Stimulus? Still a failure.

[badlydrawnjeff.livejournal.com]

The failure of the stimulus isn't exactly news, and hasn't been for some time. Thankfully, more and more people are getting on board.

For instance, it looks like we might not have needed it to begin with. Granted, since stimulus of this nature doesn't work, we never need it, but the justification for it isn't so strong anymore:

"We had to hit the ground running and do everything we could to prevent a second Great Depression," Obama told supporters last week.

...

IBD reviewed records of economic forecasts made just before Obama signed the stimulus bill into law, as well as economic data and monthly stimulus spending data from around that time, and reviews of the stimulus bill itself.

The conclusion is that in claiming to have staved off a Depression, the White House and its supporters seem to be engaging in a bit of historical revisionism.

...

The argument is often made that the recession turned out to be far worse than anyone knew at the time. But various indicators show that the economy had pretty much hit bottom at the end of 2008 — a month before President Obama took office.

Stanford's John Taylor showed us that tax credits and directed spending was fairly worthless:

Individuals and families largely saved the transfers and tax rebates. The federal government increased purchases, but by only an immaterial amount. State and local governments used the stimulus grants to reduce their net borrowing (largely by acquiring more financial assets) rather than to increase expenditures, and they shifted expenditures away from purchases toward transfers.

Some argue that the economy would have been worse off without these stimulus packages, but the results do not support that view.

Even Harvard's Robert Barro is on board to an extent. While he has yet to come around on the fact that stimulus has not ever been shown to work, he's at least noting that the merits of spending need to be more important than the stimulating impact:

"In the long run you have got to pay for it. The medium and long-run effect is definitely negative. You can't just keep borrowing forever. Eventually taxes are going to be higher, and that has a negative effect," he said.

"The lesson is you want government spending only if the programmes are really worth it in terms of the usual rate of return calculations. The usual kind of calculation, not some Keynesian thing. The fact that it really is worth it to have highways and education. Classic public finance, that's not macroeconomics."

With murmurings that we may need a second stimulus, the question remains as to why we'd pursue such a thing given the track record of the first. At this point, if you're still a proponent of Keynesian-style stimulus, why? What will it take to convince you that it will not succeed?

Comments

[xforge.livejournal.com]

The only things about the stimulus that were a failure, were that it wasn't anywhere near big enough, it wasn't administered very well, and it contained too many tax cuts for rich people and corporations.

[ddstory.livejournal.com]

It contained no strings attached, and no proper guideline for being enforced. It's like pouring milk into a bucket without having sealed all the holes at the bottom of said bucket. And then wondering why it's going empty.

[xforge.livejournal.com]

:nod: Yeah this is true. I sometimes wonder of Obama, Reid and Pelosi aren't Republican shadow agents.

[ddstory.livejournal.com]

Obama got bought by Wallstreet the moment it became clear that he would be the Democratic candidate.

[xforge.livejournal.com]

Yup. I still think it's such a laugh when people call him anti-business, anti-bank, anti-corporations or anti-Wall Street when he's got half of Wall Street on his payroll.

[existentme.livejournal.com]

Agreed. Just as the next one will.

[paedraggaidin.livejournal.com]

Nah, they're just all of them utterly clueless about economics, the budget, and money in general. Funny, for people who are almost universally wealthy.

[gunslnger.livejournal.com]

Wrong behind-the-scenes group.

[telemann.livejournal.com]

I think you're confusing the TARP funds with the stimulus package. There was a congressional oversight mandated in the stimulus package.

[ddstory.livejournal.com]

How's that working IRL?

[telemann.livejournal.com]

Pretty good.

[the-rukh.livejournal.com]

Most real regulation had to get stripped before Republicans would ever let it pass. Of course they're screeching and howling now about how it hasn't helped.

[xforge.livejournal.com]

As they always do. Even if they let a Democratic program or reform get through, they make sure it's had its balls chopped off cleanly before it passes so that they can then say "See? Government does not work. Now elect me to another term so I can continue to make sure government does not work."

[jlc20thmaine.livejournal.com]

How are those shovel ready project working out for you?

[xforge.livejournal.com]

...which is what Obama himself said about it. Your point?

[badlydrawnjeff.livejournal.com]

were that it wasn't anywhere near big enough

The data disagrees. What would have been big enough according to you?

it wasn't administered very well

What do you mean?

and it contained too many tax cuts for rich people and corporations.

It didn't have any tax cuts for rich people, or any people. Plenty of tax credits, though.

[xforge.livejournal.com]

1) If you're only getting your "data" from a bunch of Austrians and the current batch of Republicans in Congress, of course the "data disagrees."

2) I mean it wasn't administered very well. It took months and months to get any of the money allocated. Money couldn't be allocated until Republican legislators had a chance to go home and present the stimulus as giant novelty checks in front of news cameras. The last of it is actually still sitting in the banks unspent.

3) Refusing revenue is refusing revenue.

[xforge.livejournal.com]

Well of course tax cuts and credits cost less. But giving tax breaks to the megarich and to huge corporations does absolutely nothing to help anyone but the megarich and the shareholders and officers of the huge corporations, whereas sending money to build a new bridge to replace one that's falling down helps tons of people. The same money would help even MORE people if it went into public transportation and health care but don't EVEN get me started on THAT shit.

[badlydrawnjeff.livejournal.com]

1) So I sourced a bunch of Republicans and Austrians in the OP?

2) So it was a government program.

3) But tax credits are not tax cuts.

[underlankers.livejournal.com]

There were tax cuts in 2009 and in 2010, and also in 2011. At least in my world. What world are you posting from? Bizarro-Earth?

[xforge.livejournal.com]

I think the whole group is well aware that Jeffy lives in a very, very strange alternate dimension.

[underlankers.livejournal.com]

Heh. If I hadn't believed that, the discussions about whether or not Colin Powell's UN speech happened would have convinced me.

[badlydrawnjeff.livejournal.com]

No, there were tax credits in 2009, a payroll tax cut in 2010 (which was also accompanied, I believe, by an estate tax increase), and nothing so far in 2011.

[underlankers.livejournal.com]

Ah, so Obama did pass a tax cut. Then you admit you lied then? Thanks for conceding the argument.