Obama-Limbaugh Stimulus Plan of 2009

[ParanoiA]

I ran across this piece by Rush this morning, thought it was interesting. He's essentially proposing to let the republicans spend half the stimulus money their way and let the democrats spend half their way and then compare the results. I got a kick out of it, since I do like his proposed half better, but I don't see how this could ever settle the debate about how to get an economy out of a recession.

 

Not like it could ever happen in the first place, but a fun idea nonetheless.

 

http://online.wsj.com/article/SB123318906638926749.html

 

In this new era of responsibility, let's use both Keynesians and supply-siders to responsibly determine which theory best stimulates our economy -- and if elements of both work, so much the better. The American people are made up of Republicans, Democrats, independents and moderates, but our economy doesn't know the difference. This is about jobs now.

 

The economic crisis is an opportunity to unify people, if we set aside the politics. The leader of the Democrats and the leader of the Republicans (me, according to Mr. Obama) can get it done. This will have the overwhelming support of the American people. Let's stop the acrimony. Let's start solving our problems, together. Why wait one more day?

[Pangloss]

Aren't they already almost doing that? Of the $825 billion, over $250 billion is in tax cuts that the Republicans wanted but the Democrats didn't. The complaint from Republicans was that they couldn't raise that amount to a higher value.

[ParanoiA]

Aren't they already almost doing that? Of the $825 billion, over $250 billion is in tax cuts that the Republicans wanted but the Democrats didn't. The complaint from Republicans was that they couldn't raise that amount to a higher value.

 

They might be, I haven't been paying too much attention. Maybe it's the democrat proposed cuts they figure to be more symbolic, like cutting taxes for those who already don't pay income taxes, that sort of thing. I heard some talk of that last week.

[Pangloss]

There is some awful pork in that bill, I'm afraid. Doubling the Department of Education's budget, for example, is clearly an ideological move, not an economic one (and not a trivial one either, at $160 billion). Some of the criticism from Republicans is accurate and relevant, just as other parts of it are partisan grandstanding. I hate to say it, but this may just be the best we could really hope for. In spite of Republican refusal to cooperate on the voting, I think it does represent compromise government at its realistic best.

[ParanoiA]

See I'm not sure about that. I thought the republicans were far more cooperative and expected to compromise before Rush's insistance that ideological lines be drawn and sides be taken. I'm not surprised at him, but I'm curious if the republican leadership is so unsure of itself that it's vulnerable to his competitive mantra.

 

I guess we'll see as the world turns...

[SH3RL0CK]

...let the republicans spend half the stimulus money their way and let the democrats spend half their way and then compare the results. ...I don't see how this could ever settle the debate about how to get an economy out of a recession.

 

http://online.wsj.com/article/SB123318906638926749.html

 

Neither do I see how this could settle the debate because how would you ever determine how much benefit came from the First spending and how much from the second if money from both went to the same place (hopefully there will be more transparency with the second bailout)? Especially since the banks won't say what they did with the first bailout. And how could it be possible to parse these benefits from all the other things the Fed, the Treasury, other countries, etc. are doing to try to help the situation? We are talking multiple Trillions of dollars in the aggregate after all.

 

I'm actually pessimistic that all this money will do any good anyway (I'm expecting massive inflation at some point, followed by very high interest rates to combat this), but then I'm not an economist.

[jackson33]

They might be, I haven't been paying too much attention. Maybe it's the democrat proposed cuts they figure to be more symbolic, like cutting taxes for those who already don't pay income taxes, that sort of thing. I heard some talk of that last week.

 

Correct; By Earned Income Credits or other means then returning money to those not paying. This amounts to individual grants or welfare checks.

 

To thread; Limbaugh proposes lowering 'Capital Gains' and/or 'Corporate Taxes', not to individual tax payers. His proposal was letting Republican CHOOSE, what tax cutting means and to who, while Democrats can choose what to stimulate, or what ever you want to call it...

 

The best idea I have heard is raising the threshold where SS/Medicare kicks in, for the sole and total stimulus and all encompassing for a certain period. For instance if raised to 50k per tax payer, the taxpayer would simply not be paying up to 4k per year and his/her employer would save the same. Self employed, those responsible for a great majority of jobs, not filing Corporate Taxes would save on each employee and the 8K for themselves. This would benefit every company now cutting jobs, or soon will, yet give purchasing power to those working.

