• Guest, The rules for the P & N subforum have been updated to prohibit "ad hominem" or personal attacks against other posters. See the full details in the post "Politics and News Rules & Guidelines."

Will a $150 Billion stimulus package fail?

Oct 30, 2004
11,429
20
81

I suspect that the proposed $150 billion tax rebate "stimulus" plan will have no effect other than to increase the indebtedness of the U.S. to foreign countries. My thoughts are echoed in a new op-ed by former U.S. Assistant Secretary of the Treasury (under Reagan) Paul Craig Roberts, one of the few economists besides Lou Dobbs who will mention the truth in public.

Bush to Abandon Supply-Side Economics?
http://www.vdare.com/roberts/080120_stimulus.htm

The Keynesian policy of driving the economy through consumer demand was applied to a different economy than the one we have today. In those days the goods Americans purchased, such as cars and appliances, were mainly made in America. Construction workers were not illegals sending their wages back to Mexico. The US had a robust manufacturing workforce. When consumer demand weakened, companies would reduce their output and lay off workers. Government policymakers would respond to the decline in employment and output with monetary and fiscal policies that boosted consumer demand. As consumer spending picked up, companies would call back the laid off workers in order to increase output to meet the rising demand.

Today Americans are losing jobs for reasons that have nothing to do with recession. They are losing their jobs to offshoring and to foreigners brought in on work visas. Today many American brands are produced offshore in whole or part with foreign labor and imported to the US for sale in the American market. In 2007, prior to the onset of the 2008 recession, 217,000 manufacturing jobs were lost. The US now has fewer manufacturing jobs than it had in 1950 when the population was half the current size.

US job growth in the 21st century has been confined to low-pay domestic services. During 2007, waitresses and bartenders, health care and social assistance, and wholesale and retail trade, transportation and utilities accounted for 91% of new private sector jobs.
 

bamacre

Lifer
Jul 1, 2004
21,030
1
61
It is a band-aid on a gunshot wound.

Lowering the interest rate will only lead to further inflation over time.
 
Oct 30, 2004
11,429
20
81
I guess I'm looking forward to getting a check but I doubt it's going to help the nation's economy much. Perhaps a better solution would be to raise tariffs and to then use the proceeds from tariffs to assist businesses that manufacture only in the U.S. in some sort of way. Of course, I'd also kick out the illegals, put a moratorium on legal immigration, and put an end to the foreign work visas.
 

NoStateofMind

Diamond Member
Oct 14, 2005
9,711
6
76
Originally posted by: WhipperSnapper
I guess I'm looking forward to getting a check but I doubt it's going to help the nation's economy much. Perhaps a better solution would be to raise tariffs and to then use the proceeds from tariffs to assist businesses that manufacture only in the U.S. in some sort of way. Of course, I'd also kick out the illegals, put a moratorium on legal immigration, and put an end to the foreign work visas.
They won't raise tariffs. You have NAFTA , CAFTA and WTO agreements to thank for that.
 

Jaskalas

Lifer
Jun 23, 2004
30,116
3,653
126
Originally posted by: bamacre
It is a band-aid on a gunshot wound.

Lowering the interest rate will only lead to further inflation over time.
Agreed.

Originally posted by: PC Surgeon
They won't raise tariffs. You have NAFTA , CAFTA and WTO agreements to thank for that.
Agreed again. We?re in for a thrashing. The economy has only begun to unravel, next downturn will be THIS year?s foreclosures. California?s hitting those at 10,000 per month now.
 
Oct 30, 2004
11,429
20
81
Originally posted by: PC Surgeon
They won't raise tariffs. You have NAFTA , CAFTA and WTO agreements to thank for that.
We're gonna have to pull out of all of those agreements and enact Americans-first international trade policies, just like Japan and China and many other nations have done for themselves.
 

NoStateofMind

Diamond Member
Oct 14, 2005
9,711
6
76
Originally posted by: WhipperSnapper
Originally posted by: PC Surgeon
They won't raise tariffs. You have NAFTA , CAFTA and WTO agreements to thank for that.
We're gonna have to pull out of all of those agreements and enact Americans-first international trade policies, just like Japan and China and many other nations have done for themselves.
Too bad there isn't a candidate running for president that wants to do that. :roll:
 

babylon5

Golden Member
Dec 11, 2000
1,363
1
0
There is really no way out of this US-in-decline hole. Social structures, road, bridges, are in not-so-good shape. Worst is we keep borrowing money and not stopping. We don't produce like we used to. Our students aren't as smart as other Westernized countries. We are losing the edge fast in our decline.
 

