Free Markets, Free People

Stimulus fail

Apparently Joe Biden is the one chosen to carry the story that the reason the $862 billion “stimulus” plan failed is because of the stingy GOP.

Ed Morrissey pulls that apart like a kid pulling the wings off a fly.  First Biden:

“There’s a lot of people at the time argued it was too small,” he said. “A lot of people in our administration…even some Republican economists and some Nobel laureates like Paul Krugman, who continues to argue it was too small.”

“But, you know,” Biden told Tapper, “there was a reality. In order to get what we got passed, we had to find Republican votes. And we found three. And we finally got it passed,” Biden said.

But if it wasn’t for the legislative reality, Biden explained, “I think it would have been bigger. I think it would have been bigger. In fact, what we offered was slightly bigger than that. But the truth of the matter is that the recovery package, everybody’s talking about it [like] it’s over. The truth is now, we’re spending more now this summer than we — I’m calling this…the summer of recovery,” the Vice President said.

"Legislative reality" at the time consisted of prohibitive majorities on the Democrats side in Congress. They ddin’t need a single GOP vote – not one. And, in fact, as Morrissey points out, the original package was to be $775 billion and the final package was $862 billion pig we got stuck with. In fact it was bigger than what had been asked for by Biden and company. You have to love the revisionist history, don’t you?

Of course Biden is pretty sure the victory in Iraq is possibly one of the "greatest accomplishments" of this administration so it’s no like he’s new at rewriting history. Morrisey also provides us with a couple of Obama quotes that sort of kick the Biden contention in the gut:

February 5th, 2009:

While efforts have been under way in the Senate to whittle the plan back to $800 billion or less, Mr. Hoyer said he believed it should be higher, at like $880 billion. Earlier on Air Force One, Mr. Obama was asked by pool reporters traveling with him about the size of the proposal …

Asked if the figure should be $800 billion and not more, Mr. Obama said: “Well, I gave you a range. I think we’re in range.”

And February 9th, 2009:

“It is the right size, it is the right scope. Broadly speaking it has the right priorities to create jobs that will jump-start our economy and transform it for the 21st century,” Obama said of the more than $800 billion bill at a rally in Elkhart, Indiana.

If the stimulus was too small (it wasn’t), it had zip to do with the GOP.  And Joe and company isn’t fooling anyone but those who want to believe fantasy over reality.  As usual, the Democrats blame-game runs into reality and facts and comes out second-best.

~McQ

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62 Responses to Stimulus fail

  • But isn’t this the well-worn formula of the Collective, when faced with another example of  the failure of their entire philosophy?
    “We didn’t spend enough.  We weren’t committed enough.  Those evil Republicans crippled our effort.  We never really gave this a chance.”
    Geebus, how many times have I heard that in my life now?

  • Well, they are starting to focus on the real problem, spending.  Unfortunately they are 180 degrees off from the correct answer, which is less, much much less, not more.
     
    Cut back government services and if there is a real need for those services than private industry will step forward to fill the gap, stimulating a REAL recovery.

  • It was a failure in the sense that a looting is a failure for everyone but the looters.

    The idea was that this “hurry up, our very economic life as a nation depends on it, so pass this while I still have Champagne on my breath from my glorious inauguration” political payoff would by its very size “stimulate” the economy. Well, it didn’t. It was but the first of several cement overcoats that Obama helped the economy slide into.

  • And, as if on cue…
    http://www.thedailybeast.com/blogs-and-stories/2010-07-19/save-the-economy-a-manifesto-by-harry-evans-joseph-stiglitz-alan-blinder-and-other-leaders/?om_rid=MR$hOk&om_mid=_BMRERdB8O5mxrD&
    When you lede a story with “Top Economists” and then include Little Bobby Reich in the list, you are in belly-larf country.

  • Only including the direct stimulus package is bogus.  The total available stimulus was more like 12.8 trillion.
    http://www.bloomberg.com/apps/news?pid=newsarchive&sid=armOzfkwtCA4
    The whole bailout scheme is a monumental failure when viewed in total.  The Fed is still holding on to trillions in toxic MBS.  Gawd and the Fed only knows how much got lent to who and I doubt their will be any meaningful disclosure on that front any time soon.  It very well could be in the multi-trillions.  Fannie and Freddie are off-balance sheet black holes.  The list goes on.
     

  • The stimulus plan is a great issue for scoring political points, if the economy is not back to where we want it, argue it failed, and even better, argue that doing nothing or anything different would have worked better. It’s as good as arguing that it would have been worse if the stimulus had not passed. It is all an exercise in politics because it is impossible to know what would have happened if things had been done differently, so anyone can say anything.

    But why not compare recoveries?