[john5746]

I like the idea of capital gains cuts, although maybe not as drastic. It seems to me that trying to get consumers to spend, spend and spend to get things rolling in the short term is only going to work short term. They need to spend some and save some, possibly invest some. If people save more, they will feel less threatened during downturns and the spending won't dry up quite as dramatically. So removing taxes from savings, especially for middle class and below would be nice, IMO.

 

Trying to move manufacturing into new sectors is a good idea. We cannot continue to bleed manufacturing and think that a middle class will be retained.

[jackson33]

I like the idea of capital gains cuts, although maybe not as drastic. It seems to me that trying to get consumers to spend, spend and spend to get things rolling in the short term is only going to work short term. They need to spend some and save some, possibly invest some. If people save more, they will feel less threatened during downturns and the spending won't dry up quite as dramatically. So removing taxes from savings, especially for middle class and below would be nice, IMO.

 

Trying to move manufacturing into new sectors is a good idea. We cannot continue to bleed manufacturing and think that a middle class will be retained.

 

 

Savings are taxed according to the taxpayers rate after determining taxable income. Investments (Capital Gains), such as Stocks are taxed regardless of income. Said another way, savings for nearly half the population in the first place is not taxed and those that would RISK their capital, will lose a portion of whatever risked, if profit is the year end result.

 

Manufacturing jobs have moved location, more so than be lost. There is a problem or pending problem from automation, which can't be stopped. Traditionally jobs in general available or people train for have changed sectors. I saw a review, years ago, we would not have the people to operate ATT alone, if still under the original system of operator assisted. You would be surprised how many folks are involved in building solar power units or the construction of one wind turbine alone and was -0- not that long ago. IMO; In some garage today, somebody is working on the next big item to change everything...

[iNow]

Why would it be a good idea to split how we use the funds down some partisan line? That's about the dumbest thing I've heard yet. Well... this is Rush, I suppose. Maybe I should raise the bar a bit.

 

We're going to be spending the money. The argument should be for us to coordinate our efforts so we get a multiplier effect across sectors. I'm frankly completely pissed off that not a single republican voted for the stimulus bill. Business as usual got us into this mess. Concessions were already made, and I'm not at all impressed with the grandstanding ridiculousness we're seeing.

[jackson33]

You should be more concerned about 12 Democrats crossing the isle, voting against the program...Seems their may be more than one Judas for your Messiah...

 

The reality however, is whatever is compromised in the Senate/Joint Committee, will be passed and regardless of Republican participation. They have the votes...and will take the credit or the blame.

[Pangloss]

why would it be a good idea to split how we use the funds down some partisan line? That's about the dumbest thing i've heard yet. Well... This is rush, i suppose. Maybe i should raise the bar a bit.

 

We're going to be spending the money. The argument should be for us to coordinate our efforts so we get a multiplier effect across sectors. I'm frankly completely pissed off that not a single republican voted for the stimulus bill. Business as usual got us into this mess. Concessions were already made, and i'm not at all impressed with the grandstanding ridiculousness we're seeing.

 

qft.

[ParanoiA]

Why would it be a good idea to split how we use the funds down some partisan line? That's about the dumbest thing I've heard yet. Well... this is Rush, I suppose. Maybe I should raise the bar a bit.

 

We're going to be spending the money. The argument should be for us to coordinate our efforts so we get a multiplier effect across sectors. I'm frankly completely pissed off that not a single republican voted for the stimulus bill. Business as usual got us into this mess. Concessions were already made, and I'm not at all impressed with the grandstanding ridiculousness we're seeing.

 

Really, this is what was supposed to have happened when the bill was drafted in the first place through the method of compromise, a politician's job. Republicans aren't in any power to really demand much reverence, and it would seem the democrats made a decent effort to include them.

 

I did find it humorous that there was some bipartisan unity in voting against this sham, just not near enough. Of course, that's to be expected from a cut-the- taxes-shut-down-the-empire-type.

 

I like Rush's plan for playful philosophical reasons, but I have no interest in watching these two outspend each other at the same time. Then we'd need partisanship just to keep from going bankrupt.

[iNow]

One idea that I've heard and which has caused me to consider it further (come to think of it, this was a question Jon Stewart asked Jimmy Carter the other night) was...

 

If we're going to be giving the banks all of this money so the banks can survive, why don't we instead use that same money to pay off everyone's debt? Every person in the country, use the money to pay off their debt. The banks through this process would get their money anyway (since they hold that debt), the people would all be out of the financial holes they're in and be able to spend their income on other things, and it would be like hitting the reset button.