Genx87

Lifer
Apr 8, 2002
41,061
494
126
Originally posted by: WhipperSnapper
I guess I'm looking forward to getting a check but I doubt it's going to help the nation's economy much. Perhaps a better solution would be to raise tariffs and to then use the proceeds from tariffs to assist businesses that manufacture only in the U.S. in some sort of way. Of course, I'd also kick out the illegals, put a moratorium on legal immigration, and put an end to the foreign work visas.
The best solution is to lower taxes while also lowering spending. Raising tariffs only reduces our trade which raises prices at home. I dont know of many nations who prospered by putting up walls around their country. Slapping a moratorium on legal immigration is just plain silly. Legal immigraiton is a great source of human capital. Lots of these offshoring moves are done because of a lack of qualified candidates at home.
 
Oct 30, 2004
11,429
20
81

Keep drinking the Kool-Aid, Genx87.

What happened to the pioneer spirit of independence we once had in this country? We can't do things for ourselves such as produce enough objectively qualified candidates for knowledge based jobs? (I don't believe it; I think that supply-and-demand would take care of any actual problem in that area.) We need help from other countries in order to produce wealth? What happened to our sense of pride?

The offshoring of jobs and the importation of foreign labor have nothing to do with any actual shortage of talent--just a shortage of talent willing to work for third world wages. I don't buy this notion that Americans have suddenly become incompetent, impotent nincompoops who can no longer work, think, and produce wealth.





 

Genx87

Lifer
Apr 8, 2002
41,061
494
126
Originally posted by: WhipperSnapper

Keep drinking the Kool-Aid, Genx87.

What happened to the pioneer spirit of independence we once had in this country? We can't do things for ourselves such as produce enough objectively qualified candidates for knowledge based jobs? (I don't believe it; I think that supply-and-demand would take care of any actual problem in that area.) We need help from other countries in order to produce wealth? What happened to our sense of pride?
Because we as a nation have decided living the MTV lifestyle is more fun and rewarding than getting an education and applying ourselves. We have grown a sense of entitlement then wonder why engineering jobs are going to India when we lack engineers to fill the positions at home. As for engineers, there is a huge supply glut. This can be said for many technical positions in this country.

The offshoring of jobs and the importation of foreign labor have nothing to do with any actual shortage of talent--just a shortage of talent willing to work for third world wages. I don't buy this notion that Americans have suddenly become incompetent, impotent nincompoops who can no longer work, think, and produce wealth.
Please, every single one of my friends who are engineers practically name their price in interviews. They were all hired well before graduation and making nice nice money for having no experience. People in other technical area's saw the same.

I never said we are all lazy. But there is a large swath of us are only qualified to flip burgers. Being qualified to flip burgers wont get you a high paying wealth generating position. No matter how many walls you erect to keep the boogeyman of legal immigration and free trade out.
 

ElFenix

Elite Member
Super Moderator
Mar 20, 2000
101,424
5,497
126
since when is lou dobbs an economist and since when does he do anything but demagogue issues taking simplistic populist views with, ofttimes, little to no basis in reality?
 

Rainsford

Lifer
Apr 25, 2001
17,515
0
0
Originally posted by: Genx87
Originally posted by: WhipperSnapper

Keep drinking the Kool-Aid, Genx87.

What happened to the pioneer spirit of independence we once had in this country? We can't do things for ourselves such as produce enough objectively qualified candidates for knowledge based jobs? (I don't believe it; I think that supply-and-demand would take care of any actual problem in that area.) We need help from other countries in order to produce wealth? What happened to our sense of pride?
Because we as a nation have decided living the MTV lifestyle is more fun and rewarding than getting an education and applying ourselves. We have grown a sense of entitlement then wonder why engineering jobs are going to India when we lack engineers to fill the positions at home. As for engineers, there is a huge supply glut. This can be said for many technical positions in this country.

The offshoring of jobs and the importation of foreign labor have nothing to do with any actual shortage of talent--just a shortage of talent willing to work for third world wages. I don't buy this notion that Americans have suddenly become incompetent, impotent nincompoops who can no longer work, think, and produce wealth.
Please, every single one of my friends who are engineers practically name their price in interviews. They were all hired well before graduation and making nice nice money for having no experience. People in other technical area's saw the same.

