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Stimulus Update
STIMULUS UPDATE....Jake Tapper reports that Barack Obama wants to hit the ground running, stimulus-wise:
Democratic sources tell ABC News that President-elect Obama's transition team is working with lawmakers on Capitol Hill so that on Obama's first day in office, Jan. 20, 2009, an economic stimulus package has passed both houses of Congress and is awaiting his signature.
And how big will the package be? The Washington Post speculates:
New Jersey Gov. Jon Corzine (D), an Obama adviser, and Harvard economist Lawrence H. Summers, whom Obama has chosen to lead his White House economic team, both raised the possibility of $700 billion in new spending. Yesterday, Obama adviser and former Clinton administration Labor secretary Robert Reich and Sen. Charles E. Schumer (D-N.Y.) also called for spending in the range of $500 billion to $700 billion.
....Austan Goolsbee, a spokesman for Obama on economic issues who is in line to serve on the White House Council of Economic Advisers, yesterday acknowledged that Obama's jobs plan will cost substantially more than the $175 billion stimulus program he proposed during the campaign. "This is as big of an economic crisis as we've faced in 75 years. And we've got to do something that's up to the task of confronting that," Goolsbee said on CBS's "Face the Nation." "I don't know what the exact number is, but it's going to be a big number."
This is a welcome sign of pragmatism from Obama's team, but not everyone is happy. Check this out:
"Democrats can't seem to stop trying to outbid each other — with the taxpayers' money," House Minority Leader John A. Boehner (R-Ohio) said in a statement. "We're in tough economic times. Folks are hurting. But the American people know that more Washington spending isn't the answer."
Jeebus. No wonder Republicans have lost 50 House seats in the past two elections. There's not even a hint that Boehner realizes we're facing a massive financial meltdown, not just business as usual. Somebody asked him about a Democratic spending plan, so he consulted the index cards that have been implanted in his brain for the past 30 years and spit out a robotic statement decrying "Washington spending." How out of touch can you get?
"But the American people know that more Washington spending isn't the answer."
Maybe in the spirit of consensus the Democrats should listen to the Republicans and allow the economy to continue to collapse until the Republicans say when.
In our glory days of the 50's and 60's when we were creating wealth, a stimulus could work; but nowadays we would just pay the a portion of the juice on our credit cards and buy more stuff from China and transfer wealth there to stimulate their economy. The stimulus package would probably come from a combination of printing money and borrowing, raising yearly interest on the national debt to the 650 billion / year level.
Looks like the GOP doesn't like it when the "Disaster Capitalism" trick gets used on THEM, such that newly ascendant Democrats will use the crisis to ram through their own spending priorities.
As with much else, the Republicans have only themselves to blame for their predicament; they both created the disaster and gave plenty of demonstrations for how disasters can be politically exploited.
Wait. "Gov't spending" IS the answer! Not gov't transferring taxpayer money to private companies who have failed. Put the money in assets we all benefit from. It's a no-brainer.
And, astute comment, jimBOB.
Slash the damn military budget in half over the next four years.
Tax the shit out of the super rich.
That may help raise the necessary funds without borrowing more money from overseas and hiking up the national debt.
Luther: The stimulus would probably focus on infrastructure projects and the like, not something likely to be outsourced.
Jay: The point of a stimulus package is increased spending. Cutting spending elsewhere is kinda counterproductive, even in the military budget.
I realized the Republicans had no clue what was going on when the financial crisis started and they started yammering about capital gains taxes. I think FOX News and talk radio have destroyed the party, because they are now led by idiots like Rush and Hannity. Whatever meager intellectual heft the party once had has been destroyed by the base of the party.
Boehner and his ilk have never based their ideology in reality so don't expect anything different now the roof is falling in.
Look. This whole thing has been based on a housing bubble. While our government was spending far more than they were taking in, we were taking money out of over-appreciated fixed assets and spending that, too, for current expenditure. A lot of the growth of the last 6 years is a chimera, and the correction is brutal.
There's nothing wrong with Jay's idea of moving money out of the military over a number of years and into areas that create more jobs and more wealth. The military is way over-blown, and it has the added benefit of restricting over-zealous presidents from embroiling this nation in risky, speculative and extraordinarily expensive exploits abroad.
And because it is beginning to bug me no end, when is even one CEO going to walk the plank for getting their company in this mess and losing most of their shareholders' capital? Why are they getting any reward whatsoever? The UK made several CEOs jump. And no parachute.
But the American people know that more Washington spending isn't the answer.
So, what is the answer Congressman? The American peopl would like to hear you tell us. What's that you say--stop gay marriage?
Boehner is absolutely right. What the current economic situation calls for is a careful, circumspect and well targeted application of pixie dust. He should be put in charge of a committee formed for that purpose, and requested to file progress reports for publication the Congressional Record at regular intervals.
Things are bad and they're going to get worse. But I think we really dodged a bullet in this election. Imagine if McCain (or any Republican) had been elected. It's no joke tying these guys to Herbert Hoover. They really have no capacity to learn from experience at all. If it were up to them the government would sit on its hands and we'd have another Great Depression.
Unbelievable.
I won't be surprised if when Obama's big stimulus bill passes and the deficit naturally shoots up by a lot, people like Boehner piss and moan that something like that happened. Because tax cuts never, ever allow that to happen...right?
larry birnbaum, we might have another great depression even if we do everything suggested so far.
This is going to be a really near run thing. Right now we are still on the 1929/1930 side of the Great Depression. FDR wasn't elected until 1932.
I keep reminding people that the other shoe hasn't dropped. Wait until credit card defaults blossom like spring flowers.
Ron Byers--
You are correct that the other shoe has yet to drop, but unlike Hoover or FDR, Obama has a team the fully understands what needs to be done: massive fiscal stimulus.
