US 'Economic Stimulus' Budget Review

[Lemur]

Excellent points, Don. I thought we were on our way toward debt reduction when Newt and Bill did their suicidal tango, but it was nothing more than a fleeting moment of fiscal sanity.

A blogger makes salient points today:

a) no one knows quite what will work for sure;

b) Obama was elected in part to tackle this crisis and the election was obviously not a vote to continue the approach favored by the GOP;

c) Obama will be held responsible for the effects of the package, as he should be;

d) in the context of the current collapse in demand, the distinction between a "stimulus" package and a "spending" bill seems increasingly esoteric;

e) Obama did a great deal to try and bring Republicans on board and to allow for a to-and-fro; the GOP, for good or ill, had no interest in cooperating with the in-coming president. They too should be held accountable for this. If the bill fails to make a dent on the collapse of demand, and if it does end up hurting the US through even more debt, then the GOP will be able to make that point in the next election. But if it works, their opposition should be recalled.

f) none of this makes sense if looked at entirely alone. The looming financial reform package must be seen as part of the rescue. If Obama can find a center for serious long-term entitlement reform, then the long-term consequences of more debt in the stimulus bill will be drastically mitigated. Again, true fiscal conservatives will focus on entitlement reform as the balance to this bill — not stupid posturing over trivial issues like pork.

[Xiahou]

The Senate will strip it down a bit from 1.3T down to about the 1.0T level. It will then pass. The conference bill will drag it back up to 1.1T or so.

Have a little faith will ya? They'll lard it up better than that in conference.

[Don Corleone]

Excellent points, Don. I thought we were on our way toward debt reduction when Newt and Bill did their suicidal tango, but it was nothing more than a fleeting moment of fiscal sanity.

A blogger makes salient points today:

a) no one knows quite what will work for sure;

b) Obama was elected in part to tackle this crisis and the election was obviously not a vote to continue the approach favored by the GOP;

c) Obama will be held responsible for the effects of the package, as he should be;

d) in the context of the current collapse in demand, the distinction between a "stimulus" package and a "spending" bill seems increasingly esoteric;

e) Obama did a great deal to try and bring Republicans on board and to allow for a to-and-fro; the GOP, for good or ill, had no interest in cooperating with the in-coming president. They too should be held accountable for this. If the bill fails to make a dent on the collapse of demand, and if it does end up hurting the US through even more debt, then the GOP will be able to make that point in the next election. But if it works, their opposition should be recalled.

f) none of this makes sense if looked at entirely alone. The looming financial reform package must be seen as part of the rescue. If Obama can find a center for serious long-term entitlement reform, then the long-term consequences of more debt in the stimulus bill will be drastically mitigated. Again, true fiscal conservatives will focus on entitlement reform as the balance to this bill — not stupid posturing over trivial issues like pork.

Corleone rule #3 is that authority and responsiblity must remain perfectly correlated. Therefore, I am inclined to agree with point C. Point A goes without saying. Point B is debatable, I would argue that the average voter voted "Not Bush", but I'll willing to allow the point.

But Point D is a dangerous oversimplification. It is an omnibus spending bill as Seamus pointed out, and it's the right of the Democratic majority to make it. But if Obama decided to give $500 billion to the DNC, arguing, money in the economy is money in the economy, and arguing where it's going is esoteric, would you still agree with point D (and yes, that's a gross hyperbole, in the interest of making my point and avoiding my normal verbosity, and getting back to my DSP homework.)

I totally and utterly disagree with the tar and feather job you and your blogger buddy are doing in pont E. Yes, Obama has reached out to Republicans. But they did offer ideas for the stimulus, TO HIM. They had the door slammed in their face by House Democratic leadership, and only received modestly more respect in the Senate process, due to the filibuster threat. Yes, Obama attempted to involve Republicans in the process, but Frank and Pelosi went out of their way to shove it up the Republican's that they had no say, and they could vote or not vote, but they had no ability to change the bill.

Honestly Lemur, representing point E as solid is not your best work.

I'm cautious about point F, as it is the first mention I have seen of any hint of long term entitlement reform. When did that come up? The closest thing I've heard, and it's a stretch, was Obama's inauguration speech, when he talked about shifting the debate to "Government that works and government that doesn't". But that was as a basis point for an attack he was making on a core philosophical belief of (small-c) conservatives (not the Republican party, they've lost the right to call themselves that) of limited government. I believe he used the term "false choice". In other words, I'm not going to shrink government, I'm going to find out how to make it bigger yet more effective. Doesn't sound too much like a commitment to a strategy of long-term entitlement reform to me.

Point E... sheesh. Come on, man.

[Lemur]

I'm cautious about point F, as it is the first mention I have seen of any hint of long term entitlement reform. When did that come up

Oh, who knows, maybe it got mentioned at some point.