I never said we are all lazy. But there is a large swath of us are only qualified to flip burgers. Being qualified to flip burgers wont get you a high paying wealth generating position. No matter how many walls you erect to keep the boogeyman of legal immigration and free trade out.
As much as I hate to say it, I have to (mostly) agree with Genx87 here. Talent and hard work are still very much rewarded in this country, and not just in technical fields. If you're good at what you do and you work hard at doing it, I don't think you'll have a huge problem competing with anyone around the world. There are costs to off-shoring beyond wages, and the "importing" of foreign labor isn't composed of super geniuses or anything...competing with either choice isn't as difficult as people make it out to be.

That said, I don't think we have a growing sense of entitlement as much as we've ALWAYS had the sense of entitlement...just never the same "real world" effects contradicting it before. It used to be that going to college, at all, would get you a dream job where you could basically print money. That is no longer the case, but you still have people getting generic 4 year degrees and expecting to head up investment firms or something.
 

nageov3t

Lifer
Feb 18, 2004
42,816
83
91
what's putting $800 in the hands of americans going to do?

everyone will either use it to pay off debts or buy cheap imported goods, neither of which is particularly stimulating for the economy.
 

Queasy

Moderator<br>Console Gaming
Aug 24, 2001
31,796
2
0
The $100 billion that will be used to put in the hands of American won't do much. Probably cause alot more partisan fighting as Dems and Repubs argue over whether or not to restrict the rebates only to those that pay income taxes or not.

The $50 billion for business will help because the current proposal is actually a series of deductions on things like buying new equipment, depreciation, yadda yadda yadda. This was actually part of the original Bush tax cuts but has already expired. So, it is just a renewal really.

I'd rather the government cut out the middle-man and just give tax cuts or make the Bush tax cuts permanent.

Want to spur business growth? Fix the corporate taxes in America that are actually a disincentive to starting and maintaining a business in the United States. US companies not only have to deal with tariffs from other companies but also getting taxed twice when doing business overseas.

Ireland has become a major entrepreneurial business hotspot since they cut their corporate tax rate to 12.5%. This has been very good for the Irish economy as it has been growing steadily since enacting this tax cut as well as restructuring their income tax to only two levels.
 

nageov3t

Lifer
Feb 18, 2004
42,816
83
91
I thought that this article had a really good summary of all the problems with the package:

Critiques of Spending Plan Retrace Old Debate

By PETER S. GOODMAN and LOUIS UCHITELLE
Published: January 25, 2008

Useful, but flawed and probably not enough: that, in general terms, was the verdict pronounced on the $150 billion emergency spending plan agreed to by the White House and Congressional leaders on Thursday in a bid to stimulate the suddenly sputtering economy.

Most economists praised the deal as a necessary effort that by increasing the public debt to put cash swiftly into the hands of ordinary consumers, could limit the severity and duration of a recession and very likely spare some jobs.

Nonetheless, economists of nearly every ideological stripe also found substantial fault with the plan: liberals, because it does not expand unemployment benefits or food stamps; conservatives, because it fails to lock in President Bush?s tax cuts beyond their planned expiration in 2010.

Few economists thought the stimulus plan alone would be adequate to keep the economy clear of a recession. Yet many portrayed the package as a significant psychological boost for anxious markets around the world, a sign that the Washington overseers of the American economy are seriously engaged in finding a fix.

?It is a much needed and very constructive step,? said Lawrence H. Summers, the Treasury secretary in the Clinton administration who has recently called for specific and temporary tax cuts. ?It will provide some confidence. But policy-making will need to be on standby, because more may be needed.?

The plan was a result of intensive horse-trading between Democrats and the Bush administration, bringing to the fore fundamentally competing notions about economic policy. But the basic goal was shared and simple ? keeping the economy growing at a time when millions of Americans are losing confidence and cutting back in the face of falling home prices, mounting debt and rising joblessness.

At the center of the plan is an effort to spur consumers, whose spending makes up 70 percent of the American economy. The plan leans heavily on cash payments for all but the wealthiest Americans, assuming that money put in pockets will swiftly find its way into cash registers, generating jobs at restaurants, retail outlets and banks and on the factory floor.

