whatever money went out in December wasn't monitored at all. I don't much like that sort of thing.

[Censored by Laurie]

I like how this has Obama's name on it even though he's only been in office about a week. You know, because this stimulus package hasn't been in discussion since around July of 2008. Just sayin' is all.

Still, the package needs to be trimmed down by a lot and there needs to be a crapton of oversight on where the money is going. Supposedly, whatever money went out in December wasn't monitored at all. I don't much like that sort of thing.

The invisible hand tucked it into the invisible pocket and then went to the Azores.

[UNTflyer]

I like how this has Obama's name on it even though he's only been in office about a week. You know, because this stimulus package hasn't been in discussion since around July of 2008. Just sayin' is all.

Still, the package needs to be trimmed down by a lot and there needs to be a crapton of oversight on where the money is going. Supposedly, whatever money went out in December wasn't monitored at all. I don't much like that sort of thing.

No oversight is necessary if it takes the forms of tax cuts rather than just dropping money from helicopters onto pet projects of elected officials.

And it is Obama's package, he and his Congress allies created it.

And besides that, he tries to walk through windows:

Edited January 28, 2009 by UNTflyer

[meangreendork]

No oversight is necessary if it takes the forms of tax cuts rather than just dropping money from helicopters onto pet projects of elected officials.

And it is Obama's package, he and his Congress allies created it.

And besides that, he tries to walk through windows:

I guess it's his by association. Anyways - I'm hoping all the talking he's doing with both sides of the fence lead to a combination of tax cuts and well-placed spending. It's going to take some manipulation at both ends of the supply/demand chain to make this work properly again.

But I'm all about people walking through windows.

[Coffee and TV]

Some people are going to oppose President Obama's ginormous stimulus package just because they're on a different political team.

Pot. Kettle. Black. Game. Set. Match.

[KRAM1]

There is no economic stimulus in President Obama's "stimulus package".

[UNTflyer]

There is no economic stimulus in President Obama's "stimulus package".

$335 million for STD prevention sounds "stimulating".

And $500 "tax cuts" for people who don't pay taxes mean we can eliminate that stupid digital TV converter coupon, right? Right?!

[Guest JohnDenver]

$335 million for STD prevention sounds "stimulating".

And $500 "tax cuts" for people who don't pay taxes mean we can eliminate that stupid digital TV converter coupon, right? Right?!

1) I read it was 200 million. But whose counting... I think it is pork.

2) Quit playing games. Everyone pays taxes. Sales, property, luxury, sin, etc. Some people don't pay *federal income tax*, but MOST corporations don't pay "taxes" either. Yet we want to give businesses tax breaks..

[SilverEagle]

W had nothing to do with people buying more house than they can afford. W had nothing to do with the negative savings rate we've had for a number of years. W had nothing to do with people living above their means by buying everything under the sun with credit.

No one has held a gun to people's head making them do the above things. They did it on their own. I wish people would own up to their bad choices rather than blame someone else.

Weellll, I do believe that the W DID go on national TV right after the 9-11 attack and tell the American people that the best thing they could do for their country is go out and shop, shop, shop. He then went back with his advisors (make that handlers/puppetmasters) so they could plan the best way to waste 10 billion per month by attacking the wrong country.

[Quoner]

I waterboard our IT guy on 9/10 each year just to head off potential trouble at the pass.

[UNTflyer]

Weellll, I do believe that the W DID go on national TV right after the 9-11 attack and tell the American people that the best thing they could do for their country is go out and shop, shop, shop. He then went back with his advisors (make that handlers/puppetmasters) so they could plan the best way to waste 10 billion per month by attacking the wrong country.

Presidents do not drive the economy, consumers do. And when Bush told Americans to continue on with their lives, take vacations, buy cars and houses, it worked. The 2001/2002 recession was quite mild, and Americans spent money and the economy rebounded. I know how you Bush-Haters love to pile it on, but this economic problem is not his doing.

There are many factors that have caused this crisis. A major factor was Greenspan's policy of low interest rates and under-regulation of subprime lenders, backed by Fannie and Freddie policies to provide housing to low-income families who had no means to repay the loans, that created an enormous housing bubble that burst. High oil and gas prices last year aggravated the problem, and prices for just about everything began to rise. Mortgage-backed securities full of bad mortgage loans then froze the credit market.

