Saturday, February 07, 2009

Obama’s Stimulus Sham!

Dr. Ada M. Fisher

Though people try to pin a lot of the present economic mess on President Bush, he ain’t guilty on a lot of it. Does anyone remember Ross Perot saying of NAFTA I can hear that sucking sound going south if Clinton passes this as he did? NAFTA or “Shafta” as I called it is entangled in this amorphous thing call free trade. In many respects trade, which is not fair gives away our competitive advantages, can indeed compromises environmental quality and worker standards regardless of what folks purports, but such deals do meet the bottom line of unfettered profits as well as the quest for cheap labor.

As Hardy said to Laurel , another fine mess you’ve got us into. It seems few have read the proposed Obama/Pelosi/Reid Stimulus package(s) which lays out spending the likes of which we have never seen, government socialization of banking with the automotive businesses to follow, nationalize health care with the computer based records system which will allow the government access to all your health information [even though Obama, Palin and Biden wouldn’t release theirs], and forestalls doing the real work of infrastructure repairs until its time to vote again for our representatives.

Obama is trying to ram this spending bill of pork and earmarks through before the American public wakes up. Thankfully some commentators have read it. There should be no vote on the economic stimulus plan until Treasury Secretary Geitner rolls out the next plan for banks which reportedly exceeds an additional $800 billion. With the call for Paul Volker to head the economic advisors, a car czar and all these other political appointee paybacks to head things many had a hand in, one can only ask who is in charge or who’s on first? One thing is for certain, it is not the citizens and our pocketbooks.

If you want to create jobs that will benefit all of our citizens why not provide":

-A small business stimulus to eliminate taxes for one year, halve the rate the following year and equalize them with the corporate rate. It is small businesses which create over 50 percent of the jobs in America. Allow small businesses to buy medical insurance as a collective and not subject those with less than five employees to benefits requirements. [probably less than 100 billion]

-Expand the US Coast Guard and Public Health Departments by 100,000 to ensure emergency response capability in every county in the USA and baseline access to health services such as immunizations and screenings which would include mental health services. [less than 100 billion]

-Build “the wall” to slow the flow of illegal immigrants as the level of gangs in California and Texas demonstrates we are about to lose control of our borders if we don’t do things differently. [less than 100 billion]

-Offer one billion dollars to every state for infrastructure repairs on federal roads, bridges, and highways with priority going to those projects which are already shovel ready. [50 billion]

-Give no more money to banks, but allow homeowners mortgage relief from those who already took money with a half payment holiday for one year and the balance tacked on to the last loan payment. [those whom already gave the banks the money]

And since we are in such a generous mood, give each taxpayer $5000 tax free to spend as they’d like.

All of this would cost less than the $800 billion, which even the Congressional Management Office of the Budget says present bills would and these simple measures would stimulate the economy and create thousands of jobs.

Dr. Ada M. Fisher is a phyisian, educator as well as The NC Republican National Committeewoman. Contact her at P. O. Box 777 ; Salisbury , NC 28145


rmrd said...

Wanted: Personal Economic Trainers. Apply at Capitol.

By Steven Pearlstein
Friday, February 6, 2009; D01

As long as we're about to spend gazillions to stimulate the economy, I'd like to suggest we throw in another $53.5 million for a cause dear to all business journalists: economic literacy. And what better place to start than right here in Washington.

My modest proposal is that lawmakers be authorized to hire personal economic trainers over the coming year to sit by their sides as they fashion the government's response to the economic crisis and prevent them from uttering the kind of nonsense that has characterized the debate over the stimulus bill during the last two weeks.

At a minimum, we'd be creating jobs for 535 unemployed PhDs. And if we improved government economic policy by a mere 1 percent of the trillions of dollars we're dealing with, it would pay for itself many times over.

Let's review some of the more silly arguments about the stimulus bill, starting with the notion that "only" 75 percent of the money can be spent in the next two years, and the rest is therefore "wasted."

