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Krugman thinks it sucks too.
And he says so here.
being such ass holes or the Democrats for letting them. I hope
Obama vetoes this thing and says got back and do over. Because
I sure the hell would.
C
I'm still working on the numbers, butI don't know who's but I want to kick more. The republicans for
I've gotten a fair number of requests for
comment on the Senate version of the
stimulus.
The short answer: to appease the
centrists, a plan that was already too
small and too focused on ineffective tax
cuts has been made significantly smaller,
and even more focused on tax cuts.
According to the CBO's estimates, we're
facing an output shortfall of almost 14%
of GDP over the next two years, or around
$2 trillion. Others, such as Goldman
Sachs, are even more pessimistic. So the
original $800 billion plan was too small,
especially because a substantial share
consisted of tax cuts that probably would
have added little to demand. The plan
should have been at least 50% larger.
Now the centrists have shaved off $86
billion in spending - much of it among
the most effective and most needed parts
of the plan. In particular, aid to state
governments, which are in desperate
straits, is both fast - because it
prevents spending cuts rather than having
to start up new projects - and effective,
because it would in fact be spent; plus
state and local governments are cutting
back on essentials, so the social value
of this spending would be high. But in
the name of mighty centrism, $40 billion
of that aid has been cut out.
My first cut says that the changes to the
Senate bill will ensure that we have at
least 600,000 fewer Americans employed
over the next two years.
The real question now is whether Obama
will be able to come back for more once
it's clear that the plan is way
inadequate. My guess is no. This is
really, really bad.
being such ass holes or the Democrats for letting them. I hope
Obama vetoes this thing and says got back and do over. Because
I sure the hell would.
C
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If Obama doesn't have the guts to shut down repubs like he did McCain we're all toast.
Pathetic.
How do we get rid of Harry Reid?
We need a new party or new leadership. Time for a grassroots movement to ditch the democratic party.
February 7, 2009 9:12 PM | Reply | Permalink
Yippee! Yes, we need a new party. It can be like the Working Families Party that co-exists with the Democratic Party in NYC. You can run on both tickets, but if you want to run on the Working Families Party ticket, you have to run on THEIR platform. Well, I think that's how it works.
http://www.workingfamiliesparty.org/
I don't like the name though. Tired of "families" which leaves out all the single people. Labor Progressive Freedom Party or something. Not Green either. Too bunny hugging for a big movement. Something with a lot of power to it. Any ideas?
February 8, 2009 2:29 PM | Reply | Permalink
We can't afford the time to veto it. We need to start screaming at our Representatives and Senators now!
February 7, 2009 9:16 PM | Reply | Permalink
I'd rather see a veto and another run at it (but forceful and resolute this time) than to see the piece of crap Snowe and Specter are serving up to us. The original deadline was Feb. 20. They can still scrap this piece of shit and bring home a decent bill that works for the people before then. For God's sake, they passed the Patriot Act in less than 24 hours!
February 7, 2009 11:18 PM | Reply | Permalink
Who cares.
The "stimulus" bill was always a POS, and 600,000 "extra" unemployed -- one month's job losses -- is a gnat on an elephant.
The Democrats and Obama had their chance to explain to the American people just how dire the situation is. Why it calls for two trillion dollars of stimulus.
But no; both are too beholden to Wall Street and the creditor class for that.
Wait till we hear from Geithner next week; then, we'll see Obama's true colors and it won't be pretty.
February 7, 2009 9:16 PM | Reply | Permalink
Frankly, I don't know what the problem is anyway.
California doesn't have any money? General Motors can't pay its suppliers?
No problema!
Print yourselves up some bonds, guys -- "I promise to pay the holder $ (fill in the blank) on demand . . . .
The Federal Reserve can buy them up. Hell, the Fed is buying the same sort of "cash for trash" from the banks. Just expand the class of sellers.
February 7, 2009 9:30 PM | Reply | Permalink
"ceci n'est pas un pipe"
Slapping the label "collateral" on a bond envelope does not thereby make the contents genuine collateral.
Is the Fed really lending out cash for trash? I know, they don't have to tell us. Maybe it's time to force them to show their hand.
February 8, 2009 6:44 AM | Reply | Permalink
too beholden to Wall Street
There's that famous "Ellen" right wing bias...
February 7, 2009 10:06 PM | Reply | Permalink
From the left perspective I'd say pretty clearly the Democrats are far too beholden to Wall Street and that really hampers and has slowed the Democratic response to the present crisis. I am very concerned that the weak-knees of the Democrats will falter, but I am hopeful they will not and instead start taking bold and decisive action to change the dynamics before the depression overcomes the country entirely. the Democrats cannot maintain their posture of servicing the interests of predatory wealth as they have been doing for quite a while and also serve the interests of the people and the nation. The two are at odds.