As for your 2nd hyperbolic statement, it's been rehashed ad nauseum. Whatever the arguments for or against the war, which Obama has yet to end, the $500 billion spent on spent so far on the war is still only half of what our current President wants to spend.

$275 billion for "tax cuts" - most of that will go to people who do not pay income taxes. I thought we already had welfare.

$87 billion for Medicaid - not really a stimulus, just propping up a failed social program. Wait ten years when you see how much it will take to prop up Social Security.

$79 billion for direct state aid - most of that to turn the red ink to black. Again, no real stimulus, just shifting the money around.

$43 billion for unemployment benefits - money spent on unproductive people

$39 billion for health insurance for the newly unemployed - again, money spent on unproductive people

$20 billion for food stamps - money spent on unproductive people

Of the $825 billion package, only $144 billion is actually earmarked for infrastructure projects. That's $681 BILLION that will be wasted and will result in very little stimulus to the economy. But when the economy bounces back in the next 12-18 months (as capitalist systems always do when left to their own devices), Obama will be patted on the back for his brilliant economic policies.

[yyz28]

2) Quit playing games. Everyone pays taxes. Sales, property, luxury, sin, etc. Some people don't pay *federal income tax*, but MOST corporations don't pay "taxes" either. Yet we want to give businesses tax breaks..

So, you think the Federal Government should be giving tax rebates because people pay local and state taxes? There is no national sales or property tax, and most people below the Federal income tax level aren't playing property taxes either. People who don't pay federal income taxes don't pay luxury taxes? ...and those who are in an economic situation that allows them not to be paying federal income taxes can afford to buy things that incur sin taxes?

Corporations don't directly pay any taxes, you are right, they pass them on to the consumer. So if corporate tax rates go down, goods and services will cost less as the company doesn't have to charge as much to make the same amount of profit. This helps the end consumer. Increase taxes on Wal-Mart, and you increase the prices people pay when they shop at Wal-Mart. The class-warefare engaged in when Politicians try to get people to turn against "greedy companies who don't pay enough taxes" is classic. Anyone who supports tax increses on businesses support tax increases on consumers.

[Censored by Laurie]

I waterboard our IT guy on 9/10 each year just to head off potential trouble at the pass.

I think waterboards are good

[LongJim]

From LP.org:

****************************************

"Carbon capturing contests" and killing cows? More questionable spending unmasked in Obama plan

posted by Donny Ferguson on Jan 29, 2009

"Syndicated columnist Michelle Malkin is staying busy these days keeping track of some of the more wasteful items included in President Obama's government spending plan. Pitched as a plan to create jobs, the non-partisan Congressional Budget Office now estimates its final cost will top $1 trillion, and most of the spending has little to do with creating jobs.

The package passed the House yesterday, but with bi-partisan opposition. As more wasteful spending is uncovered, the White House is now urging the Senate to pass the plan as soon as possible, with little review of the new and increased spending.

Among the items highlighted by Malkin:

* $572 million to the Coast Guard for “Acquisition, Construction, & Improvements." The Coast Guard defends the plan, claiming it will create 1,235 new jobs. That comes out to over $460,000.00 per job supposedly created.

* $1.5 billion for a "carbon capturing contest."

And The Wall Street Journal uncovers:

* $600 million to buy new cars for government employees.

* $150 million for The Smithsonian museum system.

* $83 billion in income tax relief for people who don’t pay income taxes.

The Journal and Reason magazine also point to another possible proposal in the plan -- artificially increasing the price of milk. According to the Journal, "dairy and beef cattle producers butted heads over talk that the government might buy up dairy cattle for slaughter to drive up depressed milk prices." There was no explanation from the Obama administration as to how forcing mothers and childen to pay more for milk in a sluggish economy qualifies as job creation.

The only people that seem to not be getting anything from Obama's economic stimulus plan are the millions of employers who need tax and regulatory relief in order to give Americans jobs.

You may contact your two senators at 202-224-3121."

