The Stimulus Is A Failure

[Dinner]

I agree. I was just pointing out that he didn't make a claim of ~$1.5 billion.

In fact the whole stimulus bill is to small to really get things going like the New Deal did plus to much of it was in the form of tax breaks which have a very small stimulative effect on new orders and purchases (for every $1 in tax breaks you get around $1.02 in new economic activity but if you build things like roads, bridges, rail lines, dams, etc... then you get about $1.83 for every $1 spent). Just about every serious economist has agreed the stimulus bill was too small and had the wrong composition.

The important thing to remember is that Republicans were constantly trying to make it smaller and constantly trying to screw it from effective stimulus to less effective items like tax cuts. They want it to fail and did everything they could to make it fail because if the economy turns around then they have no chance in 2012.

[KrazyHorse]

for every $1 in tax breaks you get around $1.02 in new economic activity but if you build things like roads, bridges, rail lines, dams, etc... then you get about $1.83 for every $1 spent

Where the **** did you get these numbers? I've seen FAR smaller fiscal multipliers quoted in other places.

[Dinner]

MSNBC. I remember the numbers because I used them on several forums. Give me a second and I'll google that for you.

[KrazyHorse]

By the way, just so you know: the size of the fiscal multiplier is HOTLY debated among academic economists. The fact that MSNBC would simply quote a number is ridiculous.

[Dinner]

The figure was $1.02 in new economic activity from tax cuts and $1.59 for infrastructure according to Moody's.

According to Moodys.com, every dollar spent on nonrefundable tax rebates generates about $1.02 of economic activity. Every dollar spent on, say, infrastructure, which Senator Thune would like to gut, creates $1.59 in economic activity. Why would we waste 57 cents on the dollar? Why would we waste our money on tax rebates when actual spending works better?

A stimulus bill like the one we have ended up with, as of now, which is 42 percent tax cuts, gets the American people 42 percent punk. It is a waste. At a time we can‘t really afford to waste and we can‘t afford to dither, we need economic stimulus which frankly—I‘m sorry to say—is spending.

http://www.msnbc.msn.com/id/29033652/

(the quote is about 40% of the way down the page)

[Dinner]

Also one of the single fastest and most effective programs for immediately stimulating new economic activity is, believe it or not, the food stamps program. According to Moody's (quoted by MSNBC linked above) $1 in food stamps generates $1.73 in new economic activity and it does it right away. The reason is poor people spend every cent they get instead of saving so it gets into the economy fast and gets circulating also virtually all food items are domestic rather then imported so you get a big boost. Now, that's not a long term path to prosperity but if the goal is to provide an immediate stimulus for new economic activity then its one of the best ways to do it though I would honestly prefer infrastructure as that provides a long term asset which people can use for decades to come.

[KrazyHorse]

So now moody's knows a number to 3 sig figs that academic economists can't decide on?

Come on, Oerdin...

[Dinner]

I don't know their methodology so I can't really say how they arrived at it. If I could find the original Moody's report then I could dig into it for details.

[Aeson]

We're trying to increase economic activity, not the number of fatties!

[Zkribbler]

I don't know their methodology so I can't really say how they arrived at it. If I could find the original Moody's report then I could dig into it for details.

Don't bother, Oerdin. You could tell KH that 1+1=2, and he'd ask for sources then when he got them, he'd claim the source was just making the numbers up. Make him give you some authority that says something to the contrary.

[KrazyHorse]

You're a moron.

I bet you don't even know what VAR is (not VaR, btw)

[KrazyHorse]

And I've already posted a source which claims that for the US the effect on GDP of increased spending is indistinguishable from 0.

[KrazyHorse]

A source which is far more credible than Moody's btw.

You ****.

[Dinner]

What the hell is wrong with Moody's? It's just an investment and analysis firm and isn't even remotely partisan.

[KrazyHorse]

It has nothing to do with being partisan. Try again. It has to do with reporters being morons.

Nobody ****ing knows WHAT the fiscal multiplier of spending or tax cuts is. And you're telling me that Moody's reported it to 3 sig figs. That means that they found some random economist who had his own favourite model in which he got those numbers. Other economists with other models get vastly different numbers. The fiscal multiplier question is one of the biggest open questions in modern macro (from what I can tell as an outsider).

Telling me that Moody's isn't partisan and is therefore a reliable source for this info is like telling me that CNN isn't partisan, therefore I should trust them when they tell me that the mass of the Higgs boson is 185.3 GeV. They don't have that information. Nobody does.