Ron Paul: Stimulus Packages Will Turn Recession Into A Depression

[Impaler[WrG]]

The accepted meaning of ear-mark is an amendment to a bill that provides funding for a single project or expenditure that takes place in a single state or congregational district. So far I have not heard any thing in the house version or the currently in-flux senate bill that fits that definition. Traditional examples of ear-marks are having a museum built in a particular town represented by a a powerful Rep or a bridge built in the State of a powerful Senator.

Even the parts of the stimulus bill that Republicans have been critical of have all been national level programs, even in cases ware the money is spent locally or passes through state and local governments its destination is not written into the bill. If DD has specific instances of real ear-marks then please by all means point them out for us.

[Velociryx]

This thread blows.



-=Vel=-

[Agathon]

Honestly, who cares about the pork? This stimulus could be completely pork-free () and it would still be a bad idea. We're about to spend ~$800 billion on a stimulus that probably won't work, especially given that a quarter of the spending won't even happen in time to have a stimulus effect. Combined with TARP and the other bailouts, this amount of spending will push the national debt to unprecedented levels.

So what would you do, Einstein?

The problem is that individuals won't spend, so economic activity is going down the tubes. You know, people not working. This is a self-reinforcing cycle. The only way that we know of to stop it is for the government to force people to spend money, which is what is being done. Tax cuts don't work as well, because people are still free not to spend them, and they often won't if they are unsure about the future.

The debt is a problem, but it's just the smaller **** sandwich right now.

So again, what is your grand plan to get people to start spending without compulsion, and how is it going to work? Caveat: remember tax cuts won't necessarily solve the problem.

edit: I honestly don't mind if the stimulus never happens or doesn't work. Then again. I'm one of those people who would put you in a gulag.

[Naked Gents Rut]

So what would you do, Einstein?

Read the thread. I already said I'd like to see unemployment insurance extended for 2-3 years to alleviate the impact of rising unemployment. I also think a temporary reduction in payroll taxes would be a smart way to put money in the hands of those who most need it. Spending on truly economically beneficial infrastructure projects would also be ok, as long as they're shovel ready.

Beyond that, I'm not sure if we should do anything. People seem fixated on the goal of spending a massive enough amount on government spending to fully close the output gap, but that seems unwise to me.

For one thing, it's probably not possible for the government to spend $800 billion in 18 months in a non-wasteful fashion. Even if it were possible, it's probably not a great idea. The pre-recession output level in the U.S. was inflated by a massive amount of debt-financed consumption. The only way to close that output gap is to replace massive debt-financed private consumption with equally massive debt-financed government consumption.

This is a bad idea for two reasons. One, adding trillions of dollars to the national debt is risky and likely to drag down the U.S. economy in the long-term. Few people are seriously asking questions about how we'll pay off this debt in the future. Two, the best thing for the U.S. economy in the long-term is to move away from its heavy reliance on debt-financed consumption. The silver lining of this recession is that it might fundamentally affect the consumption patterns of American consumers, leading to a long called-for increase in private savings. We don't need the government picking up the unhealthy debt habit that the public finally dropped. This is our chance to abandon the failed economic policies of the past and push for economic change that we can believe in. Can we make the most of this teachable moment? I think that yes, we can.

Then again. I'm one of those people who would put you in a gulag.

You'd throw one of your own into the gulag? Where's your class consciousness?

[notyoueither]

How much more does it cost to employ a person doing something useful over paying them pogey?

[Naked Gents Rut]

Depending on who you ask, we'll be paying somewhere between $100k to $275k for every job the stimulus might save. Extending unemployment is a hell of a lot cheaper than that.

And seriously, "pogey"? What the **** is wrong with Canadians ?

[Agathon]

So what would you do, Einstein?

Read the thread.

I tried to. But I just had to laugh at most of it.

I already said I'd like to see unemployment insurance extended for 2-3 years to alleviate the impact of rising unemployment. I also think a temporary reduction in payroll taxes would be a smart way to put money in the hands of those who most need it.

That's not going to work, and I explained in part why this was the case. Lack of voluntary spending is the problem. Simply giving people money isn't going to do anything, since they won't spend it.

Now you could say that unemployed people are more likely to spend it, but what's the point of giving them money for nothing? Why not get some work out of them. At least their skills won't erode, plant won't degrade, and they will have some form of dignity.

Spending on truly economically beneficial infrastructure projects would also be ok, as long as they're shovel ready.

Why? The point of the stimulus is to effect future expectations. How people see the economy two years from now matters as much as what happens tomorrow. This is one thing the media has actually done a reasonable job of explaining, which is remarkable for such a bunch of thoughtless cretins.

Beyond that, I'm not sure if we should do anything. People seem fixated on the goal of spending a massive enough amount on government spending to fully close the output gap, but that seems unwise to me.

I don't think they can hope to close the gap. But they still need to spend a lot. Spending nothing would almost certainly guarantee a depression.

For one thing, it's probably not possible for the government to spend $800 billion in 18 months in a non-wasteful fashion.

That comment reeks of anal extraction. Where's the evidence?

The pre-recession output level in the U.S. was inflated by a massive amount of debt-financed consumption. The only way to close that output gap is to replace massive debt-financed private consumption with equally massive debt-financed government consumption.

Unfortunately, yes. There will also probably be a period of inflation. The alternative is worse.

