12 Feb 10
http://newsmax.com/InsiderCover/obama-jobs-mccain-bill/2010/01/29/id/348361
The recent proposed jobs bill by President Obama is being referred to as more of yet another stimulus package than a jobs bill. $75 billion is being allocated in bailouts for infrastructure, $79 billion is being allocated for a 6 month extension of unemployement benefits, medicaid money for states, and a child care tax credit.
So does all this investement in infrastructure produce jobs, or at least, jobs that are sustainable? The article states, "The Democratic jobs bill relies on the supposition that government spending on projects triggor the creation of large numbers of related jobs. This idea relies on the fallacy that a business has to use resources it otherwise would have used for other products to hire additional employees to work on government related projects. But when government spends money for make work programs, it takes money from the private sector would be using to create long term sustainable jobs, says competitive Enterprise institute analyst John Berlau. Government crowds out pirvate borrowers and credit when it borrows or raises interest rates, which Barlau said means less private sector jobs. This factor caused the protracted unemployement the nation faced throughout the Great Depression. Berlau, likewise dismissed the House bill's affordable housing aspect as a "slush fund" for ACORN and the other groups aligned with the Obama administration. Republicans could back those parts of the bill that would cut capital gains for small business and extend depreciation for new factories or equipment, he said, but that would be contingent on whether the Democrats pass punitive taxes against banks. Otherwise the GOP might have a difficult time supporting it. The jobs creation effectiveness of these tax code changes, however, would be contingent on whether or not the Democrats pass punitive taxes such as those being proposed for banks. Such taxes could have the effect of reducing available credit, which in turn could hamper private sector growth."
12 Feb 10
Originally posted by whodeyThe Federal government cannot create jobs by spending more money.Plain and simple. If you say it can show me how.
http://newsmax.com/InsiderCover/obama-jobs-mccain-bill/2010/01/29/id/348361
The recent proposed jobs bill by President Obama is being referred to as more of yet another stimulus package than a jobs bill. $75 billion is being allocated in bailouts for infrastructure, $79 billion is being allocated for a 6 month extension of unemployement benefits, medicaid ...[text shortened]... the effect of reducing available credit, which in turn could hamper private sector growth."
12 Feb 10
Originally posted by utherpendragonI agree. In fact, I think what they really want is another stimulus package so they can throw more pork around to their cronies. So how can they do so when the term "stimulus package" now has such a toxic sound to it? That's right, say it is a "jobs bill". Brilliant!!
The Federal government cannot create jobs by spending more money.Plain and simple. If you say it can show me how.
12 Feb 10
2 edits
Originally posted by whodeyThis argument would apply in cases where the economy is already moving along at full capacity. Consumers are spending, businesses expand to meet the demand, and banks eagerly provide loans to both consumers and businesses, and almost everyone's happy.
http://newsmax.com/InsiderCover/obama-jobs-mccain-bill/2010/01/29/id/348361
The recent proposed jobs bill by President Obama is being referred to as more of yet another stimulus package than a jobs bill. $75 billion is being allocated in bailouts for infrastructure, $79 billion is being allocated for a 6 month extension of unemployement benefits, medicaid the effect of reducing available credit, which in turn could hamper private sector growth."
The problem is that sometimes the economy stalls and is NOT moving along at anything close to full capacity. During a recession, you get the following joyful scenario:
1. Consumers are afraid to spend because they don't have jobs (or fear losing their jobs).
2. Businesses are afraid to invest or hire because they see that consumers are afraid to spend
3. Banks don't make loans because businesses are afraid to invest and consumers are afraid to spend. - Banks are also afraid that anyone they do lend to is likely to be unable to pay it back.
4. And the idea that we're in a Terrible Recession gets into everyone's mind, and everyone becomes even MORE afraid, and this just makes things worse.
So you end up with each of these sectors assuming fetal position and doing little while waiting for one of the other sectors to make the first move. If nothing is done, this stagnation can go on for quite awhile.
At this point, there's plenty of people available to hire. There's plenty of capacity to use. There's plenty of raw materials. There's plenty of money in accounts available to lend out. Even if the government temporarily uses some of these things as part of the stimulus, there is still PLENTY available to the private sector.
Obviously, once the government gives the economy a sufficient push, it should then get out of the way and let the private sector take over.
12 Feb 10
Originally posted by MelanerpesWhen you say the government gives a push I assume you mean w/a stimulas bill of some sorts. If so, why was this not the case in the depression of 1920?
This argument would apply in cases where the economy is already moving along at full capacity. Consumers are spending, businesses expand to meet the demand, and banks eagerly provide loans to both consumers and businesses, and almost everyone's happy.
The problem is that sometimes the economy stalls and is NOT moving along at anything close to full ca ...[text shortened]... ufficient push, it should then get out of the way and let the private sector take over.
The economic situation in 1920 was grim. By that year unemployment had jumped from 4 percent to nearly 12 percent, and GNP declined 17 percent.
Instead of "fiscal stimulus," Harding cut the government's budget nearly in half between 1920 and 1922.
Tax rates were slashed for all income groups. The national debt was reduced by one-third.