    In 1982 at the same point in his Presidency that Obama is at now, Ronald Reagan was at 9.5% unemployment and that headed up another full point before dropping back to 7.5% by the 1984 election. Unemployment is ticking down now, not up. Ronald Reagan had a 35% approval rating at this point in his Presidency and Obama’s low point so far has been 44%.

    It is not a perfect comparison, but at least it is a comparison between two real scenarios rather than a comparison between what is happening and anything anyone wants to imagine might or might not have happened.

    If I thought Republicans had learned their lesson from their 12 years in control of Congress and 8 years in control of the White House, and that they really would be, uh, conservative, they would have a shot at my vote. But why on earth would anyone believe the same people who, when holding all of the reins of government, gave us 5 trillion is new debt during a period of low unemployment and good GDP numbers, all the while saying the same things they are saying today about the importance of small government and the free market?

    I suppose we could argue that a Republican Congress with a Democratic President was a working formula for fiscal responsibility, but I don’t think it is an invalid argument to suggest that during the economy of the late 90’s, the boom was so big that the government just could not spend it fast enough to appear to be as incompetent as usual.

    The fact is that with respect to government spending and debt, we are not doing anything unless we are doing something about Medicare, Medicaid, Social Security, and Defense. Everything anyone ever says about government spending that does not address some all of these elements in meaningful ways is just so much hot air, and for a long, long time, hot air seems to be our only inexhaustable natural resource.

    Social Security – solution – Phased in privatization and transition to needs based benefits, complete dissolution of the fictional Social Security Trust Fund
    Defense – Cap spending at $500 billion annually unless war is officially declared by Congress.
    Medicare/Medicaid – solution = single payor plan with private insurance functioning to provide greater add-on benefits for those who have the means and desire to pay for it.

    • I agree that the Republicans are no great shakes but what is your alternative?  Are you not ready to admit that this bunch of evil spendthrifts we have in power now either don’t know what the hell they are doing Or are deliberately trying to wreck us?

      Your comparison with Ronald Reagan will only be valid if things turn around, and pretty quickly.  But I don’t think they will. In fact I see things as coasting along with some very slight improvements until early next year.

      Then the taxes go into effect and we get another round of bad juju. 

      And even if we do get some sort of recovery next year, there will be a huge amount of inflation.  We are not seeing inflation right now only because the economy is so suck-ass.

    • This isn’t about what “point in his presidency” anyone is. This recession began in December 2007. It’s 31 months old. It was technically over with some light growth in a quarter or two but no serious person thinks it is over.

      The Stimulus failed because it didn’t and couldn’t stimulate anything. It was a political looting, and a lie.

  • The stimulus plan is a great issue for scoring political points, if the economy is not back to where we want it, argue it failed, and even better, argue that doing nothing or anything different would have worked better.

    This implies you think there is an economic mechanism that supports government spending to stimulate the economy.  Is that your argument?  Your statement here seems condescending…putting any opposition to “stimulus” as only crass politics.
    I think your comparison is as bogus as hell.  If you want a comparison, deal with this one…
    http://hindenblog1.blogspot.com/2010/07/crash-obamic-great-recedingemployment.html
    Are you honest enough to admit that the Reagan trajectory…after the disaster of the Carter years…was solidly upward, while the trajectory now is into the crapper?

  • Let me say this, I am not going to be a doctrinaire supply sider. The stimulus might have actually worked (in the sense that it temporarily put some people to work and got some buying going on) If it had been spent on some much needed infrastructure projects. 

    Because that would have entailed some new hiring, (even though on borrowed money).  But only a small fraction was spent that way.  Instead it went to state governments just to let them keep their own workforce going without having to make the kind of cuts they have to make.

    (and the rest was just used as a big Democrat slush fund.)

    There is still alot of it that has not been spent, it should be used immediatly to retire public debt.

  • All criticisms of the stimulus plan need not be crass political objections, but when they come from people who do nothing but criticize Democrats (especially after the wonderful job Republicans did), it’s hard not see most of it nothing but politics.

    I have a conservative friend in the construction business who roundly disagrees with the stimulus program and claims it has not done anything for him. Then, in a breathtaking display of compartmentalized thinking, admits that business is so bad in his industry that if were not for government projects, he would be out of work.

    Yes, the stimulus could have been done differently, and certainly better, but I have driven across my state and I see project after project of infrastructure building, all with those pretty little signs indicating they are funded by the stimulus program. Ironically, my conservative brother down South, has never seen such projects or the sign.

    I have to wonder if this is a failure of the stimulus plan, or a failure of his state?

    On employment numbers, Reagan, and honesty:

    Reagan saw another year of RISING unemployment from this point in his Presidency, and he passed a very large tax increase (TEFRA) at this point in his term. The trajectory after the recovery was solid. The trajectory from this moment in Reagan’s Presidency was another full year of rising unemployment up to 10.8%. If the unemployment is lower than 10.8% a year from now, Obama is ahead.

