The Stimulus Is A Failure

[Drake Tungsten]

It shows just what a POS the stimulus package was when Ramo feels the need to draw a distinction between the stimulative and non-stimulative portions of the legislation. If we had responsible leadership, the whole thing would've been stimulative. Instead, we got stuck with a stimulus that doesn't actually stimulate.

[KrazyHorse]

I'm honestly skeptical of the whole notion that government stimulus spending has a multiplier significantly different than 0, given the multitude of political problems that arise when large amounts of money are to be spent quickly.

Keynsian spending is a nice idea in theory, but expecting a government which shows a level of economic sophistication lower than the average Polytubby's to do a good job of targeting stimulus at idle resources is overly optimistic. One look at the GM/Chrysler cluster**** should make any reasonable person be skeptical...

EDIT: ouch. terrible grammar.

[Drake Tungsten]

a government which shows the level of economic sophistication of lower than the average Polytubby

Ouch...

[KrazyHorse]

Who the hell was going to be putting money into housing construction these last few months? Hell, in the next six months?

Errr...that's what I was saying.



Ideally you want to aim spending at stuff which is:

a) Valuable in a micro sense of the word
b) Employs idle resources

The legislature tends to paint with overly broad strokes, and especially in the US is subject to extreme regionalism.

I'd trust stimulative spending much more if the plan came direct from the Fed or the CBO. As it stands, I doubt very much real thought went into it.

[GePap]

I'm honestly skeptical of the whole notion that government stimulus spending has a multiplier significantly different than 0, given the multitude of political problems that arise when large amounts of money are to be spent quickly.

Sorry, but what exactly are the "political problems" of increased direct aid to working and poor families, with the notable exeption of political leaders who decline to accept the aid?

Keynsian spending is a nice idea in theory, but expecting a government which shows the level of economic sophistication of lower than the average Polytubby to do a good job of targeting stimulus at idle resources is overly optimistic. One look at the GM/Chrysler cluster**** should make any reasonable person be skeptical...

As opposed to you average business leader, like say, the people who ran GM and Chrystler......

[Kuciwalker]

There has been an extension of unemployment benefits, an increase in food stamps, cash assitance to poor families, and direct aid to State Budgets. Most of that money will start rolling soon, once all the applications are done.

Wait, wait. "Anyone who thought the Stimulus was supposed to have any real effect this Federal fiscal year is either a troll or has no ****ing clue how government works." But some of it's going to be spent really soon, before the end of the federal fiscal year? I'm confused.

[GePap]

what part of "most of that money will start rolling SOON" did you not get?

SOON as in hasn't been spent YET.

Pay attention to the other thread on the fiscal year issue. Do try to keep up.

[Ramo]

The spending earmarked to a specific locality is a pretty small portion of the budget. The process will be governed by executive departments (HHS, Transportation, Education, etc.), not Congress. IIRC, the major exception to this is aid to states/localities, which is a function of how conservatives in unpopulated states (i.e. Nebraska) have a grossly disproportionate vote in the Senate.

The bulk of the stimulus constitutes direct transfers to institutions and individuals who will spend (unemployed, poor families, states/localities, etc.). A large portion of it has questionable stimulative benefits, but I think are good long term investments (a lot the infrastructure spending). The bulk of the rest isn't that significant, with a few exceptions that likely would pass overwhelmingly, economic crisis or not (roads might belong here, but the AMT fix is a much more odious and significant example - but that doesn't get much play since it's the upper middle class and upper class that benefit).

[KrazyHorse]

states/localities

I'm pretty sure that states and municipalities are going to find ways to spend significantly less than they're given (relative to counterfactual of no transfers)

[KrazyHorse]

The process will be governed by executive departments (HHS, Transportation, Education, etc.)

Errr...the last I checked these departments have missions which do not include the consideration of the macroeconomic effects of their spending.

[KrazyHorse]

The best part of the stimulus plan is the part which goes in direct transfers to individuals with high marginal propensity to spend. Extending unemployment benefits is a good idea, as are increases to food stamp programs etc.

And yes, the Republican local politicians who are trying to prevent their own unemployed/poor from receiving these benefits are ****ing asshats.

[Ramo]

I'm pretty sure that states and municipalities are going to find ways to spend significantly less than they're given (relative to counterfactual of no transfers)

Um, sure. By laying off teachers and cops.

Errr...the last I checked these departments have missions which do not include the consideration of the macroeconomic effects of their spending.

I was addressing the regionalism comment. As I said, there is some infrastructure spending that may be limited as a fiscal stimulus, but I think make sense over a longer period.

[KrazyHorse]

I'm pretty sure that states and municipalities are going to find ways to spend significantly less than they're given (relative to counterfactual of no transfers)

Um, sure. By laying off teachers and cops.

Is this supposed to make some sort of sense? My point is that states WILL spend more money than they would without receiving any cash from the feds, but will spend LESS than the feds give them, by spending some of the cash on **** they would have bought anyway.

I was addressing the regionalism comment. As I said, there is some infrastructure spending that may be limited as a fiscal stimulus, but I think make sense over a longer period.

So the stimulus bill is not actually a stimulus bill? In actuality the bulk of spending (outside tax cuts and direct transfers to states) has dubious macro effects in your mind and is instead merely a good buy for the taxpayer?

[Drake Tungsten]

So the stimulus bill is not actually a stimulus bill?

Obviously.

[KrazyHorse]

I like having a Ricardian put option in my back pocket...