How does the the government get money to the poor without critics calling it welfare?
No, signing delay had nothing to do with it. He was supposed to do what he said he would do – give people, including Congressmen, the time to actually read and think about the largest appropriations bill in American history. He should have done it because 1) it is the right thing to do and 2) he said he would do it.
The only way could have done that would be to delay signing it.
Um…didn’t he delay signing it for three days for no reason at all? If he didn’t plan on signing it until today, what was so damned important about them voting on it Friday? At least giving them a couple more days to consider things (like them voting today and him signing tonight or tomorrow) would have made sense - this way it’s been 3 days and nothing was acomplished by waiting.
Kimstu, thanks for your thoughtful reply.
Well, since in that exact quote he specified that digging holes was valuable if the money came from savings, I would say he has been misunderstood.
In the other quote, Keynes seems to be making the argument that if a man is given a job after a period of unemployment, it doesn’t matter where the money comes from, it is of benefit to society. I disagree.
For example, suppose I go out and rob an old lady. I use the money to give an unemployed man a job. Is that of benefit to society? I think that everyone would say no.
So Keynes basic argument is not true. Just because an unemployed man gets a job and gets Keynes’ “positive utility” from being employed, this is not necessarily a good thing for society. It depends on where the money came from.
Now if Keynes or you want to argue that borrowing money from the man’s kids to give him a job is worthwhile, that’s fine. But that’s not what Keynes said. In fact, in the second quote he is careful to specify that the money is coming from savings … so clearly in that case he is making a distinction regarding where the money comes from.
You also correctly say “I [Kimstu] didn’t assert he was [right]”. So let me ask … do you think he was right, that borrowing from tomorrow to hire someone today is a good plan?
Because if so, if it has “positive utility” to hire someone using borrowed funds, we should immediately borrow lots of money, put everybody to work, and double everyone’s salary while we’re at it … hey, we could all be rich. What’s not to like in that Keynesian plan?
The peasant’s million bucks in the current system are right where they are in the analogy – in the future. They are borrowed by the Pharoah, to be repaid from the peasants future earnings. Exactly as we are doing today.
I fear there may not be a criterion that is “clear, specific, and unambiguous”. In addition, the term “pork” in this context is vague. However, let me offer a distinction between what I see as properly belonging in a stimulus bill, and what should not be there, based on the old adage:
I would say that the first action, handing out fish, does not belong in a stimulus bill. It is a stimulus, just as any and all spending is a stimulus. But there are no long-lasting effects. It just transfers money from my kids future pockets to the present, where it is quite literally “eaten up” and is gone.
The second action is the kind we want to support. It has both short-term and long-lasting effects. It includes all the things related to “fishing” - infrastructure, equipment, training, communications, and all the rest. That is what the bill should focus on, not on things that are eaten up today and are gone tomorrow.
Shodan upon review I see that I misunderstood what the WSJ was saying and you seem to be right about that point. The minimum amount necessary for the additional child tax credit has been lowered. It is therefore now true that those with income between $3K and $8.5K who owe and paid no tax are eligible for money from the Feds when they were not last year. That amount could equal as much as $825 (15% of the newly eligible income), which when your income is under $8.5K a year is a sizable chunk of change. I still dispute calling that “welfare” even with a small w, and do agree with those who point out that the poor will spend what they can get because they need to, but I nevertheless acknowledge my misunderstanding.
Meanwhile the point remains as originally stated: how much of the tax cuts fit Sam’s description of being merely disguised “payments to low-income individuals”? “Maybe the broadening of the reach of the child tax credit. And that’s it.”
intention, no I did not say that any of this was pork. I merely made the point that there will be items that individuals will disagree about whether they are stimulus or not. For example, I hardly think that the $70 billion changes to the AMT are stimulus. You think that furnishing a building is not even though someone is building those sofas and gets paid for that and spends what they get paid. That’s the real world: people will disagree and compromises between those differing POVs will be made. It’s how things actually get done.