February 7, 2009 11:15 PM | Reply | Permalink
the left perspective
Forgive my unlabeled irony--Ellen's is the left perspective--only she's so fucking arch it's hard to tell...
February 8, 2009 12:19 AM | Reply | Permalink
$2 trillion dollars in stimulus is easy for Krugman to support because he doesn't have to consider the slight possibility that it might need to be paid back at some point. Also, where would we shovel all of that money. I doubt our current governmental structure could even deploy that amount of money effectively. Especially not in a relatively short time frame. If we could simply spend our way out of the crisis, why not $5 trillion? Call it a 1.5X multiplier and we're at $7.5 trillion stimulus. That should hit the spot for national supertrain, solar panels across the southwest, wind farms across the midwest, and an electric car in every garage.
Be sensible people. I support the stimulus package, but there must be some limits to this thing. We are already in uncharted territory. There are many more bills that will need to come down the pipeline, and we will need those 60 votes to make things happen. Simply pointing fingers and yelling will not get it done.
February 8, 2009 2:01 AM | Reply | Permalink
If you think it is too much to spend you are missing the point and I mean no disrespect at all in saying so. The thing people need to understand is that the economy isn't just in trouble: it is collapsing all around us in a way that has never before been seen. The next great depression has already begun. The only question is how horrible is it going to be. We have to spend this money just to blunt the impact of the Tsunami that is rolling fast toward our coastline.
Put another way, the jugular vein of the US economy has been cut wide open and the bleeding is, at this point, uncontrolled. Just to stop the bleeding it will take $2 Trillion. Yes, it is an almost unfathomable amount of money but if we don't spend it, then the bleeding continues unabated and very shortly the patient is dead. If we don't act quickly and in a very large manner then the economy is very likely going to be completely destroyed and millions of people are not only out of work but many of them may never work again. $2 Trillion is a whole lot less than what will be spent if we incur all the expenses that will arise if the economy grinds to a complete halt. $2 Trillion will look like a bargain if we end up being penny wise and pound foolish at this point.
February 8, 2009 2:39 AM | Reply | Permalink
"the sky is falling" is getting tiresome.
Where is your basis for $2T being necessary to stop the bleeding??
February 8, 2009 6:39 AM | Reply | Permalink
Have you read what Krugman and other economists have been writing the past couple of weeks? Are you aware that over a million people have lost their jobs in the past 60 days? It also appears the job losses are accelerating so 500,000 jobs lost last month turns into 600,000 this month and then 700,000 next month. Those kind of numbers haven't been seen since the depression because we are in another one. In the best case scenario this will last several years. Forecasts are predicing over 10% unemployment a year from now. No one is saying the sky is falling but the house is on fire and there is no economist who doesn't agree with that. If we don't act swiftly and forcefully enough now it will get exponentially worse and become all the more difficult to deal with.
February 8, 2009 7:48 AM | Reply | Permalink
Bull, and I note for the record you didn't even address, much less answer the question.
The most recent graph I saw showed basically straight line job loss at about 2x that of 2001.
I don't see anything in the recovery bill which will make a dent in the next three months in any fundamental economic contraction.
$9T in consumer spending was generated via home equity in the decade ending with 2006. The economy MUST contract, it must be allowed some contraction.
"exponentially worse" is crap.
February 8, 2009 7:55 AM | Reply | Permalink
So you didn't bother to read Krugman. Smart.
February 8, 2009 8:18 AM | Reply | Permalink
I read Krugman regularly, and with a grain of salt.
February 8, 2009 8:25 AM | Reply | Permalink
I read Krugman too, as much as it pains me.
But Oleeb - we all agree things are bad today. But unemployment is currently 7.6%. In 1933 it was roughly 25%. In 1982 it was roughly 12%.
Like Ben Stein reminded us in today's NYTimes, inflation is very low today versus in early 1980s.
We have three big problems today: housing, banking and unemployment/consumer demand. The first two problems caused the third, but Obama and the Democrats are spending all their time addressing the symptoms, not treating the causes.
February 8, 2009 4:59 PM | Reply | Permalink
Wasn't the method of calculating unemployment changed between the '30s and today? I read someplace that what we're approaching will be roughly the same as the '30s rate if the same method of calculation was used. The '30s percentages are much higher because the criteria for who was unemployed were broader. There's a frighteningly large number of people today who aren't working who don't show up in the current unemployment stats because they've simply given up and aren't looking for work any more. I believe such people were counted in the '30s but no longer. What those people are doing to survive, I have no idea, but at any rate, one can't accurately make a direct comparison of the unemployment percentages we see today and those of the '30s.