    As to Reagan’s success and Carter’s failure, I would point to one decision Carter made that made himself look bad and made Reagan look great, the appointment of Paul Volcker and his subsequent support of Volcker’s policy of burning out inflation by dramatically raising interest rates. This is widely considered to be the policy that corrected the economy, and it was Carter’s decision, which Reagan wisely supported when he took office. Carter was a failed President, an I will be honest enough to acknowledge that, but are you honest enough to admit that Reagan’s success was in part owed to Carter’s decisions.

    And yes, I do believe there is an economic mechanism that supports government spending to stimulate the economy. My short version offer of proof is to point to the largest government spending program of all time, and the resulting economic impact. WWII saw federal spending reach 70% of the GDP, and with this spending program that dwarfed all other spending programs, this country finally fully emerged from the Great Depression. I would however probably agree with you that other than recessionary periods, smaller is better, generally. Deficit spending and government growth during periods of good economic growth is our downfall, deficit government spending should be limited ONLY to recessionary periods.

    I think people become victims of their ideologies, convincing themselves that one answer (the one that fits their ideology) is ALWAYS the right answer. I disagree, and in fact believe that policies should be situational. Sometimes the conservative approach is the right answer and sometimes the liberal approach. But ideologues (on both sides) have hammers and see every problem as a nail.

    • There’s no need for spending. Just let investors, businesses, and people keep their money and the market will do the work of recovery. The markets are the economy and they are the most efficient means for creating growth.

      Government spending is always in defiance of the “knowledge problem” and has little to nothing to do with a good serious recovery. And is in fact an impediment to a good and serious recovery because it hogs capital and throws into onto the wings of non-efficient central planning.

      Spending did not work in the Great Depression, and what worked in WWII was the sudden employment of millions of men in the miltary to fight a bloody war. Hitler and Stalin could have done that much.

    • “Ironically, my conservative brother down South, has never seen such projects or the sign.  I have to wonder if this is a failure of the stimulus plan, or a failure of his state?”
       
      And I have to wonder how your state voted in the last Presidential election, and how your conservative brother’s state voted.  Because, ya know, there’s never any favoritism (from both parties) shown in cash infusions from Washington.

    • but when they come from people who do nothing but criticize Democrats

      I’m getting pretty tired of this line. (Especially when it’s coming from people around here long enough to know better, which I actually thing Sean may not be.) As I recall, QandO was against the Bush spending back then. I know I personally was. Accusing this site of only criticizing one side is projection, pure and simple. I’m sure the vast majority of political sites out there are indeed purely partisan, but this is not one of them and that’s part of the reason I hang out here as much as I do.
       
      Big deficits were bad when Bush did them. I felt that way at the time, I did not newly discover this. Obama’s deficits were worse. And if you asked me whether I would feel better about Bush’s deficits in 2007 if I knew that someone was going to quadruple them in three year’s time I would have asking you what the hell kind of dumb question is that. And I still feel that way now. Even if I was fine and dandy with Bush’s spending, which I was not, I am not required to love Obama’s spending.

    • ” WWII saw federal spending reach 70% of the GDP, and with this spending program that dwarfed all other spending programs, this country finally fully emerged from the Great Depression”

      So your cure for a recession is to draft millions of Americans into the armed forces, impose rationing, and kill a few million people? 

    • “I have driven across my state and I see project after project of infrastructure building, all with those pretty little signs indicating they are funded by the stimulus program”

      And you, of course, believe everything you read.

  • This looks like standard politicking.  Make promises, and when those promises do not pan out, simply move the goalposts.  Spent more than you had initially asked for?  Claim that you should’ve spent more.  Unemployment rises well past your estimates?  Claim that it would have been even worse!
     
    There is a certain consistency here, in that the numbers are always made up.  When the numbers you made up turn out to be, you know… made up, simply offer up new rationalizations that are supported by new numbers. Numbers which you have, of course, made up.

  • Looker, my stated voted for Obama, my brother’s state voted for McCain, so if you are correct, then that states failure happened at the polls. ;-)

    My facetiousness aside, my brother’s state received the almost exactly the same dollar amount in awards as my state. Whether Georgia spent it quickly, slowly, or just in somewhere my brother doesn’t travel, I don’t know.

    • It was honest curiosity to see if there was in fact a difference in funds available.

    • Yeah sport, well the gulf region states did not support Obama, and he has done everything in his power to try and kill us including deliberately stopping oil clean up, and the horrible unnecessary drilling moratorium.

      It’s the Chicago way.

  • I agree Tonus, everything that is happening is in fact happening, and everything that is not happening can be speculated at the whim of anyone who cares to spew forth opinions.

