House passes $819B Stimulus Bill...Spare some Change? 10 Reasons Not to

House Passes $819 Billion Economic Stimulus Bill 244-188.

No Republicans voted for the bill

Now it's on to the Senate

Don't swing on me, I'm just the messenger.

The only thing worse than giving money away, is giving money away you don't have.

WASHINGTON (CNN) — The House of Representatives Wednesday passed President Barack Obama’s economic stimulus package, sending the $819 billion bill to the Senate, where it will face more opposition from Republicans. The vote was mostly along party lines.

House passes $819 billion stimulus bill



You guys seen any TARP funds laying around?

I can't figure out where they went.
----------------------------------------------------------------------------------------------------

10 Reasons to Whack Obama's Stimulus Plan

January 27, 2009 02:10 PM ET |

James Pethokoukis

Some people are going to oppose President Obama's ginormous stimulus package just because they're on a different political team. But when you look at the economic evidence, it sure seems like an economic recovery package that's heavy on government spending and light on tax cuts is just the opposite of what we should be doing right now. Try this closing argument on for size:

1) A 2005 study by Andrew Mountford and Harald Uhlig "analyzed three types of policy shocks: a deficit-financed spending increase, a balanced budget spending increase (financed with higher taxes) and a deficit-financed tax cut, in which revenues increase but government spending stays unchanged. We found that a deficit-spending shock stimulates the economy for the first 4 quarters but only weakly compared to that for a deficit-financed tax cut." In other words, FDR vs. Clinton vs. Reagan, Reagan wins.

2) Harvard economist Robert Barro looked at the multiplier effect of World War II military spending -- supposedly the Mother of All Stimulus Plans and found that "wartime production siphoned off resources from other economic uses — there was a dampener, rather than a multiplier." Barro prefers eliminating the corporate income tax to massive government spending.

3) Alberto Alesina of Harvard and Luigi Zingales of the University of Chicago want to adress the fear and confidence issue by creating "the incentive for people to take more risk and move their savings from government bonds to risky assets. There is no better way to encourage this than a temporary elimination of the capital-gains tax for all the investments begun during 2009 and held for at least two years."

4) An initial CBO analysis found that a mere $26 billion out of $274 billion in infrastructure spending, just 7 percent, would be delivered into the economy by next fall. An update determined that just 64 percent of the stimulus would reach the economy by 2011.

5) University of Chicago economist and Nobel laureate Gary Becker doubts whether all this stimulus spending will do much to lower unemployment: "For one thing, the true value of these government programs may be limited because they will be put together hastily, and are likely to contain a lot of political pork and other inefficiencies. For another thing, with unemployment at 7% to 8% of the labor force, it is impossible to target effective spending programs that primarily utilize unemployed workers, or underemployed capital. Spending on infrastructure, and especially on health, energy, and education, will mainly attract employed persons from other activities to the activities stimulated by the government spending. The net job creation from these and related spending is likely to be rather small. In addition, if the private activities crowded out are more valuable than the activities hastily stimulated by this plan, the value of the increase in employment and GDP could be very small, even negative."

6) Christina Romer, the new head of the Council of Economic Advisers, coauthored a paper in which the following was written about taxes: "Tax increases appear to have a very large, sustained, and highly significant negative impact on output. Since most of our exogenous tax changes are in fact reductions, the more intuitive way to express this result is that tax cuts have very large and persistent positive output effects." And former Bush economic adviser Lawrence Lindsey tack on this addendum: "The macroeconomic benefits of tax cuts can be two to three times larger than common estimates of the benefits related to spending increases. The relative advantage of tax cuts over spending is even clearer when the recession is centered on the household balance sheet."

7) Economists Susan Woodward and Robert Hall find that the multiplier effect from infrastructure spending maybe just 1-for-1, less than that 3-to-1 ratio for tax cuts that Romer found: "We believe that the one-for-one rule derived from wartime increases in military spending would also apply to increases in infrastructure spending in a stimulus package. We should not count on any inducement of higher consumption from the infrastructure stimulus."

8) Economist John Taylor thinks it better to let the Federal Reserve deal with the short-term problems in the economy, while fiscal policy should attend to long-term issues: "In the current context of the U.S. economy, it seems best to let fiscal policy have its main countercyclical impact through the automatic stabilizer ... It seems hard to improve on this performance with a more active discretionary fiscal policy, and an activist discretionary fiscal policy might even make the job of monetary authorities more difficult. It would be appropriate in the present American context, for discretionary fiscal policy to be saved explicitly for longer-term issues, requiring less frequent changes. Examples of such a longer-term focus include fiscal policy proposals to balance the non-Social Security budget over the next ten years, to reduce marginal tax rates for long run economic efficiency, or even to reform the tax system and Social Security."

9) Massive stimulus didn't work in the Great Depression. As this Heritage Foundation study notes: "After the stock market collapse in 1929, the Hoover Administration increased federal spending by 47 percent over the following three years. As a result, federal spending increased from 3.4 percent of GDP in 1930 to 6.9 percent in 1932 and reached 9.8 percent by 1940. That same year-- 10 years into the Great Depression--America's unemployment rate stood at 14.6 percent." Same goes for Japan and its Great Stagnation of the 1990s.

10) Olivier Blanchard, the chief economist of the International Monetary Fund, coauthored a paper which found "that both increases in taxes and increases in government spending have a strong negative effect on private investment spending."

Bottom line: There is another model out there. One that worked in 2003, 1997 and 1981. But will America use it?