The most fervent proponents of free markets criticized the plan as a damaging intrusion by government that incurs public debt for dubious subsidies.

?The economy is working these things out,? said David R. Henderson, a libertarian economist at the Hoover Institution at Stanford. ?We?ve got the housing crisis and the subprime, and all these things take a while to settle. The government just doesn?t have the discipline to kind of let things work out.?

But in recent weeks, mainstream economists from across the political spectrum have come to the conclusion that growing economic turmoil demands that significant public money be poured into limiting the pain of a downturn.

Still, the way the deal was cut left many bemoaning the compromises.

Democrats had sought the extension of unemployment benefits and an increase in food stamps. Research shows these measures deliver the largest increases in spending, because poor people are prone to buy what they need when given the chance. Wealthy people, by contrast, tend to save more when taxes are cut.

The Bush administration insisted on rebates alone, and House Democrats relented in exchange for adding payments to people who do not pay income taxes.

?They gave up pieces of the package that were more effective,? said Jared Bernstein, senior economist at the labor-oriented Economic Policy Institute in Washington, who blamed the Bush administration for blocking the expansion of benefits. ?It?s a political choice, and a bad one. It?s an ideology that says, ?I can get a lot more credit for tax cuts than I can for expanding unemployment insurance.? ?

Unemployment among blacks and Hispanics has been rising at triple the rate for whites, while the time it takes for people to find new jobs has been lengthening, according to government data. Some experts argue that by failing to expand unemployment benefits, the plan leaves minority groups most vulnerable to a recession.

?It?s way inadequate,? said William Spriggs, an economist at Howard University in Washington. ?It doesn?t fix the problems we have with the safety net.?

Seven years ago, the last time the government handed out rebate checks in a downturn, recipients spent two-thirds of the money within six months, according to Mark Zandi, chief economist at Moody?s Economy.com.

This time, unlike the last, some of the money is going to people who do not pay taxes, so an even bigger surge of spending is likely, he said.

?This is a very positive, big step,? Mr. Zandi said.

But much has changed in recent years. Given that a lot of Americans are so deeply in debt, some economists said, many may use the money to pay off bills rather than to buy new goods and services. ?People are already behind on mortgages and credit cards,? said Gary A. Hoover, an economist at the University of Alabama.

Another big factor is that an increasing share of goods sold in the United States are made overseas. During the 2001 recession, 18 percent of what Americans spent on food and manufactured goods was imported, according to the Commerce Department. By 2006, the share had risen to 21 percent.

?A great deal of any stimulus is going to be sent overseas,? said Alan Tonelson, a research fellow at the United States Business and Industry Council, a trade association of small manufacturers that lobbies to limit imports.

Other analysts argued that the best way to ensure that dollars do not leak abroad would be to spend them on state-financed public works projects employing large numbers of people ? repairing levees and dams, fixing bridges or building schools.

The money could also be directed to states that face shrinking tax revenues as the economy contracts. An infusion of federal money would allow them to sustain construction programs and social services for the poor.

?The first people to go in this squeeze are social workers, and that should not be,? said Paul A. David, an economic historian at Stanford. ?When people are short of money or unemployed, they have trouble at home and need help.?

Debate over the stimulus plan also tripped one of the key fault lines in American economic policy ? argument about the merits of tax breaks.

The Bush administration championed tax cuts for businesses, arguing that this would coax companies to expand. But many economists question that assumption, asserting that if consumers lack money to spend, then businesses will stand pat or even cut back and fire people, whatever the tax rate.

?Breaks in taxes for corporations are unlikely to make a difference,? said Desmond Lachman, an economist at the American Enterprise Institute. ?There?s waste in it.?

But conservatives who expound the supply-side view expressed disappointment with the plan because it focused on temporary tax cuts rather than improving economic incentives through lower rates, which tend to benefit the wealthy the most.

Over the last quarter-century, Republicans have generally argued that the economy grows when money is freed up through lower taxes for all, businesses especially. Some argue that the prospect that a new administration will take office next year and increase taxes is damping investment now, stifling the creation of new jobs.

?One of the factors that?s currently souring this economy is the prospect that taxes are going to be rising in the future,? said William W. Beach, a senior fellow at the conservative Heritage Foundation in Washington. ?I?m concerned about the bang for the buck.?
http://www.nytimes.com/2008/01...siness/25stimulus.html
 

ASK THE COMMUNITY