 

There are some caveats and issues in the idea, but I found it rather thought provoking. If you're going to give the money to the banks anyway, not use it to take away peoples debt which is presently being held by said banks?

[john5746]

There are some caveats and issues in the idea, but I found it rather thought provoking. If you're going to give the money to the banks anyway, not use it to take away peoples debt which is presently being held by said banks?

 

 

Because we want people to buy more stuff, not pay debts. Paying debts is boring and doesn't grow the economy. Borrow, spend and things will be merry.

[padren]

If you're going to give the money to the banks anyway, not use it to take away peoples debt which is presently being held by said banks?

 

I thought the idea was far better too - but if you are in the banking industry, what will you lobby for? In one case, you get a ton of money from the government that you can lend to people and increase what they owe you, on top of what they already owe. In the other, you get money when people pay off their debts, but you trade equal amounts of debts for equal amounts of money.

 

Call me jaded but I think it's easy to see what solution the "financial experts" in the banking industry will suggest works best in this sort of crisis.

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Because we want people to buy more stuff, not pay debts. Paying debts is boring and doesn't grow the economy. Borrow, spend and things will be merry.

 

I really would be interested in knowing the state of borrower confidence vs lender confidence right now. We hear the banks don't want to lend money - which is understandable, but consumer debt is crushingly high and I think a lot of people are holding off on that new car or flat screen out of fear of how how bad it may still get.

 

If you helped free up people's consumer debt, enough of them will probably re-max it out in a day to offset the amount banks will actually put into the economy (some people may very well need to) and at the very least the remaining people will be far more confident to start buying again.

 

What good is it for the banks to have money to loan, if everyone is already maxed out in the credit they can support for their income?

[npts2020]

The Republicans in the house (mostly) only opposed the package to give the appearance of there being any opposition to the largest theft of money ever witnessed by humans. If people think the amount of money is mind-boggling, what about the proposed use? The first several corporate handouts have not been well-accounted for, where is the "better accounting" in the current bill? The prime interest rate is at an all-time low and the Federal reserve has flooded substantial money into the "market" so why is credit still so tight and is more money going to make a significant difference? Coroporate America has been caught at its own Ponzi scheme, sometimes called the "derivative market". Some estimates put the "value" of this market at more than 10 times annual world GDP, which only matters if a large enough percentage of them default or are cashed in. The problem is that some of the biggest issuers and backers of these derivatives are not on solid financial ground themselves (can any one say Citibank, GMAC, AIG........). A large scale collapse of the derivative market would expose how much leveraging of finances our government and financial institutions have allowed, almost identical to the levels justs before the Great Depression. Its all about confidence, but such a situation allows no room for error and will crash hard when that confidence is shaken. How much money will it take to prop up that confidence and for how long? IMO flying helicopters over the 825 largest cities in America and shoveling out $1 billion in Ben Franklins would provide as much economic stimulus as giving it out the way it has been done so far. Somebody please show where my analysis is wrong.

[Pangloss]

The Republicans in the house (mostly) only opposed the package to give the appearance of there being any opposition to the largest theft of money ever witnessed by humans.

It's worth noting that the package includes what is, if I'm not mistaken, the largest tax relief plan ever proposed in the history of this country. Something like a third of the proposal isn't stolen spending at all, it's a direct return to the taxpayer (and only to the tax PAYER).

[swansont]

There are some caveats and issues in the idea, but I found it rather thought provoking. If you're going to give the money to the banks anyway, not use it to take away peoples debt which is presently being held by said banks?

 

Because it's not going to keep the banks from failing. You leave the bank with only the bad debt, but they still have obligations to pay interest to their depositors. So they fail anyway, and the FDIC is still on the hook for guaranteeing the deposits.

[iNow]

Because it's not going to keep the banks from failing. You leave the bank with only the bad debt, but they still have obligations to pay interest to their depositors. So they fail anyway, and the FDIC is still on the hook for guaranteeing the deposits.

 

I'm not sure I follow your point. I'm not disagreeing with it, just don't understand it completely. The idea is that all debt would be essentially reversed with this action, so I guess my question is, how would banks be left with "bad debt" since it had all been paid off?

 

It's probably painfully obvious to anyone with even a basic degree in hyperbolic topography, but I'm missing it. Hoyvin-Glayvin...

