yes but will today's politicians have the balls/nerves/smarts to do this? Unlikelyas they always seem so pro-active to act.

Is it worrying? Of course it is. Almost everyone pushing the stimulus laments the need for deficit spending, especially after the last 8 years. Obviously they feel it is necessary or they wouldn't do it. I agree with that position. I understand some of those who would rather opt for inaction, but even you admit that it would result in a 3-4 year deeply painful recession. I simply do not believe that we should punish the bottom wage earners for the sins of those at the top. If you want some of that money back, then hike the top marginal tax rate. That's probably a good idea anyway since it forces more investment.

Second, the stimulus that just passed the house would not spend that money in 6 months. It's spread out over 3 years.

Third, yes, I think it's worth it if it gets the economy back on track. The problem of course is that you have to then get that revenue back either in spending cuts or tax increases. But we're going to have to face that problem whether we pass the stimulus or not. It's $1 trillion over 3 years against an already existing debt of $11 trillion.

That's not a good rationale for the bill. So what if some people "feel it's necessary"? They're mostly politicians. Yes, you have folks like Krugman and Buffet pushing for it too, but they're hardly neutral observers.

As for increasing the tax burden - for the first time in many years I wouldn't be against that, but only as a temporary measure, and as part of a broader "balance the budget" approach. Obviously that ain't happening, so I don't see the reason for this.

As for "punishing certain people" - that will happen anyway. I'd rather take the pill now.

I never said the money would be spent over 6 months. I said that it's the second bailout bill worth a trillion dollars in six months.

Look, you can't assume that this recession is an ordinary slowdown in the economy. It's not. The world is looking at the U.S. and is seeing that the pillar of the modern economic system is spending like a drunken sailor. How much longer before other countries lose trust in the U.S. financial system and start calling in the debts?

And here we go again: http://online.wsj.com/article/SB123319689681827391.html



Now there's no Bush to blame, though.

Oh, but the opponents, they're neutral, right?

Here's a story regarding the CBO report, which is about as non-partisan as you're going to get on this issue:

http://www.mcclatchydc.com/251/story/60822.html

The nation's current recession is likely to be the longest since World War II, and by some measures could be the worst since the Great Depression, a new Congressional Budget Office forecast said Tuesday.

Without a major economic stimulus plan, "the shortfall in the nation's output relative to its potential would be the largest – in terms of both length and depth – since the Depression of the 1930s," said new CBO Director Douglas Elmendorf in testimony prepared for the House Budget Committee.

The analysis is sure to add important momentum to the effort to enact an $825 billion stimulus by mid-February. President Barack Obama is meeting Tuesday morning with House Republicans and plans to meet with Senate GOP members in early afternoon. The nonpartisan CBO is highly regarded by both parties.



Bush doubled the national debt in 8 years, from $5.7 trillion to 11 trillion. If that didn't put them over the top, then why would this? Now that Obama's president, they're suddenly going to realize how much we've been spending?

As I understand they want to do the Bad Bank Concept. We did also open a Bad Bank for the UBS here and the National Bank and the Staate did pay 68b CHF for "toilet paper" (they called it papers that will become more worth in a few years......I cried and laughed and I call it toilet paper).

You will see....at the end the public will pay everything....and the "normal" economy will not see as nearly as the help the financial sector gets. Public gets fucked here.

Who's saying that? I'm not neutral.


I don't doubt the finding of the report that "Without a major economic stimulus plan, "the shortfall in the nation's output relative to its potential would be the largest – in terms of both length and depth – since the Depression of the 1930s,". What I am trying to convey is that artificially raising the nation's output is not the best course of action. This is on top of the inefficiencies that the government brings in to the equation.


Bush is very much to blame here. His budget deficits hindered the ability and the feasibility of borrowing more money; on top of this he was the initiator of the big bank bailout, that in the end was about as useful as burning money in front of the White House.

What Obama should be thinking about is how to reverse the trend, not doing more of the same.

Indeed. If these papers have no value now, how will they magically increase in value when the government is the one holding them?