This is a bad idea for two reasons. One, adding trillions of dollars to the national debt is risky and likely to drag down the U.S. economy in the long-term.

I agree. It is a bad idea. Unfortunately, the alternative of a prolonged depression is worse. Voters behaved like ****wits and now we all get to reap the reward.

Few people are seriously asking questions about how we'll pay off this debt in the future.

My guess is increased inflation as they print their way out of it in the long run.

Two, the best thing for the U.S. economy in the long-term is to move away from its heavy reliance on debt-financed consumption. The silver lining of this recession is that it might fundamentally affect the consumption patterns of American consumers, leading to a long called-for increase in private savings. We don't need the government picking up the unhealthy debt habit that the public finally dropped.

That's a pipe dream. People will vote to keep themselves at the trough. But that's another story. If the price of avoiding larger government debt is a prolonged depression, it's a no brainer.

This is our chance to abandon the failed economic policies of the past and push for economic change that we can believe in. Can we make the most of this teachable moment? I think that yes, we can.

The failed economic policies of the past are the voters' fault. People will vote for whomever promises them easy money. Our society has run out of options. We already work far too much, while we make nothing, and the orgy of borrowing was allowed simply to make neoliberalism palatable to the middle and working classes. That was fine as long as there were bubbles to hide the truth. Alas, that is no more.

If you want capitalism to work properly, then you'll have to prevent the middle classes voting themselves preferential conditions. That means limiting or abolishing democracy. If you're up for that, then at least you're honest.

This mess was caused by voters, and now they are all looking for someone else to blame. The fault is not in the stars, but in ourselves.

You'd throw one of your own into the gulag? Where's your class consciousness?

You'll get a state whore for personal relief. What do you care?

[Naked Gents Rut]

It's too late for a full response, but I'll just say that I don't understand why you seem so sure that a depression is in the cards if there isn't a massive stimulus. Obama, Krugman and others who want to scare the public in order to get their spending priorities passed have said this, but less partisan sources (including members of Obama's own economic team) don't seem to think this is the case.



Even without the stimulus, Romer and Bernstein estimate unemployment will approach its natural rate around the end of 2012. Given that unemployment lags behind growth, this means the recession will have ended well before that time. That's a depression?

[Agathon]

It's too late for a full response, but I'll just say that I don't understand why you seem so sure that a depression is in the cards if there isn't a massive stimulus.

It's hard to say, but the fact there have been massive bank failures, and that massive bank bailouts have been required is something I have not seen in my lifetime. It's also globalized, which makes things rather more complicated.

Even if it is only a recession, a stimulus is an appropriate response. Part of the problem is that people in charge won't call it out for what it is, because calling it out just makes it worse.

Obama, Krugman and others who want to scare the public in order to get their spending priorities passed have said this, but less partisan sources (including members of Obama's own economic team) don't seem to think this is the case.

Well, I don't think they need to scare the public. People are already terrified enough, and that is the problem. It's what you get if you live in a faith-based economy, as we do. I don't think Obama and Krugman are particularly partisan sources either. By world standards, both are extremely right wing and pro-capitalism.

Even without the stimulus, Romer and Bernstein estimate unemployment will approach its natural rate around the end of 2012. Given that unemployment lags behind growth, this means the recession will have ended well before that time. That's a depression?

Perhaps that is true. I really have no idea. To be honest, I don't think that any of them have the slightest clue what they are doing, or what will happen. Interestingly, the people who predicted this mess were heterodox economists like the Austrians, which leads me to think that there was a massive dose of groupthink among the others and in the political elites. If this crisis proves anything, it proves that the Emperor has no clothes, and that is something I have personally suspected for a long time. I've been getting a good laugh out of the solemn pronouncements from all sides.

We live in a society that is deeply stupid and unconnected with reality. Whether or not we have been lucky, won't be apparent for another few years. It's childish to cry about it. Que sera sera and all that.

[Victor Galis]

Looks like the Senate plan scales back aid to states, unemployment benefits, and even middle class tax cuts in favor of incentives to buy homes and cars. We're so screwed.

http://www.nytimes.com/2009/02/08/us/politics/08stimulus.html?_r=1&th&emc=th

[Darius871]

aggie's back!

[Kuciwalker]

Looks like the Senate plan scales back aid to states, unemployment benefits, and even middle class tax cuts in favor of incentives to buy homes and cars. We're so screwed.

[action=Kuciwalker]cries[/action]

[Felch]

Looks like the Senate plan scales back aid to states, unemployment benefits, and even middle class tax cuts in favor of incentives to buy homes and cars. We're so screwed.

Great so to get us out of a crisis caused by people buying homes that they shouldn't have been buying, we're going to make it easier to buy more homes.

Be careful what you wish for.

[notyoueither]

Depending on who you ask, we'll be paying somewhere between $100k to $275k for every job the stimulus might save. Extending unemployment is a hell of a lot cheaper than that.

And seriously, "pogey"? What the **** is wrong with Canadians ?

What's wrong with "pogey"?

It's a perfectly good word.

[Victor Galis]

Great so to get us out of a crisis caused by people buying homes that they shouldn't have been buying, we're going to make it easier to buy more homes.

Be careful what you wish for.

It's like they cut the best bits out and stuffed the worst possible things in their place.