Waiting until January is unacceptable. Our economy is in a state of free fall. Even if George Bush had the audacity to veto for some crazy reason, the public outcry would cause enough GOPers to flip to override.
The people in there now would just filter a bunch of it away to themselves. I can wait.
Yep. Congress needs to get off their lazy asses and pass a Stimulus Bill that will give me some free money.
It would be nice. As a white male Honda owner with a fixed rate mortgage I can afford, I feel quite left out.
-Joe
Same boat plus I just re-fi’ed the house at 5%. I could use a new LCD though. Come on Uncle Sugar, get on it!
But, “Stimulus Bill” is constitutionally barred from a third term!
I want mine to put away for the kids college and not stimulate the economy at all!
You mean the same Congress that passed a $170 billion stimulus bill back in February that didn’t do a thing, except delay the inevitable?
We don’t need throwing good money after bad. We need a fundamental change in attitude. Ain’t gonna happen. It’s gonna get much, much worse.
Congress also needs to get off their lazy asses and pass a bill giving me a pony.
Because, goddamn it, my equine paradise is in a free fall and a pony in January just isn’t going to cut it! What am I supposed to ride on Christmas? God, George Bush is such an asshole!
As anathema as it may be to conservatives, something has to be done to stimulate the economy. We’re in a downward spiral… payrolls are cut, people cut spending because they are unemployed or underemployed, payrolls are cut even further because nobody is buying anything, then people buy even LESS, and so on and so on. If giving people free money will help ease this destructive spiral, then give people free money.
The February stimulus package wasn’t a bad idea, it simply wasn’t big enough.
As unbelievable as it may be to liberals, there is no such thing as free money. You can add it to the deficit, which will further hurt the economy later; or raise taxes which will further hurt the economy now.
The February package WAS a bad idea. The ongoing bailouts ARE a bad idea. And another trillion dollars thrown at it WILL BE a bad idea.
I choose the first one. The “later” one.
Wait, was this a trick question?
How much would work? $1000? $100k? A million? Frankly, I demand nothing less than a zillion gajillion dollars.
I mean, come on? Free fall! Downward spiral! Unemployment! How many more bad things have to happen until someone sees the light and gives me my zillion dollars? :smack:
Throwing rotting lumber on the deck won’t save a sinking ship. It takes a deep knowledge of the vessel and a lot of hard work done underwater repairing and strengthening the hull. I guess it is easier to just throw some boards at it and imagine it will fix itself. Since you’re adamant, I suppose I’ll take a couple of boards after all to try keep afloat when the ship finally goes under.
Your pony will be arriving shortly by FedEx. (Unfortunately, the Airholes Rider never made it out of committee.)
Giving people “free” money only delays the spiral so long as the underlying causes remain unresolved. And you can’t keep tossing in money forever. As it’s been pointed out, “free” money isn’t free; you do eventually have to pay it back, one way or another.
Even if you assume that people who receive stimulus money will spend it (a poor assumption, savings rates are slowly starting to rise in recent months), what do you do after the stimulus money is spent? The underlying issues will still remain: the destruction of capital via falling housing and equities prices, lack of available credit, general lack of economic confidence, deflation. Tiding people over with a bit of cash for a couple of months does nothing to address any of these issues in the long term.
Throwing money at the problem does buy you some additional time to try to fix the problem. Perhaps handouts that come with a lot of strings, that work to address the underlying issues and protect taxpayers interests, would be useful. But so far, those kinds of handouts appear to be rather few and far between.
Blalron, you’re absolutely right. Stimulus now would be better than waiting till late January. But what can we do? Obama’s not president, and the Senate is still 50% Republican. Bush is doggedly determined to be known as the worst president our lifetimes. The chorus of the uninformed that we have in this thread would seem to be echoed by the people he trusts the most. He’s going to continue to use his final days to do damage while we grind our teeth in frustration and wait for the clock to finally run out.
This isn’t a serious question, but it does have a serious answer if anyone else reading the thread is interested.
You can find Okun’s Law in undergraduate macroeconomics books, and wikipedia of course has an article. The law is this: for every percentage point that unemployment rises, we can expect a 2% drop in overall economic activity. Unemployment has almost reached 7 percent, and the economy is crumbling fast, so this should continue higher. Let’s be far too charitable and assume that we’re headed toward 8 percent (some professionals are worrying about 10 percent, but what the hell, I’m feeling generous).
Using 5% as the baseline for full employment, that’s a 3 percent rise in unemployment, and so a 6% shortfall in GDP for the economy. The GDP was maybe 13.8 trillion bucks in 2007. 6% of that is about 830 billion dollars worth of output that will vanish from our economy in a single year if we do nothing. A pure waste. If our economy gets stuck and finds a new equilibrium output level below the optimal level, this 800+ billion worth of losses could compound indefinitely year after heartbreaking year. And keep in mind, this is quite likely an understatement. If we actually do hit 10% unemployment, our economy would be losing somewhere in the neighborhood of 1.3 trillion dollars a year. Maybe even more. Okun’s Law might be higher than a 2% GDP loss.
We could just suffer through that like idiot stoics. Or we could listen to what the professional economists actually say and have a stimulus to avoid this. Because of multiplier effects, the government would not have to spend 830 billion to make up an 830 billion shortfall (and again, this is a low estimate). Still, fiscal multipliers aren’t great, so we’re looking at prolly a cool half trillion dollars. That’s about 1666 bucks per person. Of course, this doesn’t have to be a check from the IRS. We could spend the money making our government buildings more energy efficient, repairing our roads and bridges, and equipping our schools with the latest high tech equipment (all of which Obama plans to do).