[SilverEagle]

Presidents do not drive the economy, consumers do. And when Bush told Americans to continue on with their lives, take vacations, buy cars and houses, it worked. The 2001/2002 recession was quite mild, and Americans spent money and the economy rebounded. I know how you Bush-Haters love to pile it on, but this economic problem is not his doing.

There are many factors that have caused this crisis. A major factor was Greenspan's policy of low interest rates and under-regulation of subprime lenders, backed by Fannie and Freddie policies to provide housing to low-income families who had no means to repay the loans, that created an enormous housing bubble that burst. High oil and gas prices last year aggravated the problem, and prices for just about everything began to rise. Mortgage-backed securities full of bad mortgage loans then froze the credit market.

As for your 2nd hyperbolic statement, it's been rehashed ad nauseum. Whatever the arguments for or against the war, which Obama has yet to end, the $500 billion spent on spent so far on the war is still only half of what our current President wants to spend.

$275 billion for "tax cuts" - most of that will go to people who do not pay income taxes. I thought we already had welfare.

$87 billion for Medicaid - not really a stimulus, just propping up a failed social program. Wait ten years when you see how much it will take to prop up Social Security.

$79 billion for direct state aid - most of that to turn the red ink to black. Again, no real stimulus, just shifting the money around.

$43 billion for unemployment benefits - money spent on unproductive people

$39 billion for health insurance for the newly unemployed - again, money spent on unproductive people

$20 billion for food stamps - money spent on unproductive people

Of the $825 billion package, only $144 billion is actually earmarked for infrastructure projects. That's $681 BILLION that will be wasted and will result in very little stimulus to the economy. But when the economy bounces back in the next 12-18 months (as capitalist systems always do when left to their own devices), Obama will be patted on the back for his brilliant economic policies.

The current economic situation is not of his doing? Please tell me how long it takes for something like this to get started, and how long someone can ignore it before someone has to take responsibility for it. If you don't think Bush is in any way responsible for this mess, then I see little point in electing any President.

To compare the $500 Billion in wasted money plus all the bad diplomacy and hatred that it's bought America, to an overinflated stimulus package is to me

absolutely absurd. If Bush and his chicken hawk war mongers had spent even half of that $500 Billion in infrastructure projects INSTEAD of sending the

Army to do a CIA/FBI mission, not to mention the absurd waste of money that creating homeland security has cost us, our mess wouldn't be nearly as big.

[untbowler]

The current economic situation is not of his doing? Please tell me how long it takes for something like this to get started, and how long someone can ignore it before someone has to take responsibility for it. If you don't think Bush is in any way responsible for this mess, then I see little point in electing any President.

To compare the $500 Billion in wasted money plus all the bad diplomacy and hatred that it's bought America, to an overinflated stimulus package is to me

absolutely absurd. If Bush and his chicken hawk war mongers had spent even half of that $500 Billion in infrastructure projects INSTEAD of sending the

Army to do a CIA/FBI mission, not to mention the absurd waste of money that creating homeland security has cost us, our mess wouldn't be nearly as big.

BUSH Sucks!! Bush Sucks!!

We get it can't you Libs/Democrats give it up and realize that your savior is now in office and is about to spend $1 Trillion on programs that more than likely will make the US even more of a Welfare State than it already is.

All of you are going to get your wish, Obama will talk to Dictators and appease them, install radical environmental standards, kill the coal industry and discipline the greedy oil giants. So no worries, the Democrats will rule the country as they have for the past TWO YEARS!!!

Just stop blaming Bush when this all blows up in their face.

Edited January 29, 2009 by untbowler

[forevereagle]

BUSH Sucks!! Bush Sucks!!

We get it can't you Libs/Democrats give it up and realize that your savior is now in office and is about to spend $1 Trillion on programs that more than likely will make the US even more of a Welfare State than it already is.

All of you are going to get your wish, Obama will talk to Dictators and appease them, install radical environmental standards, kill the coal industry and discipline the greedy oil giants. So no worries, the Democrats will rule the country as they have for the past TWO YEARS!!!

Just stop blaming Bush when this all blows up in their face.