Not true. He didn’t sign it until three days after the vote, so there was time for delay.
More to the point, a two day delay in the process is meaningless to the results of the bill, which will take months to years to be felt. However, those two days are critically important to making an informed decision on the bill.
We already have support programs for the poor. The crippling cycle of long-term welfare was dismantled during Clinton’s administration for a reason. It’s being brought back a little at a time into long term programs with deliberately misleading names such “child tax credit”. Eventually it will be restored to the original state sponsored, tax payer funded breeding program for child abusers.
No, because in Keynes’ other exact quote about digging holes, in the earlier section that I pointed out, he specified that he was talking about forms of loan expenditure.
Therefore, the Keynesian position about the value of “digging holes in the ground” can apply in different circumstances either to savings-financed expenditure or to deficit spending. Therefore, IMO, it is not misunderstanding or misinterpreting Keynes to apply his “digging holes” example to deficit-spending situations.
I hope that is clear now.
I think it depends on circumstances. That, in a nutshell, is the whole problem of deficit spending, and I don’t think there’s a simple or easy way to determine when, how, or to what extent deficit spending is necessary or advisable.
But most economists seem to agree that where deficit spending does have a significant role is precisely in the sort of situation we’re now facing, namely, severe economic recession. When widespread unemployment is contracting the economy and bringing people into poverty, it does make sense to “borrow from tomorrow” to hire people today.
So then, why are you so down on the prospect of using stimulus money to build a new Homeland Security headquarters and put desks and chairs in it? Wouldn’t that count as “infrastructure and equipment”?
DSeid, my apologies for the lack of clarity in my writing. You say:
All money which is borrowed and spent will be a stimulus to the economy. My point (which I clearly expressed poorly) is that we should spend the money wisely, on things which will have a larger, longer-term effect. For example, the immediate stimulus to the economy will be the same if we spend the money on chairs or fixing roads.
Fixing the roads, however, will provide large, long-term, lasting benefits to the economy as a whole, while buying chairs will not. That is the difference I wanted to highlight.
Nor, I guess, will giving three-year-olds a solid start on an education provide long-term benefits.
It is just as clear as it was to start with, which is to say not very. Not your fault, Keynes. In one place Keynes says digging holes is valuable if the money comes out of savings. I believe that. In another place he says it is valuable if the money is borrowed. That’s also clear (although it’s not what he says in the other quote). I just don’t believe it.
Do you believe that it doesn’t matter whether we are digging holes with borrowed money or with savings? And if it doesn’t matter, why did he specify the money coming from savings in the second quote?
The issue to me is production. It’s the difference between barbers and fishermen. Fishermen produce real goods with a tangible value. Barbers provide a service. Both are valuable, and both are very different.
This is far from a meaningless distinction. You can have an isolated society where everyone is a fisherman. You cannot have an isolated society where everyone is a barber. Somebody has to make something, somebody has to create something, somebody has to actually produce something of value to pay the barber. Primary producers are the backbone, the engine of the economy.
For me, that is the important part of any stimulus plan – support for the primary producers. That’s why I don’t see buying chairs for government workers as belonging in a stimulus plan. The Government, by and large, is a service provider. While their services are valuable, government services are not what fills the coffers of an economy. That would be the primary producers. Like barbers, you can’t have an isolated society where everyone works for the Government …
All the aid in the world given to barbers is useless unless we increase the ability of the populace to pay for their services. The only way to do that is to increase the productivity of the country, to make and grow and manufacture useful things, things of value. That is what we need to focus on in a stimulus bill.
Frank, we need both short-term stimulus and long-term stimulus. While Head Start may or may not provide long-term benefits (studies differ), increasing the number of well-prepared five year olds doesn’t do anything to help in the current crisis.
Yes, education is always valuable, no matter how old you are. But there’s not that many five-year-olds on the unemployment roster … so I’d vote for training that will help workers rather than kids.