Perhaps someone with more economics knowledge than I have can weigh in here. I'm sure there's more to it than what I'm aware of.
February 8, 2009 9:59 PM | Reply | Permalink
Not entirely, but yes, unemployment means something different today than it did then, in several ways. Check out http://www.shadowstats.com/ and browse around for interesting alternative graphs. But there is no indication that workers are even close to as much trouble now as then (however, this recession is still young so...).
As for Bill's point, I think it's a valid one.
February 9, 2009 1:37 AM | Reply | Permalink
Useful BLS chart here See line U-6.
Real life goes beyond this, but 13.9% is still pretty hefty. Not the 30's, no... but looking ugly.
February 9, 2009 1:59 AM | Reply | Permalink
"Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers.."
Yes, many ways to slice and dice it.
If it were my index, I would adjust the part time part for the time fraction - if employed 50%, that counts at half-weight. I also think non-civilian should be counted too, but I realize that's a different metric.
February 9, 2009 2:13 AM | Reply | Permalink
To that I'd add that total debt is now running about 130 percent of income. Consumer spending will not get us out of this without a return to something approaching full employment. Even then, I wouldn't bet on it.
February 9, 2009 2:59 AM | Reply | Permalink
Obviously not, because what he says doesn't agree with Krugman's interpretation, and if he had read him, he would of course agree 100% with Krugman's god-like wisdom on all things.
February 9, 2009 1:09 AM | Reply | Permalink
Oh that must be it. I am an errant zombie, a hive member out of touch with the borg, a voice off key in the choir.
That must be it.
Tech question: Why won't my profile show stuff? I put in some info into the forms like Age, Politics, ... but nothing comes up on the public view. Is this just further proof of the above observation, or is there a trick besides clicking SAVE on the edit page?
February 9, 2009 1:29 AM | Reply | Permalink
Never mind the tech question, my profile info just showed up. Maybe it's moderated??
February 9, 2009 2:16 AM | Reply | Permalink
Or you might look at the numbers he is talking about and weigh whether or not that makes some sense in realtion to the amount of money necessary to combat the predicted loss of economic activity in coming months. Of course, that would be considering the information instead of snarking about belief in Krugman (who has no credentials for the claims he makes).
February 9, 2009 10:56 AM | Reply | Permalink
I'm still waiting for a basis for the idea that it will cost $2T to stop the bleeding. I think it will take a lot less.
February 9, 2009 3:34 PM | Reply | Permalink
The CBO.
February 8, 2009 9:11 AM | Reply | Permalink
No way. Religious attachment to dogma is unsuitable for discussion.
The economy is not a sacred cow!
February 8, 2009 3:46 PM | Reply | Permalink
Veto?
This bill hasn't been to conference yet. I read that it won't go to a vote until Tues. Obama has a speech on Monday.
Krugman talks about social value, but that's a diversion from stimulus value. What is the stimulus value of the $40B for the States? Or is "stimulus" now being abandoned entirely?
"According to the CBO's estimates, we're
facing an output shortfall of almost 14%
of GDP over the next two years, or around
$2 trillion" - Krugman as quoted
Is that a total of $2 or $2 per year? Krugman is being dishonest here.
The economy is NOT a sacred cow. The idea of "shortfall" entails some required standard. There is no such thing.
February 8, 2009 7:01 AM | Reply | Permalink
Aid to the states is one of the most direct forms of stimulus because it prevents layoffs of state employees and can continue funding state-contracted projects.
February 8, 2009 12:35 PM | Reply | Permalink
That made no sense. Aid to States which goes directly to State government is clearly "direct". It helps keep porked up Administrations feeling comfy. So what?
Where is the stimulus factor? What would it cost a State in today's market to borrow the money "the old fashioned way" on a State by State basis, project by project if needed? Why have States engaged in such massive moral hazard? It's clear that the weaking situation has been know for at least 18 months.
February 8, 2009 4:10 PM | Reply | Permalink
I disagree. States have already begun cutting spending dramatically to meet balanced budget mandates. This is not a case of eliminating waste. It is a case of gutting essential services and furloughing or firing state employees. And most who favor stimulus spending to begin with agree this is one of the fastest ways to put money in play.
February 8, 2009 5:59 PM | Reply | Permalink
So there is no stimulus factor here. Your position is simply that essential programs need to be funded, and that the Fed should do it not the States.
"And most who favor stimulus spending to begin with agree this is one of the fastest ways to put money in play."
Who are not in "most" there? How is putting money in play a good idea here, on its own??
February 8, 2009 6:24 PM | Reply | Permalink
From a report by the Center on Budget and Policy Priorities:
You have to at least agree this is not a typical cycle.