President-elect Barack Obama pledged yesterday to shape a new Social Security and Medicare "bargain" with the American people, saying that the nation's long-term economic recovery cannot be attained unless the government finally gets control over its most costly entitlement programs.

That discussion will begin next month, Obama said, when he convenes a "fiscal responsibility summit" before delivering his first budget to Congress. He said his administration will begin confronting the issues of entitlement reform and long-term budget deficits soon after it jump-starts job growth and the stock market.

"What we have done is kicked this can down the road. We are now at the end of the road and are not in a position to kick it any further," he said. "We have to signal seriousness in this by making sure some of the hard decisions are made under my watch, not someone else's."

Maybe some leftist liberal columnist talked about it at some point.

It's possible some RINOs might have signed on in the hopes of advancing entitlement reform under Obama, too.

In months to come, Gregg will be worth celebrating. He is one of the smart guys on Capitol Hill, especially when it comes to fiscal policy. And he provides Obama with a third strong Republican Cabinet member, joining Defense Secretary Bob Gates and Ray LaHood at Transportation. [...]

Moreover, Mitch McConnell of Kentucky, the Republican leader of the Senate, told the National Press Club that a bipartisan deal on entitlements is something he thinks can and should happen in this Congress.

Obama said the same thing when he visited The Washington Post just before the inauguration, and now he has in Gregg someone who can help him lobby Congress to move that project forward.

-edit-

As for point (F), which got your gander up, I have no idea if the narrative you offer is legit. It's the one House Republicans are selling, but they would do, wouldn't they? They can't very well go after the new Prez with the 70% approval, so they would logically make a stink about the Congressional leaders with rather lower numbers. Hey, maybe that's exactly how it really happened, in which case they are very lucky that it just happens to be the most fortuitous way of positioning themselves. Frankly, I have a feeling that if the House Republicans had any intent of working with the new Prez, they could have made it happen.

[Crazed Rabbit]

The facts of the matter are America recovered quicker than other allied countries which where following smith's ideal of the free market, these countries continued in a slump until they began rearming. Im sure there are parts of FDR's new deal which did actually cause harm, but it is arguable that the new deal actually lengthend the depression or shortened it, various brilliant economists such as Friedman and Keynes have argued differing views and i would say it is difficult to pick one or the other as 'fact'

Oh really? Wikipedia suggests otherwise;

The massive rearmament policies to counter the threat from Nazi Germany helped stimulate the economies of Europe in 1937-39. By 1937, unemployment in Britain had fallen to 1.5 million. The mobilization of manpower following the outbreak of war in 1939 finally ended unemployment.

http://mediamatters.org/items/200901080005

extracts from article...

That place is absolutely nothing more than a parroting of left wing democrat talking points.

In a November 10, 2008, New York Times column, Krugman wrote that Roosevelt's policies included "long-run achievements" that "remain the bedrock of our nation's economic stability" and that Roosevelt's short-term successes were constrained because "his economic policies were too cautious."

Krugman long ago divorced his writing from economic facts and joined it instead with partisan pandering.

Most importantly, all he does here is talk - that is nothing compared to the actual research that was done by the two economists at UCLA. Partisan diehards will always fight what they oppose, no matter the facts.

Progressive economists are not alone in crediting Roosevelt's policies for easing the economic crisis. As Newsweek senior editor Daniel Gross noted on his blog on January 4, 2007, Federal Reserve Chair Ben Bernanke -- appointed by President George W. Bush -- wrote in his Essays on the Great Depression, "Only with the New Deal's rehabilitation of the financial system in 1933-35 did the economy begin its slow emergence from the Great Depression."

The author is a deceiver or a fool. Here is what Bernanke said:

Their argument, in short, is that under institutional arrangements that existed before the establishment of the Federal Reserve, bank failures of the scale of those in 1929-33 would not have occurred, even in an economic downturn as severe as that in the Depression

....

For practical central bankers, among which I now count myself, Friedman and Schwartz's analysis leaves many lessons. What I take from their work is the idea that monetary forces, particularly if unleashed in a destabilizing direction, can be extremely powerful. The best thing that central bankers can do for the world is to avoid such crises by providing the economy with, in Milton Friedman's words, a "stable monetary background"--for example as reflected in low and stable inflation.

Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again.

CR

[Lemur]

Krugman long ago divorced his writing from economic facts and joined it instead with partisan pandering.

Didn't he win a Nobel Prize for economics last year?

If he's a hack, what does it take not to be a joke in your book, CR?

[Crazed Rabbit]

Didn't he win a Nobel Prize for economics last year?

If he's a hack, what does it take not to be a joke in your book, CR?