    Since I believe that government SHOULD spend during recessionary periods, it is no stretch for me to be confident that without the stimulus, the situation would be worse. If you believe that austerity, or a different manner of stimulus was the only correct course of action, you would of course believe otherwise.

    In the end, it is as I said, an exercise of imagination, because everything except what is happening is someone’s imagination of what would have happened under different circumstances.

    Consider McPhillips response, “Spending did not work in the Great Depression, and what worked in WWII was the sudden employment of millions of men in the miltary to fight a bloody war. ”

    I said that WWII was the biggest stimulus program in history, and McPhillips rejected this notion, then immediately said the government employment of millions of Americans by the government worked. So while clearly I am not the only person who believes that WWII ended the Great Depression, but am I the only person who sees the employment of millions of Americans by the government as government spending?

    I see complaints on this site about new government jobs as opposed to private sector jobs, but wasn’t WWII all about government jobs? 70% of Americans were employed by, or paid by companies who were paid by the government. AS I said, stimulus on a massive scale.

    • The Great Depression was Great because of FDR’s policies. We would have pulled out of it much sooner if FDR didn’t try to fix it. WW2 essentially distracted FDR from destroying the economy, it was the stimilus effect of the war, it was that it refocused the Administration.

      http://newsroom.ucla.edu/portal/ucla/FDR-s-Policies-Prolonged-Depression-5409.aspx?RelNum=5409

      At this point, we should be on our way to recovery. However, Obama, much like FDR, is preventing that recovery.

      • It should read “. . . it wasn’t the stimilus effect of the war . . .” in the above post.

      • The facts support you.  The depression did not really end, even given the incredible effort of WWII, until AFTER the war, when Congress radically reversed the Collectivist policies of the FDR years.

      • CATO has a nice writeup about the fallacy of WWII spending, and an even better assessment of its aftermath in 1946.
        http://www.cato.org/pubs/policy_report/v32n3/cpr32n3-1.html
        Stimulus by Spending Cuts: Lessons from 1946
        Cato Policy Report, May/June 2010
        Jason E. Taylor and Richard K. Vedder
        Of course it is often said that World War II provides the empirical proof that a Keynesian-style government stimulus can bring an ailing economy back to full employment. During the 1930s, the argument goes, government simply did not spend enough to end the Great Depression. AfterPearl Harbor, policymakers finally put the stimulus pedal to the metal with massive deficit spending and highly expansionary monetary policy — the money supply doubled between 1941 and 1945 — to finance wartime production. Unemployment fell from nearly 20 percent in the late 1930s to 3.1 percent in 1942 and 1.2 percent in 1944. John Maynard Keynes himself implied that the return to full employment in the face of massive expansionary policy validated his theory, saying that economic “good may come out of evil” if we heeded the lessons of the wartime stimulus by using the same methods to combat downturns during peacetime.

        But the real economic lesson to come out of the World War II era was not that the conscription of nearly a fifth of the labor force into grueling and dangerous working conditions abroad and the imposition of a command economy at home — complete with rationing, price controls, and government allocation of many aspects of life — could bring unemployment down. Soviet-style command economies had many problems, but unemployment was not typically one of them.
        (and)
        If the wartime government stimulus had ended the Great Depression, its winding down would certainly lead to its return. At least that was the consensus of almost every economic forecaster, government and private. In August 1945, the Office of War Mobilization and Reconversion forecast that 8 million would be unemployed by the spring of 1946, which would have amounted to a 12 percent unemployment rate. In September 1945, Business Week predicted unemployment would peak at 9 million, or around 14 percent. And these were the optimistic predictions. Leo Cherne of the Research Institute of America and Boris Shishkin, an economist for the American Federation of Labor, forecast 19 and 20 million unemployed respectively — rates that would have been in excess of 35 percent!

        What happened? Labor markets adjusted quickly and efficiently once they were finally unfettered — neither the Hoover nor the Roosevelt administration gave labor markets a chance to adjust to economic shocks during the 1930s when dramatic labor market interventions (e.g., the National Industrial Recovery Act, the National Labor Relations Act, the Fair Labor Standards Act, among others) were pursued. Most economists today acknowledge that these interventionist polices extended the length and depth of the Great Depression. After the Second World War, unemployment rates, artificially low because of wartime conscription, rose a bit, but remained under 4.5 percent in the first three postwar years — below the long-run average rate of unemployment during the 20th century. Some workers voluntarily withdrew from the labor force, choosing to go to school or return to prewar duties as housewives.
        /end quote
        The point being that a command economy drives what politicians and bureaucrats want, not what producers, investors, and consumers want.
         
         

    • http://hotair.com/archives/2010/07/19/tarp-audit-claims-obama-admin-destroyed-tens-of-thousands-of-jobs-in-dealer-closures/
      There is alllllll kinds of empirical evidence that government spending is, in fact, counter-productive.  But I don’t expect to convert you to reality.

