Ron Paul: Stimulus Packages Will Turn Recession Into A Depression

[Ramo]

A third of the stimulus are tax cuts. There's a very large FICA tax credit in the legislation. The problem that the Republicans have is that not enough of those tax cuts are going to the rich (which would have very limited stimulative effects).

And, ummm:

He also said that he felt infrastructure was a good idea, but only 3% of the package actually goes to infrastructure projects.

This is obviously not true. Unless you define infrastructure to only mean roads.

[Victor Galis]

...

as we pay off the trillion.

Do you know something I don't?

I guess. But based on the election results, the Republicans have nowhere to go but up. So why not gamble?

Or they could go nowhere.

The real problem is that there are two arguments that get mixed up. There's a theoretical argument about whether fiscal stimulus could be good in an ideal situation on which the GOP and neoclassical economists are dead wrong on. Then there's the practical argument about whether this particular stimulus will be any good.

There's plenty of reasonable arguments against the current bill. I personally think they need to split the immediate spending from long-term reforms, rush through the former, and discuss the latter thoroughly. A rushed bill that tries to do too much will invariably fail or be less efficient than several well debated smaller bills. Obviously the sooner we get funding to the states, shovel-ready projects, etc. the better. There's no reason to tack on the long-term measures on to that.

[Victor Galis]

Actually I think the bill contains too many tax cuts and not enough public transit spending. Apparently the latter was cutback to make room for the former

[Naked Gents Rut]

if you're a congressional Republican, why would you support the stimulus?

Because you know the recession is going to end in the next couple years (most likely before the end of 2009), know that Obama's stimulus is going to be credited for the turnaround even though it won't have made much of a difference and know that the media will jump at any chance to hammer the GOP for standing in the way of The One. You'd have to be either brave or stupid to vote against this stimulus.

[Naked Gents Rut]

This is obviously not true. Unless you define infrastructure to only mean roads.

Eh. Close enough...

The bill to be voted on today includes $30 billion for roads and bridges, $9 billion for public transit and $1 billion for inter-city rail -- less than 5 percent of the package's total spending. Administration officials have said they did not push for more infrastructure spending because of concerns about how many projects are "shovel ready" -- a view that House members say is held most strongly by Lawrence H. Summers, Obama's chief economic adviser.

http://www.washingtonpost.com/wp-dyn/content/article/2009/01/27/AR2009012703655_pf.html

[TCO]

Ron is right. I can see it going down in my part of the economy. What already woulod have been just a financial kerfuffle with some paper profits getting erased and a few Goldman fvckers losing their vacation houses...has turned into a major industrial pause. The economy is doing a rational expection of the impacts of current/future actions. The bailout was a knife in the heart. Exact opposite of desired effect except for Bush who wanted to play out the hand (like with Iraq) and for his little Goldman weenies (who are all Demos anyhow).

[Naked Gents Rut]

No more bailouts.

[Naked Gents Rut]

With no Republican support, the House approved an $819 billion stimulus plan that will serve as the cornerstone of President Obama's efforts to resuscitate the economy, an early victory for the new president but still a disappointment because of the lack of Republican votes.

The measure passed 244 to 188, with 11 Democrats and 177 Republicans voting against it.

http://www.washingtonpost.com/wp-dyn/content/article/2009/01/28/AR2009012800196.html?hpid=topnews

Bravo, you brave, stupid bastards.

[Ramo]

Eh. Close enough...

Right. Because infrastructure is only transit. It looks like you didn't bother reading that idiotic WSJ editorial you posted.

[Naked Gents Rut]

Time to start calling your Senators. There's a small chance we can filibuster this POS in the Senate.

edit: Teh Putin is on our side.

Vladimir Putin. the Russian Prime Minister, launched a swingeing attack on Western financial rescue packages yesterday, calling for a new world order to reverse the financial crisis.

On his first visit to the World Economic Forum in Davos, Mr Putin called the crisis a “perfect storm” that had arisen from a world dominated by the US. He said that only a rebalancing of global power could cure the problem and that financial stimulus packages of the kind agreed by Washington and London could lead them down a path well-worn by Moscow while doing little to aid recovery.

“Interference of the State, the belief in the omnipotence of the State: that is a reaction to market failures,” Mr Putin said in his keynote address at the opening of the four-day meeting. “There is a temptation to expand direct interference of state in economy. In the Soviet Union that became an absolute. We paid a very dear price for that.”

http://business.timesonline.co.uk/tol/business/economics/wef/article5607474.ece

[Naked Gents Rut]

The US debate over the fiscal stimulus is remarkable in its neglect of the medium term – that is, the budgetary challenges over a period of five to 10 years. Neither the White House nor Congress has offered the public a scenario of how the proposed mega-deficits will affect the budget and government programmes beyond the next 12 to 24 months. Without a sound medium-term fiscal framework, the stimulus package can easily do more harm than good, since the prospect of trillion-dollar-plus deficits as far as the eye can see will weigh heavily on the confidence of consumers and businesses, and thereby undermine even the short-term benefits of the stimulus package. ...

The most obvious problem with the stimulus package is that it has been turned into a fiscal piñata – with a mad scramble for candy on the floor. We seem all too eager to rectify a generation of a nation saving too little by saving even less – this time through expanding government borrowing. First it was former US Federal Reserve chairman Alan Greenspan’s bubble, then Wall Street’s, and now – in the third act – it will be Washington’s. ...

Perhaps Mr Obama should reflect on the fact that the Clinton-era boom began in 1993 with tax rises and a congressional rejection of a fiscal stimulus package. This time, there is certainly a cyclical case for deficit- financed public spending, but accompanied by phased-in tax increases to provide proper financing of crucial government functions in the medium term.

http://www.ft.com/cms/s/0/35438c54-ec8a-11dd-a534-0000779fd2ac.html?nclick_check=1

Sachs.

[Elok]

Hmm, Ron Paul, NGR and Putin are all opposed to the stimulus plan. That's a powerful argument for it in my book. Now, if only we could do a seance to get Neville Chamberlain's opinion...oh, and Ramo, NGR's articles have both been from the Washington Post, not WSJ. If anything, the WaPo leans to the left.

[Naked Gents Rut]

Jeff Sachs, Greg Mankiw and Robert Barro are all stimulus skeptics, as well. I feel fine being in that company.

[GePap]

Jeff Sachs,

Yeah, one of the architects of Shock Therapy in Russia. Worked great!

Greg Mankiw

chairman of W's Council of Economic advisors, who clearly gave the Bush administration brilliant advice...

and Robert Barro

A fellow at the Hoover Institute. How symbolic...

are all stimulus skeptics, as well. I feel fine being in that company.

Yeah, just like you were in fine company with Rummy and Cheney back in 2003. Yup, you sure know how to pick arguments....

Yup, nothing better than a clear record of global ****ups to make one believe.

[GePap]

Sachs argues that there isn't much of a long term plan at work, and I would agree with that - why Congress should have ignored Larry Summers and added more long term cpaital spending on more infrastructure.

But linking consumer confidence to large deficits? Come on, consumers didn't blink while we had almot half a trillion dollar deficits as long as their own housing prices went up. What evidence is there that Joe Sixpack spends based on what he thinks the Federal debt will be, as opposed to what he thinks about his own fiscal solvency?