Oh, I'm sorry, did he win the Nobel for his opinion column?

CR

[Lemur]

He won it for work in "economic science," which seems to be not unrelated to (a) his column subject, and (b) what we are discussing.

Does a Nobel laureate in economic science need to agree with you to not be a hack?

[Crazed Rabbit]

IIRC, the nobel was for international trade research.

Now, the people who say FDR didn't help are those like Friedman, Bernanke, and those two UCLA fellows.

All have done extensive research on the Great Depression. I don't believe Krugman has. His articles are not reports of research he's done; they are his partisan look at current events.

Just look at what The Economist had to say on him.

"A glance through his past columns reveals a growing tendency to attribute all the world's ills to George Bush…Even his economics is sometimes stretched…Overall, the effect is to give lay readers the illusion that Mr Krugman's perfectly respectable personal political beliefs can somehow be derived empirically from economic theory."

CR

[Lemur]

The article is from '03, but it's fascinating. I had no idea Krugman was considered such a lefty! Ranked second only to Ann Coulter for pure partisanship by one survey? Wowsers, that's stern stuff. Thanks for the article. I see he won second place again in '07.

Okay, point taken. He's an anti-Bush shill. Who won the Nobel Prize.

[LittleGrizzly]

http://www.marginalrevolution.com/ma...rnanke-on.html

Bernanke does suggest that some of the gains came from forced unionization and "efficiency wage" effects and yes that would credit the New Deal.

Look there is disagreement on the issue there were plenty of other economists mentioned in the article, so much so that to call it an historical fact is not accurate

Remarks by Governor Ben S. Bernanke
At the Conference to Honor Milton Friedman, University of Chicago, Chicago, Illinois
November 8, 2002

Those comments made at a conference to honour Friedman don't really invalidate what he said...

[Don Corleone]

Oh yeah, he won a nobel prize, so he has divinely inspired insights. They NEVER play politics with the award...

[Xiahou]

Okay, point taken. He's an anti-Bush shill. Who won the Nobel Prize.

Sorta like Al Gore then.

[Major Robert Dump]

Maybe I'm not looking deep enough into what the depression was. But I always thought that letting food and goods go to waste in warehouses and plowing under perfectly good crops while people starved and went without was a pretty good sign that price fixing was not working and the depression was, in fact, still on.

[Devastatin Dave]

Sorta like Al Gore then.

Don't forget about Arafat.

[Lemur]

Or Henry Kissinger. I take it we're drawing no distinction between the Peace Prize and the ones they give out for scientific disciplines?

-edit-

While we're making big lulz over hippie Swedes and their meaningless awards:

[Lemur]

I just haven't shared enough pretty charts in this thread ...

[Devastatin Dave]

I just haven't shared enough pretty charts in this thread ...

Hail Ceasar!!!!

[Xiahou]

While we're making big lulz over hippie Swedes and their meaningless awards:

That population adjusted? Seeing as how the source is "The office of the Speaker" (Nancy Pelosi), I'm gonna call shenanigans on that one.

Oh noes! Worst recession evar- pass stimulus now!

[KukriKhan]

In other top news:

POTUS bumps his head (again)


climbing aboard MarineCorps1 (MC1). Yesterday, he startled the the MC1 Marine Guard who was rendering his finest Corps salute, by reaching out to shake the lad's hand and chit-chat a moment. (Note: It always takes these never-been-in-service-before new POTUS's about 6 months to learn how to return a salute; I always wondered why some Command Sergeant Major didn't swing by for a quick lesson).

[seireikhaan]

That population adjusted? Seeing as how the source is "The office of the Speaker" (Nancy Pelosi), I'm gonna call shenanigans on that one.

Oh noes! Worst recession evar- pass stimulus now!

Actually, if you look at the graph, it claims source as Bureau of Labor Statistics. But, of course, I'm sure they're just in on the whole thing, so therefore we can't trust any sources.

[Xiahou]

In other top news:

POTUS bumps his head (again)


climbing aboard MarineCorps1 (MC1). Yesterday, he startled the the MC1 Marine Guard who was rendering his finest Corps salute, by reaching out to shake the lad's hand and chit-chat a moment. (Note: It always takes these never-been-in-service-before new POTUS's about 6 months to learn how to return a salute; I always wondered why some Command Sergeant Major didn't swing by for a quick lesson).

Obama also recently tried to enter the Whitehouse through a window- that was mistaken for a door:

Notice the actual door, a few feet off to the right.

[Lemur]

Obama also recently tried to enter the Whitehouse through a window- that was mistaken for a door:

Notice the actual door, a few feet off to the right.

I seem to have given you a bad case of Lemur's Disease.

Oh noes! The Bureau of Labor Statistics and Nancy Pelosi are working with the Nobel Committee to deceive Americans into doing bad things! Run!