    • “but am I the only person who sees the employment of millions of Americans by the government as government spending?”
       
      except the items that we were spending on were expendables, intended to blow things up, and feed the machines and men used for the purpose of blowing things up.  We weren’t going to use them locally.  We could in fact employ millions of Americans to build GM cars to sit in lots, but we wouldn’t use them up as fast as we did Sherman tanks, 500 lb bombs, .50 cal machine gun rounds or K and C rations (etc etc etc).     Getting people to pay a tax or buy bonds for a new aircraft carrier to be used to sink the Japanese fleet and bomb the crap out of Kyushu made sense to people, as opposed to paying for someone else’s health care, which, call us what you will as a result, may not.  What’s more, there was an end in sight for a war, a hill to climb and then we’d be done.  Everyone who bothered to think about it believed the military would get smaller when the war ended.   All I see with the current spending is more spending on the horizon and bigger government.  Not to mention a very significant portion of the world lost all their cool consumer goods their homes and their manufacturing production capacity as a result of the war, which to put it rather crassly, opened up a substantial market for American goods, especially since we only boosted production capacity during that period.
       
      So, not the same environment, not the same  type of motivations for the spending, and nothing like the same frame of mind.

      • We have even more future spending to do. If we can’t balance the budget now, how will we later? This budget failure would not be so bad if we didn’t have major structual problems looming in the form of the entitlements. Instead of dealing with real problems, Obama is pushing a leftist agenda and creating more problems.

        The stimilus handed to the broke states is a big mistake. It allows the states to continue acting stupid, instead of fixing their pension/union issues. Reinforce failure; stupid.

    • If you can’t make a distinction between “stimulus” spending and spending on a conscript military to fight a war, then pay attention to me when I make it, as I did in my comment.

    • ” but wasn’t WWII all about government jobs?”

      No, it wasn’t. So nice of you to trivialize the suffering and death of millions of people.

      • “but am I the only person who sees the employment of millions of Americans by the government as government spending?”

        “The potlatch was a cultural practice much studied by ethnographers. Sponsors of a potlatch give away many useful items such as food, blankets, worked ornamental mediums of exchange called “coppers”, and many other various items. In return, they earned prestige. To give a potlatch enhanced one’s reputation and validated social rank, the rank and requisite potlatch being proportional, both for the host and for the recipients by the gifts exchanged. Prestige increased with the lavishness of the potlatch, the value of the goods given away in it.”
        http://en.wikipedia.org/wiki/Potlatch

        “Literally, ‘giving’. An extravagant festival held by the Indian tribes of the northern Pacific coast, especially the Haida, the Nootka, and the Kwakiutl. The ceremonial destruction or giving away of possessions by chiefs and leading warriors establishes superiority in social or political status, or permits the assumption of inherited rights. One chief might ‘shame’ another by destroying valuable pots, killing slaves, and burning down houses. If the other chief failed either to give away or to destroy more things, then he would lose public esteem. According to legend, the first patlatch was concerned with the exchange of feathers, long regarded as sacred objects by the North American Indians.”
        http://www.answers.com/topic/potlatch

        We certainly came out of WWII with increased prestige, but that was asbout it.  We also immediately went into a recesion.
        Further, I don’t see the forced labor, death, and maimimg of millions of Americans as ‘the employment of millions of Americans by government’.

    • Since I believe that government SHOULD spend during recessionary periods, it is no stretch for me to be confident that without the stimulus, the situation would be worse. If you believe that austerity, or a different manner of stimulus was the only correct course of action, you would of course believe otherwise.
      In the end, it is as I said, an exercise of imagination, because everything except what is happening is someone’s imagination of what would have happened under different circumstances.

      Both the previous and the current administration made specific claims and promises when they agreed to stimulus packages and bail-outs.  The Obama administration warned that unemployment would rise beyond 8% if the stimulus plan was not enacted.  The administration asked for an amount in the range of $775-800 billion and received a total of $862 million.
       
      Now, with unemployment close to 10% and the economy still stalled, the administration pretends that its previous claims don’t exist, and whips up new claims out of thin air.  This is not just a case of what happened and what might have happened.  The administration oversold the stimulus and then lied about it.  That part isn’t speculation.  That part should not be subject to cries of partisanship or ideological differences.

  • “It was not the stimulus effect of the war, it was the refocused administration”

    Maybe it’s just me, but precisely how is going from putting a lot of people to work on the government payroll morph into a “refocus” when the government puts a massively greater number of people to work on the government payroll?

    There was certainly a refocus of what the government was hiring people to do, but the net effect is the same, except WWII was much, much bigger.

    FDR’s failure, considering the stimulus effect of putting 70% of the country on the government payroll in one form or another, may have been that he was thinking too small.