As any economist will tell you, the economy tends to be forward-looking and emotional. So if businesses and households can see immediate benefits from a program while knowing that a bit more stimulus is on the way, they are likely to feel more confident that the recovery will be sustained. That confidence, in turn, will make them more likely to take the risk of buying big-ticket items now and investing in stocks or future ventures.

Moreover, much of the money that can't be spent right away is for capital improvements such as building and maintaining schools, roads, bridges and sewer systems, or replacing equipment -- stuff we'd have to do eventually. So another way to think of this kind of spending is that we've simply moved it up to a time, to a point when doing it has important economic benefits and when the price will be less.

Equally specious is the oft-heard complaint that even some of the immediate spending is not stimulative.

"This is not a stimulus plan, it's a spending plan," Nebraska's freshman senator, Mike Johanns (R), said Wednesday in a maiden floor speech full of budget-balancing orthodoxy that would have made Herbert Hoover proud. The stimulus bill, he declared, "won't create the promised jobs. It won't activate our economy."

Johanns was too busy yesterday to explain this radical departure from standard theory and practice. Where does the senator think the $800 billion will go? Down a rabbit hole? Even if the entire sum were to be stolen by federal employees and spent entirely on fast cars, fancy homes, gambling junkets and fancy clothes, it would still be an $800 billion increase in the demand for goods and services -- a pretty good working definition for economic stimulus. The only question is whether spending it on other things would create more long-term value, which it almost certainly would.

Meanwhile, Nebraska's other senator, Ben Nelson (D), was heading up a centrist group that was determined to cut $100 billion from the stimulus bill. Among his targets: $1.1 billion for health-care research into what is cost-effective and what is not. An aide explained that, in the senator's opinion, there is "some spending that was more stimulative than other kinds of spending."

Oh really? I'm sure they'd love to have a presentation on that at the next meeting of the American Economic Association. Maybe the senator could use that opportunity to explain why a dollar spent by the government, or government contractor, to hire doctors, statisticians and software programmers is less stimulative than a dollar spent on hiring civil engineers and bulldozer operators and guys waving orange flags to build highways, which is what the senator says he prefers.

And then there is Sen. Tom Coburn (R-Okla.), complaining in Wednesday's Wall Street Journal that of the 3 million jobs that the stimulus package might create or save, one in five will be government jobs, as if there is something inherently inferior or unsatisfactory about that. (Note to Coburn's political director: One in five workers in Oklahoma is employed by government.)

In the next day's Journal, Coburn won additional support for his theory that public-sector employment and output is less worthy than private-sector output from columnist Daniel Henninger. Henninger weighed in with his own list of horror stories from the stimulus bill, including $325 million for trail repair and remediation of abandoned mines on federal lands, $6 billion to reduce the carbon footprint of federal buildings and -- get this! -- $462 million to equip, construct and repair labs at the Centers for Disease Control and Prevention.

"What is most striking is how much 'stimulus' money is being spent on the government's own infrastructure," wrote Henninger. "This bill isn't economic stimulus. It's self-stimulus."

Actually, what's striking is that supposedly intelligent people are horrified at the thought that, during a deep recession, government might try to help the economy by buying up-to-date equipment for the people who protect us from epidemics and infectious diseases, by hiring people to repair environmental damage on federal lands and by contracting with private companies to make federal buildings more energy-efficient.

What really irks so many Republicans, of course, is that all the stimulus money isn't being used to cut individual and business taxes, their cure-all for economic ailments, even though all the credible evidence is that tax cuts are only about half as stimulative as direct government spending.

Many, including John McCain, lined up this week to support a proposal to make the sales tax and interest payments on any new car purchased over the next two years tax-deductible, along with a $15,000 tax credit on a home purchase. These tax credits make for great sound-bites and are music to the ears of politically active car salesmen and real estate brokers. Most economists, however, have warned that such credits will have limited impact at a time when house prices are still falling sharply and consumers are worried about their jobs and their shrinking retirement accounts. Even worse, they wind up wasting a lot of money because they give windfalls to millions of people who would have bought cars and houses anyway.