FDR actually ran on a balance budget platform! He lived in a pre-Keynesian age.
And I have no problem with increasing the national debt if it goes toward investments that will enhance future productivity growth. That's money well spent. The military budget, however, needs to shrink. It is not an effective use of debt-financed spending.
TheDeadlyShoe
I could have been more explicit in my comment but nothere understood. Spending as an investment for higher returns in the future is a good idea. But its a matter of either spending a line of credit and increasing debt or cutting costs and spending the savings so those returns become pure profit.
Borrowing trillions from the Chinese so that illegal aliens can build make work projects will probably have little effect on the economy in the long run.
Since the U.S. has open borders and little consumer product manufactiring, too much of the stimulus will just go to either China to pay for consumer goods or to Central and South American as remittances.
Of course, the Environmental requiresments will limit the start of any large scale project for years. But I guess most of the money will be used to create no work jobs in urban governments.
I wonder what taxes will be like in a few years to pay off the trillion dollar a year budget deficits that the government will be to have.
Veering slightly OT, I just want to paste in a bit from a Krugman quote on the Depression from Political Animal."
"Also, expansionary policy at the federal level was undercut by spending cuts and tax increases at the state and local level."
Still a problem, it seems, although fortunately Kevin doesn't seem to have much sway in this regard, at least in his home state. ;>)
Headline from http://bloomberg.com/apps/news?pid=20601109&sid=arEE1iClqDrk&refer=home
"Fed Pledges Top $7.4 Trillion to Ease Frozen Credit"
If that money was given to households earning below the median wage, it would do more to save the economy.
Borrowing trillions from the Chinese so that illegal aliens can build make work projects will probably have little effect on the economy in the long run.
You seem to be under the impression that the Chinese are the only ones buying T-bills these days(or in the past).
As misapprehensions go, that one is pretty funny.
And your infrastructure spending = illegal alien make-work projects is pretty good too.
Fortunately, those open borders have allowed lots of immigrants(legal and not) to return to their country of origin as jobs(construction in particular) have disappeared. Also fortunate are the probable effects of infrastructure spending - those hired will be able to continue to make payments on their home and credit-card debt, while freeing up unemployment benefits for those who continue to lose their jobs as the economy continues to contract.
Wouldn't it be nice if banks stopped failing, as a consequence of stimulus spending? It would sure be better than the acceleration in failures that we're seeing.
Of course, the Environmental requiresments will limit the start of any large scale project for years. But I guess most of the money will be used to create no work jobs in urban governments.
You are forgetting a key element; this will be a Democratic administration and Congressional majority. Any projects they propose will not have, as an organizing principle, the intent to challenge existing environmental regulations. After you remove the "fuck-the-treehuggers" elements of typical Republican-promoted plans, approval and permitting is surprisingly(not) smooth.
Re: "no-work jobs in urban governments."
Do you not understand that most of those folks you see leaning on shovels at public works projects are NOT city employees? They are contractors, hired because privatization is more efficient!
Quick, superdestroyer, forward that post to Boehner, he's almost out of simple-minded cliches and could really use your help.
Wouldn't it be nice if banks stopped failing, as a consequence of stimulus spending? It would sure be better than the acceleration in failures that we're seeing.
It would be nice, but it did not work for FDR in the '30's and it did not work for Japan in the '90.'s. Stimulus spending on infrastructure does not, will not revive bubble destroyed economies.
The UK made several CEOs jump. And no parachute.
Posted by: notthere on 11/24/08
oooo, I love it when you talk dirty.
FDR actually ran on a balance budget platform! He lived in a pre-Keynesian age.
Posted by: g. powell on 11/24/08
Hillary pretty much did the same. But, at least she had the excuse that back then it wasn't so clear to everybody that we were headed for this mess.
Isn't it amazing how fast this has blown up from a mild recession to something possibly worse than the Great Depression. And some people say the number of bad mortgages is still yet to be seen and the effects of the financial industry meltdown have yet to be seen throughout the real economy.
So, we have a lot yet to go through and Kevin will have a lot to write about.
I believe, what makes this financial situation soo bad is that it does not just affect this country - even though we have done the most to contribute it it - it affects the whole world this time.
And there is alot of waste in military spending - as in all government spending. Let's get rid of the pork and just leave the bones.
And you have to laugh at a Republican complaining about the spending Obama hasn't even done yet after the past 8 years of Republican run-away spending!!
The government will get back part of its job-creation outlays as taxes that the workers and their employers will pay. Also, actual work on, say, infrastructure repairs is an investment. The government can either pay people to work and get a return on its investment, or pay them unemployment benefits and get no return.
I like Mr. Drum's assessment of the disconnect between Boehner (Sen. Larry Craig's favorite) and reality, characterized by your suggestion he can only fall back on neo-con talking points.
But I think you kinda missed the point. Boehner's Bunch, with some Dem complicity of course, never saw a boondoggle or earmark he didn't like. All of the bridges to nowhere (built while one in Minneapolis was falling down) were the GOP-led congress's favorite plaything during the first term.
When the Dems took over mid-term ('06), they were just as frivolous. They were also just as complicit in deregulation and lack of oversight of the financial institutions. The last I looked, however, they're also just as anti-bailout. Pelosi et al. did tell the auto industry to come up with some concrete plans. Let's lay blame where it is due. A pox on both their houses.
James M. Martin: A pox on both their houses.
I quite agree. Alas, I seem to find myself in the same domicile.
Ditto!
But - this type of honesty will get you nowhere.
Let's just hope that they will take care that it DOES NOT pass both houses UNTIL Jan 20th.
If that makes it one day late, that's okay -- if it means that President Butch doesn't get one last chance to fuck the country over by -- whatever.