    • FDR took what should have been a short economic down turn and turned it into a long down turn. Same as Obama is doing now.

      It wasn’t WW2 stimius effects that got us out of the Depression. It was the fact that the Administration focused on the war effort and stopped trying to “fix” the economy.

      The Great Depression lasted a long, long time because of FDR. He messed up the market’s natural tendency to self correct. When he stopped messing up the market’s natural tendency to self correct, the market corrected.

    • That is simply crazy.  War…especially full-tilt war…is not an exercise in economics.  Economics is the study of the allocation of scarce resources among competing demands.  War…especially a war of national survival…removes all but a very few of those demands.  It creates demand for a few things at levels that nobody would tolerate in time of peace, and it completely suppresses demand for things that most people would prefer.

    • Yeah, that’s what we need: Big Thinkers. Like FDR and Hugo Chavez and Barack Obama.

      The problem is that the legacy of the Big Thinkers is that their entitlement programs have already run the National Debt up around 90% of GDP and its structural, not a momentary balloon to fight a war that can be paid down in a couple of decades.

      • The big problem going forward is Medicare, Medicaid, and social security, with Obamacare adding to the mess soon. And Obama will do nothing to fix this problem, and everyone knows it (instead he’s busy creating new problems).

        The stimilus solution didn’t work for FDR, it didn’t work during Japan’s lost decade, and it isn’t working now. Stimilus can help some in a short term manner, but it is better to achieve it via lower taxes, and let people decide how to handle the money, rather than the government.

        But given Obama’s back-to-back $1.4T debts, and the fact that those who buy our debt are getting skittish, and any form of stimilus is risky. It’s down right insane considering what will eventually happen with the big entitlements. And much of Obama’s stimilus causes more harm than good, bailing out car companies (rewarding failure), firing CEOs (creating more uncertainty), etc.

  • “There is alllllll kinds of empirical evidence that government spending is, in fact, counter-productive.  But I don’t expect to convert you to reality.”

    And there is all kinds of evidence that government spending can stimulate economic growth, but I don’t expect to convert you to reality.

    I think the reality is between the ideologies, not belonging to either, which of course is a waste of time arguing when you are talking to an ideologue. Government spending can be a stimulus, and at times it can be a drag on the economy. I would suggest that when the economy is growing, government spending is a drag, but in recessionary periods, spending can promote growth.

    But to someone who thinks the Great Depression did not end until AFTER WWII, who is willing to ignore the doubling of our GDP between 1941 and 1945 and the reduction of unemployment below 10% by 1941, and less than 2% by 1942, I can only suggest this is a person to whom facts that do not help them seem to just being ignored or changed.

    Not to mention that the top tax rates remained at 88% or higher until 1963.

    So what FDR collectivist policies were reversed after WWII?

    Most of the New Deal programs were discontinued during WWII, since the war itself became the ultimate government spending and hiring program. Since the Depression was over before the end of WWII, continuing the large government employment before WWII and the MASSIVE government employment during WWII would have been unnecessary. Arguing that only when these programs stopped could the economy recover is a point of view built wholly on fiction, since government jobs are government jobs, regardless of whether the people are employed to build bridges in America, or destroy them in Europe.

    But I especially enjoy the “FDR extended the Depression” arguments, which are really just a preview of the “Obama is worsening the recession” meme. there is so much bad data implicit in these studies that they are worthless. The authors of two of the studies which come to this conclusion apparently skipped the day they taught statistics in statistics class. Correlation is not causation, and they have never gotten close to proving causation.

    • And there is all kinds of evidence that government spending can stimulate economic growth, but I don’t expect to convert you to reality.

      ‘K.  Put.  It.  UP.

    • Since the Depression was over before the end of WWII, continuing the large government employment before WWII and the MASSIVE government employment during WWII would have been unnecessary.

      Both of your assertions are false.  Put up your support.

    • But to someone who thinks the Great Depression did not end until AFTER WWII, who is willing to ignore the doubling of our GDP between 1941 and 1945 and the reduction of unemployment below 10% by 1941, and less than 2% by 1942, I can only suggest this is a person to whom facts that do not help them seem to just being ignored or changed.

      The war GDP is nonsense. Real productivity is producing things people buy. Most people don’t buy tanks, warplanes, warships. We can measure the cost of a Sherman tank, but we don’t know what its market value would have been in 1943. So when you tout the wartime GDP, all you are realy saying is “we spent a lot of money”. It fails at measuring productivity.

      And of course, the same logic applies with respect to employment. Being drafted is not the same as being employed creating something of value.

    • The data are not bad, your assumptions are.  World war 2 did not get us out of  the depression, there was extreme austerity and rationing during WW2. And after the war there was a recession,. (look it up if you don’t believe me)

      Now I am not saying that some government spending cannot have a stimulative effect, but the money has to come from somewhere,  We should never spend money unless it is something that has value in and of itself.

