Ron Paul: Stimulus Packages Will Turn Recession Into A Depression

[Ramo]

There are those who saw this coming two years ago, but they weren't listened to.

Oddly enough, they're the same ones who doubt the efficacy of government intervention now.

No one predicted that the entire banking system would come tumbling down. A lot of people saw huge problems in the housing market, but that's a different question. And no, that set of people is obviously not the set of stimulus skeptics. For one prominent example, see Krugman.

[Naked Gents Rut]

No one predicted that the entire banking system would come tumbling down.

Nouriel Roubini did. And even he thinks the recession will be over by the end of 2009.

[Ramo]

True, Roubini called the crisis.

But about his recession predictions...

Roubini - The U.S. is experiencing its worst financial crisis since the Great Depression and its most severe recession in decades: a severe housing bust is entering its fourth year of decline and there is no bottom in sight. The recession will last at least 24 months (December 2009) and the recovery may be so weak, and growth sub-par until 2011, that it will feel like a recession even once the economy will be technically out of it by 2010. The banking system is effectively insolvent, as credit losses will swell above $3 trillion and fiscal deficits above $1 trillion loom for the next 2-3 years.

http://blogs.reuters.com/great-debate/tag/nouriel-roubini/

He'd also been aggressive about calling for a stimulus.

[Velociryx]

d'oh!

[Naked Gents Rut]

I don't have a problem with a stimulus. My problem is with the hundreds of billions being spent too late to actually stimulate the economy.

[Felch]

Felch - specifically, I was referring to 'poly, and the relative lack of discussion and outrage here re: the expansion of government. Admittedly, I wasn't watching the threads every day, which is why I said "I didn't recall" rather than make an absolute statement.

Yeah, I know there are some people who were still rooting for them until the end. Poly ain't as bad as some other sites I've seen though. People here are smart mother****ers.

[Ramo]

I don't have a problem with a stimulus. My problem is with the hundreds of billions being spent too late to actually stimulate the economy.

According to Roubini, the upper bound for your "hundreds of billions" would have to be ~$140 billion.

[Naked Gents Rut]

“This plan is more than a prescription for short-term spending -- it's a strategy for America's long-term growth and opportunity in areas such as renewable energy, health care and education.”

With this key sentence from his op-ed in the Washington Post today, President Obama has given Republicans a golden opportunity: Insist on splitting the legislation being debated on the Senate floor into a true short-term stimulus, which can pass quickly, and long-term policy proposals, which require serious debate.

Republicans should stop trying to improve the unimproveable with small-bore amendments to the current legislative package. Instead, they can point out that Obama is supporting under the guise of emergency legislation a bloated catch-all of stimulus, pork and (often bad) policy. They can make clear that Republicans will support a real short-term stimulus (pro-growth tax cuts, housing measures and a few targeted spending provisions unemployment and COBRA extensions) that meets Larry Summers’s criteria of being targeted, timely and temporary. They should introduce such a measure as a substitute -- “The Emergency Economic Growth Bill of 2009” -- and trumpet their vigorous support of it. And they should insist that all the “energy, health care and education” proposals be debated in an orderly and serious way in the regular legislative process -- not jammed through as part of an emergency “stimulus.”

http://voices.washingtonpost.com/postpartisan/2009/02/the_republicans_opportunity.html

[Naked Gents Rut]

President Obama's economic recovery package will actually hurt the economy more in the long run than if he were to do nothing, the nonpartisan Congressional Budget Office said Wednesday.

CBO, the official scorekeepers for legislation, said the House and Senate bills will help in the short term but result in so much government debt that within a few years they would crowd out private investment, actually leading to a lower Gross Domestic Product over the next 10 years than if the government had done nothing.

CBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net. [The House bill] would have similar long-run effects, CBO said in a letter to Sen. Judd Gregg, New Hampshire Republican, who was tapped by Mr. Obama on Tuesday to be Commerce Secretary.

http://www.washingtontimes.com/news/2009/feb/04/cbo-obama-stimulus-harmful-over-long-haul/

Awesome.