[Lord Winter]

It would be nice if those graphs had 2008/2009 data. Looks like the recession is going to stay here for a while. The past reccessioins have all taken 6-12 months to end.

[Seamus Fermanagh]

It would be nice if those graphs had 2008/2009 data. Looks like the recession is going to stay here for a while. The past reccessioins have all taken 6-12 months to end.

The historical norm is 6-24 months -- only the Great Depression lasted significantly longer. Some would argue that was because of the "cure." Others argue that without the New Deal, it would have gone on longer. Who can be sure?

[KukriKhan]

Just watched his first prime-time news conference. Thirteen questions, 10 minute answers apiece.

I've figured it out, I think: wait 'til he says the phrase "the bottom line" or "my bottom line". Words spoken after that phrase are the answer. Previous words are, I dunno, internal discussion, academic reflection, tutoring time? Whatever.

"Bottom line" is the key. Wait for it, and all will be revealed.

[Husar]

"Bottom line" is the key. Wait for it, and all will be revealed.

I often do the same with long reviews, often all the info you need is in the conclusion.

Concerning windows vs doors, the actual door seems quite big for a door and looks more like a window to me, I might have made the same mistake(does that mean I can run for POTUS now? ).

It's also great to have a big recession now, I hope it continues for a while, we can have a big boom afterwards, it's best if they wait with that until I am done studying.

[Crazed Rabbit]

It gets worse:
A new bureaucracy will be formed:

One new bureaucracy, the National Coordinator of Health Information Technology, will monitor treatments to make sure your doctor is doing what the federal government deems appropriate and cost effective. The goal is to reduce costs and “guide” your doctor’s decisions (442, 446). These provisions in the stimulus bill are virtually identical to what Daschle prescribed in his 2008 book, “Critical: What We Can Do About the Health-Care Crisis.” According to Daschle, doctors have to give up autonomy and “learn to operate less like solo practitioners.”

Keeping doctors informed of the newest medical findings is important, but enforcing uniformity goes too far.

New Penalties

Hospitals and doctors that are not “meaningful users” of the new system will face penalties. “Meaningful user” isn’t defined in the bill. That will be left to the HHS secretary, who will be empowered to impose “more stringent measures of meaningful use over time” (511, 518, 540-541)

What penalties will deter your doctor from going beyond the electronically delivered protocols when your condition is atypical or you need an experimental treatment? The vagueness is intentional. In his book, Daschle proposed an appointed body with vast powers to make the “tough” decisions elected politicians won’t make.

The stimulus bill does that, and calls it the Federal Coordinating Council for Comparative Effectiveness Research (190-192). The goal, Daschle’s book explained, is to slow the development and use of new medications and technologies because they are driving up costs. He praises Europeans for being more willing to accept “hopeless diagnoses” and “forgo experimental treatments,” and he chastises Americans for expecting too much from the health-care system.

Elderly Hardest Hit

Daschle says health-care reform “will not be pain free.” Seniors should be more accepting of the conditions that come with age instead of treating them. That means the elderly will bear the brunt.

Medicare now pays for treatments deemed safe and effective. The stimulus bill would change that and apply a cost- effectiveness standard set by the Federal Council (464).

And to think, this is only the first month of Obama's presidency.

CR

[Husar]

That actually sounds worse than our system, though i think for experimental treatments you may have to pay here as well, it seeme to be mostly decided by the insurance you have, which would be the same with a private insurance system, or can you currently get a 1 million dollar experimental treatment for free in the US when you don't have any insurance or do all insurance companies just pay anything?
Because the article sure makes it sound like currently you get any treatment for free, no matter how much it costs, but the way I always understood it you currently have to pay for every plaster you get from the doctor.

[Xiahou]

It gets worse:
A new bureaucracy will be formed:


And to think, this is only the first month of Obama's presidency.

CR

Don't forget the disturbingly protectionist, "Buy American" provisions:

As if the $900 billion stimulus package wasn't controversial enough, provisions requiring purchase of U.S.-made iron and steel for government contracts that were slipped into the House version, and of all manufactured goods in the Senate's, have annoyed more people than expected — across the world.

Last week, leaders from Canada, Brazil, China, the U.K., India, Mexico, Germany and the Czech Republic, among others, spoke out against such "Buy American" provisions as protectionist. Some threatened retaliation.

The most assertive voice came from the European Union, our top overseas market, which last year engaged in two-way trade with the U.S. totaling $709 billion.

EU ambassador to the U.S. John Bruton warned Congress that the "Buy American" provisions will damage the U.S. as well as world trade by building protectionist sentiment around the world.

Let's hope that gets let on the cutting room floor in the final version of the bill.