      As I said before, infrastructure projects might be necessary and helpful, but the kind of spending that has been mostly done is not.

      Ultimately we have to decide if a bunch of politicians, deal-makers, lawyers, bureaucrats, job-shoppers, and union leaders can spend our money better than we can. 

      If it isn’t  necessary, don’t spend it, and the economy will recover all on it’s on if you get off the backs of businessmen, It always has in the past. 

    • ” who is willing to ignore the doubling of our GDP between 1941 and 1945″

      Some of us maintain there is a difference between GDP and wealth,  between bullets & destruction and wealth creation & real economic growth.

      ” Correlation is not causation, and they have never gotten close to proving causation.”
      Funny you should mention that.

      • PS;

        About that doubling of GDP. How much was that share of GDP that was weaponry worth after the war? Filling scrapyards and landfills is not my idea of economic growth.

        Time for an anecdote.
        When I was a child a friend and I decided to set up a koolaid stand in our neighborhood. Unfortunately, it was a small neighborhood and after selling about three glasses of koolaid there were no more customers. We were left sitting there with our rapidly warming koolaid, wondering what to do.

        At last, we decided to divide up our profits, and proceeded to take turns buying a glass of koolaid, dividing the sales receipts after each purchase and then buying another round until all the koolaid was gone.
        According to current liberal economic theories we were a great success. We sold out our entire inventory, and our sales receipts were great. Lots of economic activity. Lots of stimulative consumption. Large increase in NDP(Neighborhood Domestic Product).

        I learned a lot from that experience, and it informed my understanding of economics when I took those courses. It is obvious some others could benefit from a similar experience.

        CONSUMPTION DOES NOT CAUSE ECONOMIC GROWTH.
        INVESTMENT CAUSES ECONOMIC GROWTH.
        CONSUMPTION IS NOT INVESTMENT, NO MATTER WHAT YOU SAY, EVEN IF YOU CLICK THE HEELS OF YOUR RUBY SLIPPERS AND CHANT ‘CONSUMPTION IS INVESTMENT’.

    • Well, I suppose you can blame the attitude of the American Public towards the recovery on the powers of persuasion of the PRO RIGHT Mains Stream Media, as they daily take Obamatilla for the Gulf Oil Spill, the failure to close Gitmo, the failure of the stimulus, ignoring the DOJ Black Panther case….oh, wait, they don’t do that do they.  Instead they provide cover for a guy who thinks his economic and governmental policies “got us out of the mess”. 

      Not to mention directly lying that the ‘Republicans’ stopped progress on bills, reduced the stimulus, etc, etc, etc.  When every single Republican legislator both in the House and Senate could have stayed home and there still would have been Democratic party majorities for every bill they wanted (so, he’s lying, and unlike the Democratic claim that Bush was an idiot, the man is a genius, so he knows he’s lying).

      The economy is where people live, and they’re not happy.   If all this stuff is ‘getting us out of this mess’ why does the average American think it isn’t?   

      People are tired of being told it’s the drought breaking rain when all it is is Obama and the Democrats pissing down their backs  and it’ll show in September.  How can you seriously support the guy who gets on TV on Monday and tells you we need to spend more to get out of trouble, and on Tuesday shows up to tell  you he’s worried about deficit spending.   Don’t you resent being treated like a, and a very young one, child?

  • Umm…  IF the Porkulus is working to stimulate the economy, WHY are Collectivists calling for MORE pork?
    HMMMMMM…..??????

  • I have a sneaking suspicion…Sean Dunn= Professor Erb?

     “I think the reality is between the ideologies, not belonging to either, which of course is a waste of time arguing when you are talking to an ideologue. Government spending can be a stimulus, and at times it can be a drag on the economy. I would suggest that when the economy is growing, government spending is a drag, but in recessionary periods, spending can promote growth.”

    Does that or does it not sound like an Erbism?
     

    • Yeah, I noticed that too.

      But people who pretend to be in the middle annoy me.

      • Yep. Boiling water is warmer than the surface of Jupiter and colder than the surface of the sun, but it still ain’t good for swimming.
        Stupidity is always annoying.

  • Here is another way to think of the GDP during the war.

    Consider the National Recovery Act employment of the unemployed to chase tumbleweeds. How much did they increase GDP?

    Using the methods that calculate the high wartime GDP, we would calculate the increased GDP to be equal to the cost, i.e., the pay that goes to the tumbleweed chaser +  the management costs. But in reality, the whole thing was just a wealth transfer exercise, not an increase in GDP, since the value of the tumbleweed is ziltch.