[Victor Galis]

I'm not particularly optimistic.

Who cares what you think? Professional analysts don't see the recession lasting past 2010.

Are those the same professional analysts that didn't see it coming in the first place? Besides the stimulus is needed until the output gap is closed not until the recovery starts.

How are we funding all this again? With the worldwide nature of this downturn, I really don't know who will be buying all these t-bills.

The Chinese.

[Victor Galis]

“This plan is more than a prescription for short-term spending -- it's a strategy for America's long-term growth and opportunity in areas such as renewable energy, health care and education.”

With this key sentence from his op-ed in the Washington Post today, President Obama has given Republicans a golden opportunity: Insist on splitting the legislation being debated on the Senate floor into a true short-term stimulus, which can pass quickly, and long-term policy proposals, which require serious debate.

Republicans should stop trying to improve the unimproveable with small-bore amendments to the current legislative package. Instead, they can point out that Obama is supporting under the guise of emergency legislation a bloated catch-all of stimulus, pork and (often bad) policy. They can make clear that Republicans will support a real short-term stimulus (pro-growth tax cuts, housing measures and a few targeted spending provisions unemployment and COBRA extensions) that meets Larry Summers’s criteria of being targeted, timely and temporary. They should introduce such a measure as a substitute -- “The Emergency Economic Growth Bill of 2009” -- and trumpet their vigorous support of it. And they should insist that all the “energy, health care and education” proposals be debated in an orderly and serious way in the regular legislative process -- not jammed through as part of an emergency “stimulus.”

http://voices.washingtonpost.com/postpartisan/2009/02/the_republicans_opportunity.html

I believe I suggested that in my first post in this thread.

[Naked Gents Rut]

I probably didn't read it.

[Darius871]

president obama's economic recovery package will actually hurt the economy more in the long run than if he were to do nothing, the nonpartisan congressional budget office said wednesday.

Cbo, the official scorekeepers for legislation, said the house and senate bills will help in the short term but result in so much government debt that within a few years they would crowd out private investment, actually leading to a lower gross domestic product over the next 10 years than if the government had done nothing.

Cbo estimates that by 2019 the senate legislation would reduce gdp by 0.1 percent to 0.3 percent on net. [the house bill] would have similar long-run effects, cbo said in a letter to sen. Judd gregg, new hampshire republican, who was tapped by mr. Obama on tuesday to be commerce secretary.

http://www.washingtontimes.com/news/2009/feb/04/cbo-obama-stimulus-harmful-over-long-haul/

awesome.

[DanS]

How are we funding all this again? With the worldwide nature of this downturn, I really don't know who will be buying all these t-bills.

All those little old ladies, who would otherwise be funding businesses creating jobs.

[DanS]

I'm not a fan of stimulus plans. They delude people into thinking that there's such a thing as a free lunch and the impact is questionable anyway. If I had my 'druthers, we would extend unemployment insurance and maybe only a little more. But that's it. Hey, I'm not going to complain too much about a little infrastructure spending, but this bill is a Christmas tree.

As an example, you have health insurance being paid for those on unemployment rather then them having to buy it themselves through COBRA. Now this might be a good idea in a land of unlimited resources, but the bill is putting all future governments on the hook for health insurance for the unemployed. That means that businesses will pay more for unemployment insurance. Not something to do lightly, by any means.

Then you have the federal government taking on state and local government health care obligations. I have serious questions about the propriety of doing this. These governments have been exploding in size lately -- not thinking a whit about rainy days. Well, here are some rainy days and they should pay the piper.

Then you have a Y2K-style giveaway to the IT industry to revamp medical records processes. Hey, it might be a good idea in the end, but it hasn't been vetted. They really don't even a have a plan. Certainly nothing in the procurement pipeline that would be ready to be spent. The chances of this being an effective spending program in 18 months are just about zero.

I could go on, and I will if anybody is interested. We could talk smart grids, for instance.