What adds insults to injury, however, is that many of the senators who supported these tax breaks then turned around and opposed as "boondoggles" much more cost-effective proposals to stimulate auto and housing sales, such as having the government replace its current fleet of cars with hybrids or giving money to local housing authorities to buy up foreclosed properties for use as low-income rental housing.

Personal economic trainers would confirm all this. Until they're on board, however, here's a little crib sheet on stimulus economics:

Spending is stimulus, no matter what it's for and who does it. The best spending is that which creates jobs and economic activity now, has big payoffs later and disappears from future budgets.

KMR said...

I thought Americans had freedom of association. Why did President Obama repeal the executive Executive Order 13202, that prohibited federal agencies and recipients of federal funding from requiring contractors to sign union-only project labor agreements (PLAs) as a condition of performing work on federal and federally funded construction projects.

This order restricts bidding on federally funded construction projects to union-controlled businesses. That means over 84% of no union contructiuon companies cannot bid for governmenbt work. President Obama is making a huge mistakes and this order will affect hundreds of workers in the contruction field.

The Intellectual Redneck said...

According to the CBO, the stimulus bill will actually hurt the economy in the long run. However, there is the possibility it will stimulate illegal immigration. In addition to providing up to 300 thousand construction jobs for illegal aliens, the bill will bail out irresponsible states like California. This will allow them to avoid dealing with one of the primary reasons they have a budget deficit. That reason is the extensive and expensive social net they have extended to illegal immigrants. Obama's stimulus will stimulate illegal immigration

Leette said...

Dr. Ada I am down with your suggestion. All things worthwhile instead of a waste of my time and money.

rmrd said...

Cost Estimate for Proposed Senate Amendment to H.R. 1

Today CBO released a cost estimate for a proposed Senate substitute amendment to H.R. 1, the American Recovery and Reinvestment Act of 2009, introduced by Senators Inouye and Baucus on January 31st. The amendment would specify appropriations for a range of federal programs and would increase or extend certain benefits payable under the Medicaid, unemployment compensation, and nutrition assistance programs; it also would reduce individual and corporate income tax collections in a number of ways, including an alternative minimum tax (AMT) patch for 2009 and a tax credit of up to $500 for each worker in both 2009 and 2010.

CBO estimates that if enacted in mid-February, H.R. 1 as amended would increase outlays by $132 billion during the remaining several months of fiscal year 2009, by $242 billion in fiscal year 2010, by $145 billion in 2011, and by a total of $632 billion over the 2009-2019 period. In addition, CBO and the Joint Committee on Taxation (JCT) estimate that enacting the proposed Senate amendment to H.R. 1 would reduce revenues by $101 billion in fiscal year 2009, by $219 billion in fiscal year 2010, and by a net amount of $253 billion over the 2009-2019 period. (Approximately $96 billion of the estimated revenue change is attributable to the proposed tax credit for wage earners and $70 billion to the proposed changes in the AMT.)

Combining those effects, CBO estimates that enacting the Senate amendment would increase federal budget deficits by $233 billion over the remaining months of fiscal year 2009, by $461 billion in 2010, by $142 billion in 2011, and by about $884 billion over over the 2009-2019 period. The table below summarizes CBO’s and JCT’s estimates of the legislation’s budgetary effects.

These estimates differ from CBO’s cost estimates for similar legislation considered in the House of Representatives last week. On January 30, CBO transmitted a cost estimate for H.R. 1 as passed by the House on January 28, 2009; and on January 26, we transmitted a cost estimate for the bill as introduced in the House on that date. CBO and JCT estimated that the version of H.R. 1 that was passed by the House of Representatives would increase deficits by $526 billion over the 2009-2010 period and by a total of $820 billion over the 2009-2019 period; the Senate amendment would increase the deficit by $694 billion over the 2009-2010 period and by about $884 billion over the 2009-2019 period.

Much of the difference in the 11-year totals comes from the Senate amendment’s AMT provisions, which would reduce revenues by about $70 billion. The most significant difference in outlays from discretionary funding in the House and Senate versions stems from the proposed State Fiscal Stabilization Fund: both versions would appropriate $79 billion for this new activity, but CBO estimates outlays of about $31 billion over the 2009-2010 period under the House-passed version of H.R. 1 and about $52 billion over the 2009-2010 period under the Senate amendment. The difference reflects the fact that the House version would provide the funding in two components, the first available for obligation beginning July 1, 2009, and the second a year later; the Senate proposal would provide all the funding in 2009.