10 Reasons to Whack Obama's Stimulus Plan


[edit on 28-1-2009 by lernmore]

The House passed the $819 billion economic stimulus bill by a vote of 244 to 188.

www.c-span.org...

Not a big surprise. Just surprised that not many were as angry at this package as they were with Bush. Personally, am angry about both.

Whew!

For a moment there i thought it might not pass. It's a good thing too. This will save our economy.

I couldn't be more happy with what our government is doing. Since we have a huge surplus in money this won't have any negative effect.

I'm happy that my children and grandchildren will pay low taxes due to how smart our government has been in handling this whole situation.

The generations to come will look up to us.

CBO cost estimate of the stimulus plan.

Lags in spending stem in part from the need to draft plans, solicit bids, enter into contracts, and conduct regulatory or environmental reviews. Spending can be further delayed because some activities are by their nature seasonal. For example, major school repairs are generally scheduled during the summer to avoid disrupting classes, and construction and highway work are difficult to carry out during the winter months in
many parts of the country.

Brand new programs pose additional challenges. Developing procedures and criteria, issuing the necessary regulations, and reviewing plans and proposals would make distributing money quickly even more difficult—as can be seen, for example, in the lack of any disbursements to date under the loan programs established for automakers last summer to invest in producing energy-efficient vehicles. Throughout the federal government, spending for new programs has frequently been slower than expected and
rarely been faster.

www.cbo.gov...

reply to post by lernmore


Pfft, anything for more than a Billion dollars is just wrong. We, the tax payers, cant really track where the money is going.

Uhmmmmm...does this also include

another unemployment extention?

reply to post by David9176


Was that sarcasm? I honestly can't tell.

Unemployment extension, now that would be wonderful.

reply to post by jam321


Is not that we are not angry my friend, but we came to the realization with the first bail out scam that this is going to be shoved up our rears we wanted or not.

So why not outrage? because we Americans has become nothing more than losers kissing the hands of those that give us their hand outs.

That is why nobody is outraged.

This bill like the first one is nothing but another scam at the backs of the American tax payer, to be squandered just like the first.

reply to post by distemper


To tell you the truth states are running out of money for any unemployment extensions already.

We all the people losing jobs no amount of bail out is going to help the unemployed pay their bills and stop losing their homes.



[edit on 28-1-2009 by marg6043]

reply to post by David9176


I was right about to blast your comment when I realized you were being sarcastic... Good 1! May our children forgive us, and you obama.

Tentickles, your avatar freaks me out.

Originally posted by Tentickles
We, the tax payers, cant really track where the money is going.

Obama Launches Recovery.gov

President Obama has announced the creation of a new website which he says will enable the public to monitor how effectively the US state spends and distributes his proposed $825bn stimulus package.

The president said the site, www.recovery.gov, would be part of his plan to create a more transparent administration.

Visitors to the site today see a message asking them to, "Check back after the passage of the American Recovery and Reinvestment Act to see how and where your tax dollars are spent".

I hope this sucker works. But I have serious doubts.

[edit on 28-1-2009 by Benevolent Heretic]

BH, while I have hopes with the prosecution of those that were squandering the first bail out I have not hopes for the stimulus.

This is going to pay for the already overinflated federal government bills, in other words without this bail Americas government will collapse.

How the Government Dealt With Past Recessions

[edit on 28-1-2009 by lernmore]

But, Obama said we don't have a moment to spare!!!! We had to pass this bill to save the US.

Hmmmm...seems like he took another page from the Bush playbook on how to get more money from the American tax payer.

Change you can believe in!!! Thanks, Obama!!

This will be funny when another crisis hits the markets in september or even before that... The US will fall as long as the same crooks are in office, obama included.

Reuters link ...in case it didn't hurt enough reading it the first time.

Obama wins House passage of economic stimulus




[edit on 28-1-2009 by lernmore]

I was being sarcastic. I should have added an eye roll in there.
It's tax cuts and increased spending. More debt.

If it was a real stimulus package it would be HUGE tax cuts and HUGE cuts in government spending.

It's funny that Republicans make a stand now against this wasteful spending when they helped push the first one across.

Are they now beginning to see the light? Or is it more BS political garbage?

My guess is the later.

[edit on 28-1-2009 by David9176]

Let's hope the senate blocks it... that would be interesting... and would Obama force it by presidential order? Would bank close for a week? Would the markets crater?

When is the senate vote ?

And so if this bailout is spending money up to 2019, this is the final attempt to save the day? If this fail, and it will, it's over?

[edit on 28-1-2009 by Vitchilo]

Originally posted by Vitchilo
Let's hope the senate blocks it... that would be interesting... and would Obama force it by presidential order? Would bank close for a week? Would the markets crater?

When is the senate vote ?

[edit on 28-1-2009 by Vitchilo]

The senate doesn't vote on it until next week.
Something this large, it wouldn't be surprising to see it back in the house.

Obama and Congress seek deal on economic stimulus

WASHINGTON (Reuters) - Republicans in the Senate accepted on Thursday President Barack Obama's offer to search for a compromise on an economic stimulus bill that could end up costing around $900 billion, as long as tax cuts play a large role. The Senate is expected to start considering the massive bill next week, following passage on Wednesday in the House of Representatives of a slightly smaller bill, without the support of a single Republican. "We look forward to offering amendments to improve this critical legislation," Senate Republican Leader Mitch McConnell said.