And of course, we could also try new innovative types of monetary policy. There’s no telling what might happen here. The Fed could print the money and then dump it from helicopters (no, I’m not saying this is a good idea, I’m just saying that they don’t call the current Fed chair “Helicopter Ben” for no reason).
Of course, it won’t likely be 500 billion exactly. Some economists are calling for more and some are calling for less than that. But the overwhelming majority of them are calling for some sort of fiscal stimulus. We can reasonably discuss the needed size of the stimulus, and how it should be implemented, but there is no worthwhile debate possible about whether it’s needed or when it’s needed. If we had competent leaders, the stimulus would’ve already started. But we’ve got this lame duck thing going, so we’re just gonna have to deal with that.
You all might not personally need the money. I don’t either. Regardless, if you receive another magical check in the future that you weren’t expecting, then instead of mocking that, I suggest you splurge for the sake of economic harmony. You can get cool stuff out of it while you do your part to jack up those fiscal multipliers.
Also, bear in mind that this is taxable income and as such the gov’ment withheld half…
the front half.
So tell me this, Mr. Jackson, if spending 500 billion dollars will raise the GDP back up to $13.8 trillion, why not just keep going? Obviously, $14 trillion would be better. So would a half quadrillion. And if it doesn’t matter how we spend it, so long as it is spent, I say ponies for all. Maybe puppies for those with equine allergies.
I don’t really understand your creative accounting, but I’m highly skeptical that you can create wealth by spending money (or giving it away, depending on your perspective). If that was the case, the treasury could just put the printing press on ‘auto’ and we’d all sit back and watch the economy grow.
No, I’m of the opinion that you actually have to create wealth to create wealth. Like, work hard and build novel products and provide novel services that people want. If the incentives aren’t there, we’ll just have to wait until they are. Despite my fully justified fear of government incompetence, I could even get behind a plan to manipulate the incentives instead of just letting them sort themselves out. (This is why I at least tentatively support Obama’s public works idea.) But just handing out cash? I fail to see how that changes anything. It is like walking on a treadmill and expecting to get somewhere. Everybody is just as poor as before, but with less incentive to do anything about it.
We wouldn’t keep going because our economy isn’t capable of producing 15 trillion. Or 16 trillion. Or 20 trillion. Resources are ultimately limited, and we can’t magically create half a quadrillion.
However, our economy is fully capable of producing 13.8 trillion. We know this, because it has in the past. We measured it, and that’s how much stuff that we’re capable of producing. And every dollar short that we are from that total is a dollar completely wasted. And if the economy gets stuck a trillion dollars short of its potential output for year after year, then that’s trillions of dollars of waste that we could have entirely avoided. It looks expensive to fight against that, but it’s even more expensive to suffer an extended downturn when we could’ve jump-started the economy by taking action early on.
Actually, we could theoretically turn on the printing press and do exactly that, and get up to 13.7 trillion worth of output. Not any higher. We’re not capable of producing higher. But we could theoretically turn on the printing press and make more money to fix this problem. And in fact, though you might not be aware of it, Helicopter Ben has actually started this process. He’s doing it quietly, and he’s doing it carefully, but the monetary base has jumped significantly in the last year. It’s gone up an enormous amount.
The problem is that it’s incredibly hard to figure out how much money to pump into the economy. We’re in what’s called a “liquidity trap”. This new money isn’t being spent, it’s being hoarded, and so it isn’t motivating people to buy things.
Economists disagree about certain things. But there is absolutely a consensus that the government can do quite a bit right now to get the economy moving again, even if they disagree on how active the government should be. Giving checks to everyone is one of those things we can do, weird as that might seem. I would prefer that we build stuff (building stuff means we have better stuff even after the crisis), but it takes longer to build stuff than it does to give away money. In reality, there will be a combination of different plans, and you shouldn’t be surprised if one of the plans is another fat check.
Economies in crisis just do not function as people would otherwise expect.
First, I will assume you mean that you believe the US can produce $13.8 Trillion assuming no inflation. You can make your GDP dollar value arbitrarily high just by printing money. It’s just that a can of soda would then cost $100 or some such.
Yes, US GDP was $14 Trillion at some point in the past, but that doesn’t necessarily mean that level was sustainable in any way, past or present. For example, people took out loans they couldn’t afford to buy homes they couldn’t afford, an increase in investment spending. People then took out HELOCs against these overpriced homes to buy new cars and big screen TVs, increasing private consumption. All this occurred on the assumption that housing prices would never fall, a bad assumption. So houses, cars, and big screen TVs were produced for people to buy. GDP went up, but it was a house of cards. For awhile we were producing $14 trillion worth of stuff because there was demand for $14 trillion worth of stuff, but there’s no reason to believe we could support that level of production today.
Again, if all you care about is getting back up to $14 Trillion in GDP, sure, you can just print up money, hand it out, and cause inflation. And as you say, the Fed is doing this to a degree. But this doesn’t mean you’re necessarily producing more stuff; it just means everything costs more dollars. Alternatively, you can borrow the money and inject it into the economy, whether by handing it out or through increased government spending. Assuming the money is spent instead of hoarded, you then really would be generating $14 Trillion of goods and services to meet this additional consumer/government demand. But in this case you are then carrying more debt, and the increase can only be sustained for as long as you are able to borrow money.
That’s not to say I’m opposed to borrowing money to prop up the system in the short term; I think it’s a reasonable measure. But it is not a sustainable solution; it’s just a band-aid that buys time for the underlying problems to be worked out. And certainly we should be weighing the consequences of taking on this additional debt against the consequences of simply suffering now. Borrowing large sums of money and cutting checks indiscriminately, all in the name of the stimulating the economy, strikes me as reckless.