[npts2020]

It's worth noting that the package includes what is, if I'm not mistaken, the largest tax relief plan ever proposed in the history of this country. Something like a third of the proposal isn't stolen spending at all, it's a direct return to the taxpayer (and only to the tax PAYER).

 

Well that is one of the better parts of the bill. The problem is that someday all of that money will need replacing (last time I looked the Fed was running a deficit for as far as the eye can see into the future). Having just finished skimming the House passed version, I would say it is virtually impossible that the act will not cost more than advertised (way more if the economy gets any worse). There are big $$$$ to be had from it in nearly every sector of the economy, so everyone get out your feed troughs, I mean proposal sheets, and line up for a check of your very own. Enough money to give every man, woman, and child $2,500 in one act of congress............how long can this go on?

[iNow]

How (if at all) are you accounting for downstream domino/multiplier effects? If you want to look at this as pure dollars, then at least frame the context properly. I'm thinking "cost" versus "investment." If the investment is done properly, it can go on for a VERY long time. If it is merely a cost... then not long at all.

 

It's important not to focus purely on this quarters balance sheet alone. When making a big expenditure, sometimes you have to take a big immediate hit to achieve the long term payoff. Somtimes you have to operate on the short term at a loss to realize longer term growth.

 

I seem to remember a strange saying that "you have to spend money to make money." While that's an incredibly limited statement, it frames the issue here rather well. If we focus merely on "this is costing a lot right now" instead of "we're going to recoup much more than we put in if we're patient enough to do so" then we miss the true underlying support for the action, we ignore the long term benefit, and we do ourselves a great disservice.

 

Do you find this to be a fair criticism of your point? If not, why not?

Edited January 31, 2009 by iNow

[swansont]

I'm not sure I follow your point. I'm not disagreeing with it, just don't understand it completely. The idea is that all debt would be essentially reversed with this action, so I guess my question is, how would banks be left with "bad debt" since it had all been paid off?

 

Then you're talking about a much, much bigger bailout. You can't repay both the good loans and bad loans with the current bailout. But you still have the problem of having deposits with an obligation to pay interest (liabilities) with no income. And then there's the question of how much inflation you just created by effectively increasing the money supply by a huge amount.

[ParanoiA]

It's worth noting that the package includes what is, if I'm not mistaken, the largest tax relief plan ever proposed in the history of this country. Something like a third of the proposal isn't stolen spending at all, it's a direct return to the taxpayer (and only to the tax PAYER).

 

I'm just not finding this Pangloss. My google search ain't bringin' up no historic tax relief plan. This could be entirely my fault, so could you entertain my ignorance and provide a link or something?

 

The Republicans in the house (mostly) only opposed the package to give the appearance of there being any opposition to the largest theft of money ever witnessed by humans.

 

There are big $$$$ to be had from it in nearly every sector of the economy, so everyone get out your feed troughs, I mean proposal sheets, and line up for a check of your very own. Enough money to give every man, woman, and child $2,500 in one act of congress............how long can this go on?

 

Just wanted to say I love the spirit of these posts. However this turns out, it's nice to see folks apprehensive about our debt and this kind of big spending. Personally, I would prefer we stop with the voodoo stimulus crap we keep getting over and over again, first the republicans and now the dems. Just cut some taxes to promote businesses growth and leave it alone - let us get ourselves out of this by empowering the individual - with their own money. That's the economy.

[iNow]

Then you're talking about a much, much bigger bailout. You can't repay both the good loans and bad loans with the current bailout. But you still have the problem of having deposits with an obligation to pay interest (liabilities) with no income.

 

Of course. I'm not sure why I had such a blind spot to that when I first read it. Thanks for coming back in to clarify.

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Personally, I would prefer we stop with the voodoo stimulus crap we keep getting over and over again, first the republicans and now the dems. Just cut some taxes to promote businesses growth and leave it alone - let us get ourselves out of this by empowering the individual - with their own money. That's the economy.

 

Just curious. How exactly would that help since it wouldn't really create any noticable manufacturing jobs within our own country? Basically, you'd be cutting a bunch of taxes so we could spend it on consumer goods from China... then, the money runs out and we still have an economy in the US that isn't growing jobs or creating new sectors.

 

People (as a general rule) are not going to organize themselves and aggregate their funds from the governments "empower the individual plan" at a large enough scale to stimulate the production and manufacturing capability in the amount we need. They're going to spend it on porn.