The Federal Reserve's activity, moreover, was hardly noticeable.
By the late summer of 1921, signs of recovery were already visible. The following year, unemployment was back down to 6.7 percent and it was only 2.4 percent by 1923.
12 Feb 10
1 edit
Originally posted by utherpendragonNever mind that, why did the first stimulus package not keep unemployement below 8% like Obama had predicted?
When you say the government gives a push I assume you mean w/a stimulas bill of some sorts. If so, why was this not the case in the depression of 1920?
The economic situation in 1920 was grim. By that year unemployment had jumped from 4 percent to nearly 12 percent, and GNP declined 17 percent.
Instead of "fiscal stimulus," Harding cut the governm llowing year, unemployment was back down to 6.7 percent and it was only 2.4 percent by 1923.
I think you will find that conservatives are much more mindful of history than progressives. The progressive continues to try and pound the square into the round hole.
12 Feb 10
4 edits
Originally posted by MelanerpesEconomic highs and lows in the economy are unavoidable much like highs and lows in our own personal lives. However, the US is now apparently unwilling to acknowledge that lows are acceptable. Now they throw money at the problem, like they do everything else, with the presumption that they can "fix" things. The last stimulus bill did next to nothing as will future stimulus/job bills other than scare the populace about the debt ballooning.
This argument would apply in cases where the economy is already moving along at full capacity. Consumers are spending, businesses expand to meet the demand, and banks eagerly provide loans to both consumers and businesses, and almost everyone's happy.
The problem is that sometimes the economy stalls and is NOT moving along at anything close to full ca ufficient push, it should then get out of the way and let the private sector take over.
What people are really scared about is the increasing debt that the US holds. If the economy were allowed to function as it has in the past, it will recover on its own. It is only when new problems such as the debt that have people worried. Naturally business' are paying close attention to this problem because they know at some point their taxes will begin to be raised as well as a devaluation of the dollar internationally. Add to this fact that there are increased health costs just around the corner with a possible NHC plan and cap and trade legislation ready to take a bite out of their profits and what you have is government holding up economic growth. Oh yea, I forgot the Obama administration waging war with the banks. Brilliant!!!
12 Feb 10
Originally posted by whodey"never mind that" is the whole point. The depression of 1920 is barely mentioned.It doesn't fit into the big lie. But we should learn from it.
Never mind that, why did the first stimulus package not keep unemployement below 8% like Obama had predicted?
I think you will find that conservatives are much more mindful of history than progressives. The progressive continues to try and pound the square into the round hole.
According to the endlessly repeated conventional wisdom, the Great Depression of the 1930s was the result of capitalism run riot, and only the wise interventions of progressive politicians restored prosperity. This is false.
Few presidents have been subjected to the degree of outright ridicule that Warren Harding endured during his lifetime and continues to receive long after his death. But the conventional wisdom about Harding is wrong to the point of absurdity.
The way the progressives are dealing w/this now is as w/FDR and the New Deal.A chance for a big power grab.
They know exactly what they are doing.
12 Feb 10
2 edits
Originally posted by utherpendragonI wasn't backing any particular "stimulus" proposal. Just saying that sometimes the economy gets in a rut and something has to push it out. And this rut is usually some sort of widespread "fear" or "recession pyschology". But it's clear that merely throwing money around isn't necessarily going to get the job done. So I am indeed skeptical of a lot of the "stimulus programs" that get offered.
"never mind that" is the whole point. The depression of 1920 is barely mentioned.It doesn't fit into the big lie. But we should learn from it.
According to the endlessly repeated conventional wisdom, the Great Depression of the 1930s was the result of capitalism run riot, and only the wise interventions of progressive politicians restored prosperity. ...[text shortened]... w/FDR and the New Deal.A chance for a big power grab.
They know exactly what they are doing.
But why do you have to go all the way back to 1920 to make your argument?
A better argument would be Clinton's "Biggest Tax Increase in World History" in 1993. Using the same logic used by those who support stimulus programs, the GOP thought this tax increase would trigger the next great depression, but instead the economy almost immediately began growing rapidly.
I believe that one of the things that was holding back recovery in early 1993 was the fear that the federal deficit was getting out of control. Perot's candidacy helped to whip up lots of fear on this topic. In a totally rational world, Clinton's tax increase would have had a depressive effect. But in the real world, Clinton's efforts likely reassured a lot of people who were worried about the budget, and this ultimately stimulated a burst of new spending and investment.
It's possible that the reverse effect may've happened with the Obama stimulus. When word got out that the deficit had risen from $400Bill to $1400Bill practically overnight, it made people worry that spending had suddenly gotten totally out of control. And the recently passed stimulus bill seems to have greatly added to this perception. I believe that this fear is behind a lot of the Tea Party activities, and it may well be interfering with recovery.
So perhaps the best way to stimulate the economy right now might be to soon pass a comprehensive measure focused on balancing the budget over next few years. I know - everyone will scream about how this approach worked horribly in the 1930's when FDR tried it. But I don't think deficit-hysteria was as big an issue back then as it is today.