I guess it makes sense, though. The government arrests Bernie Madoff for running a Ponzi Scheme, while at the same time overseeing the biggest Ponzi Scheme in history of the world - Social Security.

I don't think the output would be artificially raised. People would be working real jobs doing things that really need doing. I fully understand the concern about government inefficiency, but I think the net gain of 2-3 million new jobs is worth it. And unlike supply-side targeted spending/tax cuts, this is much less likely to result in a bubble.



I hate to invoke Hoover here, but I think that would be a catastrophic mistake. Not doing anything would be preferable to trying to cut spending AND raising taxes at this moment, which is what it would take to reverse the deficit gap. I would tackle that maybe 4-5 years down the road, after the economy has recovered and had some sustained growth.

Btw, the Republicans voted unanimously AGAINST middle-class tax cuts. Isn't that what they'd be saying right about now were the situation reversed?

Steven Colbert:

Do you live in the same world as we do, BKB?

The STD funding was removed from the bill. Just FYI.

Yeah?? And how about removing the part where he plans to use $$$ to sod the grass at the Malls, most of which will probably close due to the poor economy cause no one has $$ to go shopping?? As much as I'm not a Rush Limbaugh fan, perhaps the Obama Administration should listen to his plan and take him up on his advice??

I hope you're only pretending to be, well, this misinformed.

They're talking about sodding the grass at the NATIONAL MALL, not at shopping malls. It's one small project, and it actually does put people to work, which is the whole point of the stimulus.

I usually skip what BKB has to say, but that gem you picked out is comedy gold and I have laughed at perhaps 2-3 things ever written by a KJ poster.

BKB, why do you end sentences with two periods or other punctuation marks?

Limbaugh is an idiot

Perhaps, but the guy does Know his shit and besides, I'm sure Rush Limbaugh is really broken up by what some kid named Chipmunky feels about him..

Know*

Are you serious? The net gain of 2-3 million jobs is worth a trillion dollar bailout? That's $500,000 per person, which is roughly 20 years of salary payments per person, assuming average salary of $25,000.

Is reality no longer required to be taken into consideration when we're talking about Obama's plans?

4-5 years down the road there will be another downturn in the economy, which will require another emergency bailout and another stimulus package.

That's just dumb. That's what they're trying to do by voting 'No' on the bill. But once the bills passes, how can they reject the funding for their districts? They're not czars; they're lawmakers.

I see there is a lot of talk about some "dumb" projects that the stimulus package proposes. I think that misses the point. From the Keynesian point of view (which is what is driving this bailout), it doesn't matter what the projects are, as long as there is money going into the economy. John Keynes himself said that the government should give people money to dig holes and fill them up again.

What's interesting, though, is that even if the projects are "smart" it's not necessarily a good thing that the government is funding them. I will give you an example from the industry that I work in, wind energy.

For years many wind developers have been building wind farms in West Texas, because the wind there is very good. However, because there is not a lot of demand there, what wound up happening is that the energy prices go way down (many times energy prices in West Texas are actually below zero due to abundance of wind energy). So now nobody builds wind farms in West Texas anymore, because it's just not profitable. The way to fix the issue is to build transmission lines to link up West Texas with more populated areas in TX, such as Dallas and Houston. In theory, this could be done with private investment, because it would existing and future wind farms very profitable for their operators. In reality, however, these lines aren't built with private funding due to expectations that the government will fund it. So when Obama tries to push through a stimulus package that includes building out of more transmission lines, he helps fuel these kinds of expectations for the future. Thus even investing in "good" projects sets up perverse expectations and stifles private infrastructure investment.

And this is assuming that the government can spend the money efficiently, which we know it can't.

The money in a budget doesn't just to go salaries. When your company does its budget, are wages the only item on the expense sheet?

We're talking about building bridges, buildings, and investing in alternative energy technology among other things. That requires massive amounts of supplies, equipment, materials, etc, etc, etc.



I thought you said that in 4-5 years, the economy would start improving? Unless you mean that the bailout would boost the economy and then would be followed by another downturn in 4-5 years. But you claimed earlier that the bailout wouldn't work at all.

Which is it?