Redneck , the GOP's AMT changes in the Senate Bill caused the change in outlook.

sbm said...

squeeel like a pig.....We were promised a "Prophet" and deliverance is what we will get

rmrd said...

Macroeconomic Effects of the Senate Stimulus Legislation

In a letter sent today to Senators Grassley and Gregg, CBO analyzed the macroeconomic effects of an initial Senate version of the stimulus legislation (the Inouye-Baucus amendment in the nature of a substitute to H.R. 1, which is the House stimulus bill). CBO estimates that the Senate legislation would raise output by between 1.4 percent and 4.1 percent by the fourth quarter of 2009; by between 1.2 percent and 3.6 percent by the fourth quarter of 2010; and by between 0.4 percent and 1.2 percent by the fourth quarter of 2011. CBO estimates that the legislation would raise employment by 0.9 million to 2.5 million at the end of 2009; 1.3 million to 3.9 million at the end of 2010; and 0.6 million to 1.9 million at the end of 2011.

Those estimated effects are slightly greater than those of H.R. 1 (as introduced) in 2009 and 2010 (particularly in 2009), but lower in 2011, because more of the overall rise in spending and fall in revenues occurs in the first two years under the Senate legislation.

Most of the budgetary effects of the Senate legislation would occur over the next few years. Even if the fiscal stimulus persisted, however, the short-run effects on output that operate by increasing demand for goods and services would eventually fade away. In the long run, the economy produces close to its potential output on average, and that potential level is determined by the stock of productive capital, the supply of labor, and productivity. Short-run stimulative policies can affect long-run output by influencing those three factors, although such effects would generally be smaller than the short-run impact of those policies on demand.

In contrast to its positive near-term macroeconomic effects, the Senate legislation would reduce output slightly in the long run, CBO estimates, as would other similar proposals. The principal channel for this effect is that the legislation would result in an increase in government debt. To the extent that people hold their wealth in the form of government bonds rather than in a form that can be used to finance private investment, the increased government debt would tend to “crowd out” private investment—thus reducing the stock of private capital and the long-term potential output of the economy.

The negative effect of crowding out could be offset somewhat by a positive long-term effect on the economy of some provsions—such as funding for infrastructure spending, education programs, and investment incentives, which might increase economic output in the long run. CBO estimated that such provisions account for roughly one-quarter of the legislation’s budgetary cost. Including the effects of both crowding out of private investment (which would reduce output in the long run) and possibly productive government investment (which could increase output), CBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net.

Looks like education spending would be helpful, Redneck.

rmrd said...

GOP Governors support the plan. The friggin' Chamber of Commerce supports the plan.

The DC GOP has jumped the shark.

Anonymous said...

GO GOvernors would rather the stimulus take out ear marks. But many of them said they will not refused the money. The South Carolina Governor is the most fiscal conservative of all.

The majority of States with Democratic run legislators are on the verge of bankruptcy. Why?

sbm said...

tick tock tick tock tick tock

What happened to the politics of hope over the politics of fear?

Sounds alot like GWB trying to hoodwink us into Iraq.... What a minute it's change.... no its fear... wait its hope.....or is it the same old shit different day....... put a 1 trillion into education but don't try to politic it into this bill......redbone

Democrats voted for Iraq, everyone was for Iraq doesn't mean Iraq was the smart thing to do... right? ohhh this is different I see.....

HOPE over FEAR...............

Anonymous said...

Cause democrats don;t pay taxes

Anonymous said...

Democrats pay taxes infact we pay more than Republicans.If you do not like taxes stay off the fucking "tax funded" roads.

Anonymous said...

I guess Obama didn't get the memo..... 90% of all taxes are paid by 10% and by most account all rich people or republican so with magic math most taxes are paid by republicans. asssssssshoooolllllllleeeeeee