    Likewise, wartime production provided much less post war value than the costs used to calculate the GDP. This of course ignores the value of winning the war, which was immense. Winning made the investment well worth it, but the high cost of winning can’t be counted as economic prosperity.

  • Well Rob, there are always going to be more people who think a higher or lower number is a better number than was chosen. Macro-economics is far from an exact science and the best number is lowest number that COULD get the job done. It is never a sure thing.

    Obama is not a dictator, he did not get to decide exactly what the stimulus was going to be and exactly how it was going to be spent. He influenced the decision to a large extent, but so did politics, local and otherwise, rewarding financiers and otherwise, corruption and self-interests and otherwise. But don’t misunderstand me, I know full well that Obama owns it, for better or worse.

    “Both of your assertions are false.  Put up your support.” – Since you made this claim first, that “There is alllllll kinds of empirical evidence that government spending is, in fact, counter-productive.  But I don’t expect to convert you to reality.”

    I would really like to see this evidence that you can empirical evidence of a causal relationship between government stimulus spending and either negative economic growth or even less positive economic growth than there would have been otherwise. Remember, and this is where it gets difficult, you said empirical, and the evidence must be empirically causal because correlation is not causation.

    The fact is that I copied your sentence and reversed it, but neither is true, you cannot provide ANY empirical evidence that stimulus is counter-productive and I cannot provide any empirical evidence. We have only theories put forth on multipliers, credit market rigidity, crowding out, and the impact of debt.

    The only truly valid criticism of the stimulus is when does it stop. Long term year after year stimulus spending would lose any effectiveness it may have had, and debt is eventually bad. But that is a criticism based on prognostications of the predilictions of the current government. I will join you in opposing spending in perpetuity. But the stimulus, even if were a trillion and a half is manageable, even irrelevant in the long term. Our debt problem is with Medicare/Medicaid, Social Security, and defense spending, and I have already offered my solutions to these.

    • Ah, I see you could not be troubled to read the link posted with my “empirical” comment.  Which, I think, proves nicely your integrity.

    • There are plenty of valid criticisms of the stimilus. For one thing, it is spending money we don’t have. For another, it isn’t having its intended effect. It distorts the market instead of jump starting it. And it is used to reinforce failure.

      A key problem with government stimilus spending is due to the information problem; the central planners don’t know where to best spend the money. And as we have seen, it is simply wasted.

      A clear example is the banckrupt states: bailing them out allows them to continue failed policies.

  • “But people who pretend to be in the middle annoy me.”

    I did not say that I was politically in the middle, I said that I was not an ideologue, because I am not. But I take a stand and support the candidates and/or party that I think will serve the nation’s interest best at any given. I have campaigned for both Republicans and Democrats. Currently, I believe the Democrats are better equipped than Republicans to deal with some of our problems.

    However, I don’t think either party is prepared to deal with the real issues that I have previously listed, and as they trade barbs about minutia, like the oil spill and stimulus, and TARP, and all the other issues that don’t add up to anything, they are whistling past the graveyard that they are dragging this country to (both parties) by refusing to seriously address these issues, and by attacking anyone who dare mention serious proposals to deal with them.

    Medicare/Medicaid, Social Security, and defense spending account for all but 600 billion of our annual federal spending, excluding one time items like the TARP fund and the Stimulus. In other words, we could eliminate 100% of discretionary spending, and we would still have a very large and growing problem.

    Whether my team wins or your team wins is really irrelevant unless both of these teams stop preventing these problems from being addressed and do something.

    And no, I am not Erb, I am Captin Sarcastic, and I have been for a long, long time.

    • CS, Erp. Not much difference.

      • IIRC, CS was pushing for a healthcare reform (socialized medical care) and putting forth Spain as an example on healthcare and energy policy late 2008 early 2009.

    • Democrats will not do anything to actually reform social security of medicare/medicaid. And it isn’t the present costs but the future costs that are the problem with these programs.

      Unlike ss, medicare and medicaid, the military is something we actually need. We can probably cut military costs without significantly threatening our security, but only so much. But it isn’t the military but the entitlements that are the true risk.
      Obamacare represents a huge new entitlement program. Obama is heading the wrong way. And he’s pushing for cap and trade, and the whole green energy thing that has proven such a boon to dynamic, succesful Spain.
      Anyone who has payed attention over the past year and thinks the Dems have any solutions is an idiot, pure and simple.

  • http://www.nytimes.com/2010/07/19/business/19autos.html?_r=2
    MMMMperical….  Tasty…!
    Two questions–
    1. If Porkulus were working, why are its parents trying to scapegoat the GOP?
    2. If Porkulus were working, why are Collectivists begging/demanding/mau-mauing for more PORK?
    Keynes was wrong.  (Did you see the period?)

    • Excellent questions.  Not expecting MiniTru to ask those questions any time soon.