Other than giving jobs to laid-off teachers, I guess it doesn’t.
Please look up stimulus in your dictionary. A stimulus provokes a reaction. Providing jobs to teachers and chair salesmen puts money into the economy equally as well as providing jobs to highway pavers and ditch diggers.
Well remember that the furnishings are part of the package for a new Dept of Homeland Security Headquarters. So, accepting your criteria for wise stimulus (and I have stated very similarly myself previously) the issue is whether of not that new Headquarters will have a “larger, longer-term effect”? I’d think less than say money for education and the electrical transmission infrastructure and high speed rail but I think that some may think otherwise (and could argue that potentially preventing just one terror attack will do much to protect future productivity) and the compromise between those POVs was had as part of getting the deal done.
Also as to early education, I’d beg to differ. You are hiring teachers (as Frank notes, on preview). That is an immediate effect. You are encouraging a better educated workforce in the longer term. That’s the larger longer-term effect. It hits the criteria.
But given this is supposed to be a stimulus rather than a permanent addition to the federal budget, how much good does it do to give people jobs that are planned to be obsolete? When funds are cut, which should be the case here, schools eliminate positions and those folks will be back out on the curb again. In a way, this is worse than creating jobs in construction, because if the economy picks up there’s a greater likelihood of construction workers finding comparable jobs after the stimulus money is used up.
I’d be happy to see spending increased on education (look up my past posts on NASA for evidence of that) but I think it was not appropriate to put some of the funding under a stimulus plan, simply because education spending needs to be on-going to be worthwhile.
Why will not the teachers be able to go back to the schools that they are currently being laid off from once the economy picks up again?
The impression I took away from the book was not that Keynes was saying that it’s intrinsically irrelevant whether government spending comes out of surpluses or deficits (savings vs. borrowing). Rather, what I think he was doing was stressing the (rather counterintuitive) concept that a project can be economically useful even if it’s not directly economically productive (“digging holes”). The point is just that a make-work government project, whether funded from surpluses or deficits, can have a valuable effect on the economy even if it doesn’t directly produce any valuable assets. That’s not the same thing as saying that it doesn’t matter how any particular spending project is funded.
A random illustration: If my eyes are getting bad and I spring for a new pair of glasses that make me see better, those glasses are helpful to me, whether I bought them out of my savings or put them on my credit card. But that doesn’t mean that it doesn’t matter how I paid for them. Whether I used saved money or borrowed money will certainly have an impact on my future finances.
So no, I don’t think that it doesn’t matter how government spending projects are funded (and as I noted, I don’t think that Keynes thought that either). But I’m not willing to make a hard-and-fast distinction along the lines of “surplus spending automatically good, deficit spending automatically bad”. How a particular project should be funded depends on resources and circumstances.
Well, you can’t have an isolated society where everyone fixes roads, either. Why should stimulus money go to road-fixing but not to other government services such as homeland security?
I see the point you’re making about the importance of primary producers, but again, I don’t understand why the distinction has to be so black-and-white. Why should primary producers be the sole focus of stimulus spending? (And do road-fixers really count as “primary producers” anyway?)
Will this have an effect?
Obama approves several thousand new troops for Afghanistan war
These 17,000 troops are not being moved from Iraq, this is a new deployment.
Is there some federal initiative to refund these positions that you know about and I don’t? Schools get their funding from the town/city, state and the federal goverment, unlike businesses who have a lot more leeway about when to add and cut positions. When funding is cut - often due to “belt-tightening” aka budget cuts at the town/city level - positions are cut. Most of these cuts are permanent.
Take for example the gifted education program that my school system had when I was in middle school. They cut the position due to budget shortfalls back in 1990. No teacher has ever been hired to fill this position since. My position with a special needs preschool/kindergarten back in 2002 fell victim to a similar cut. They haven’t hired anyone in that position since, either. Maybe things are better in states that spend more on education (NH historically spends the least) but schools don’t rehire teachers once they’re laid off around here.