Why does it have to be this way? Why can't we all agree that ALL POLITICIANS ARE EVIL?!?! Really, the hate that keeps flying around here gets old. Neither side is doing it right. Obama is not the Socialist that some claim he is. On the other side Bush is not Satan. This arguement is getting really freaking old. Why is it that the winning side always says (yes, always) "Now we have a leader, let's all get behind him." Why is it, when the same side loses, they can't take their own advice? I am really tired of everyone claiming that because Bush is out, the world will come to an end.

If I recall, the Republican supporters all blamed Clinton for his weak stance against terrorism after 9-11, so this isn't exactly news. Not sure why you are surprised that the Democrats are blaming Bush for the economy.

[SilverEagle]

BUSH Sucks!! Bush Sucks!!

We get it can't you Libs/Democrats give it up and realize that your savior is now in office and is about to spend $1 Trillion on programs that more than likely will make the US even more of a Welfare State than it already is.

All of you are going to get your wish, Obama will talk to Dictators and appease them, install radical environmental standards, kill the coal industry and discipline the greedy oil giants. So no worries, the Democrats will rule the country as they have for the past TWO YEARS!!!

Just stop blaming Bush when this all blows up in their face.

Actually Cheney sucks. Bush isn't smart enough to totally orchestrate this mess.

[meangreendork]

Actually Cheney sucks. Bush isn't smart enough to totally orchestrate this mess.

Yeah, that pretty much sums it up.

[UNTFan23]

Weellll, I do believe that the W DID go on national TV right after the 9-11 attack and tell the American people that the best thing they could do for their country is go out and shop, shop, shop. He then went back with his advisors (make that handlers/puppetmasters) so they could plan the best way to waste 10 billion per month by attacking the wrong country.

So Bush should be responsible for the past 6 to 7 years of consumer irresponsibility? Puh-lease!

I wish the CEO of my employer would take the fall if I do something stupid at work.

I am still going hold on to the notion that W didn't hold a gun to those homebuyers' heads and force them to buy that house they couldn't afford on a variable rate 30 year note.

[GreenMachine]

So Bush should be responsible for the past 6 to 7 years of consumer irresponsibility? Puh-lease!

I wish the CEO of my employer would take the fall if I do something stupid at work.

I am still going hold on to the notion that W didn't hold a gun to those homebuyers' heads and force them to buy that house they couldn't afford on a variable rate 30 year note.

but damn it UNTFan23, how do you expect people to stay up with the Joneses if they don't buy way more house than they KNOW they can afford. We can't put the blame on the poor, misled, consumer. We have to blame big, bad, evil, corporate america.

Edited January 30, 2009 by GreenMachine

[oldguystudent]

but damn it UNTFan23, how do you expect people to stay up with the Joneses if they don't buy way more house than they KNOW they can afford. We can't put the blame on the poor, misled, consumer. We have to blame big, bad, evil, corporate america.

I see both sides of this. I have friends that bought...no. I have friends that took out stupid mortgages on houses with price tags beyond their means. I tried to talk them out of it, but they wouldn't listen. I feel they should bear responsibility for their actions. On the other hand, I've seen the sales pitches some of these mortgage brokers were throwing out at the financially illiterate with no oversight whatsoever. Get someone on food stamps to sign on the dotted line and win a trip to Puerta Vallarta!

One of the reasons that I don't necessarily believe in the 100% free market is because I do believe that a fool and his money are soon parted. I also believe that there are plenty of people willing to take that fool's money. Sadly, by definition, half the population is of below average intelligence, and average just isn't very high. In the end, the 10% of the population with the financial sense to take the money has all of it, and the other 90% are left wondering the earth in rags and living in shanty towns. Then what? I just don't have enough faith in human nature to believe that trickle down economics works. Like communism, it works in [homersimpsonvoice]theory[/homersimpsonvoice].

Clinton and Bush both have a hand in the complete lack of oversight over the past several years. The Clinton administration allowed for banks to offer brokerage services and vice versa. The Bush administration did nothing to reign it all in and stood atop a national soap box pushing America for a "society of ownership."

Whoever just posted that we all should just agree that all politicians are evil regardless of which side of the aisle they sit was right on in my humble opinion.