February 8, 2009 6:54 PM | Reply | Permalink
Do you specialize in meaningless quotes?
There is nothing there which shows a stimulus factor.
It talks about the inverse situation, raising taxes and cutting spending.
It makes a mistake re taxes taking money out of the economy. Taxes are spent by the government, so the money stays in the economy.
"You have to at least agree this is not a typical cycle."
There is no such thing as a typical cycle, all recessions/depressions are unique even if there are loose similarities. Why would you ask a tautology?
If you can point out the highly significant underlying fundamentals which are critically different from your idea of "typical", maybe one of us would learn something useful! I see "deleveraging bubble + job declines at 2x the 2001 rate". Where is the "the sky is falling" in that?
February 9, 2009 1:24 AM | Reply | Permalink
You can't be serious.
If "deleveraging bubble" is the best you can do, you got off the train several stops back. Or maybe you really are the only one that knows what's going on.
Sorry for burdening you with the long quote. It happened to include all of what you had previously denied. The point is that reductions in state spending are directly connected to decreasing demand. And 41 states are forecasting deficits for fiscal 2010 totalling $88 billion. I don't see how you can address a decrease in aggregate demand without addressing this issue.
P.S. Speaking of meaningless, you've got to do better than "deleveraging bubble" to describe a phenomenon that may well topple the global financial system.
February 9, 2009 2:24 AM | Reply | Permalink
Yes, I'm being quite serious. There is no question that decreasing government revenues and the inability to borrow will squeeze government employment. That's so obvious it doesn't need to be said, but that's all you've offered.
You have not said how Fed intervention will offer a significant stimulus factor, the point at issue. You also accept my point that taxes do not remove money, contra the quote.
"So there is no stimulus factor here. Your position is simply that essential programs need to be funded, and that the Fed should do it not the States."
How is Fed spending more stimulative that private spending? Why shouldn't States borrow more on their own, if borrowing is the solution?
There are so many holes in this that it makes a seive look water-tight.
February 9, 2009 2:35 AM | Reply | Permalink
Private spending would work except there is no private spending. In this case, the federal government is the spender of last resort.
I'm not an economist as you've correctly pointed out. Are you? I might have thought so, until you said that states could balance their budgets by issuing bonds.
At any rate, I have more economists on my side than you do. If you insist on trying to reduce a complex issue to simplest terms, ok. But instead of a meaningless term of art, try something we can all understand. Like sinkhole.
February 9, 2009 2:44 AM | Reply | Permalink
Nothing personal, eds. I'm cranky, I'm tired and I've got about 15 hours of work to do tomorrow.
February 9, 2009 2:47 AM | Reply | Permalink
Still no answer. You've become a sinkhole here. :(
I didn't say bonds would balance the budgets, I said States could borrow their own money, balanced budget or not.
February 9, 2009 3:28 PM | Reply | Permalink
It ain't over till it's over...
Remember all those lonely days when it looked like Obama was losing? He spoke to us, "Keep the faith." It was hard but I did. He soundly defeated the Clinton machine. He thumped the Republicans. In the end this bill won't be pretty but it will be a good start. We elected US a great President. He won't let US down.
Keep the faith.
February 8, 2009 7:57 AM | Reply | Permalink
"Trust, but verify." :)
February 8, 2009 9:12 AM | Reply | Permalink
I agree, Steve. Even if Obama had pursued a partly-line package the House version would have been loaded down with non-stimulus spending. And passage of a bill made to the President's specs would not have been assured in the Senate.
I think we get what we get. What finally emerges from Washington will not be a total solution; Obama has been saying so since the beginning. But I'm hopeful it will be an icebreaker in terms of restoring some confidence in the economy.
February 8, 2009 12:54 PM | Reply | Permalink
Oh Dear !!! I seem to have created a monster with this post.
C
February 8, 2009 9:59 AM | Reply | Permalink
Would that be Karma or Justice? :-)
February 8, 2009 4:14 PM | Reply | Permalink
The chances Obama will veto this are virtually nil.
Although nobody knows precisely what will happen when the money is released, economists -- those in best position to speculate -- are rapidly coalescing around the position that timing is critical. Notice this includes even the AEI's Allen Viard.
Start over from scratch? Come on.
February 8, 2009 11:40 AM | Reply | Permalink
Biggest bang for the buck is to immediately pass HR 676, Single Payer Health Care. A new study shows that will create 2.6 million jobs. A great article on this by Bruce Dixon is at http://www.blackagendareport.com/index.php?option=com_content&task=view&id=1014&Itemid=1
February 8, 2009 2:55 PM | Reply | Permalink
At what cost, now and later?
February 8, 2009 4:19 PM | Reply | Permalink