So the Democrats finally were able to pass an unemployment extension against Republican objections that the money should come from unallocated TARP funds or there should be budget cuts to offset the extension.
My question, coming purely from ignorance and curiosity is, why not use unallocated TARP funds? What is the Democrats reason for not considering that? The news I hear on TV, Radio, or look at on-line haven’t, as far as I know, mentioned why the Democrats are against that. And this isn’t a slam on the Democrats. I’m unemployed and am happy that they pushed the extension through.
I thought I read an article earlier today that mentioned TARP funds (not unallocated, IIRC, but funds being paid back by the banks or something of the sort). Or am I misremembering?
The Democrats failed to argue their point on the stimulus package which allowed the Republicans to cut it back to less then what was needed. Since then the Democrats have been scrambling to increase stimulus spending, the unemployment package being more stimulus.
The country needs stimulus and the Democrats continue to fail to make their argument for the good of the country. As the Republicans will benifit politically from the Democrats failing they have been more then happy to help them along the way.
Why don’t they spend the stimulus money they already voted for? Voting to allocate more money that doesn’t get spent isn’t going to do what they’re aiming for…
Because it is already slated to be spent. ie They allocated 50 million dollars for a new highway. The contractor may have received 10 million up front for the engineering and design then and may have even started tearing it up. They need to have the other 40 million in the bank for when that contractors next payment is due or for when they complete the project. The Republicans were arguing we’re too broke to finish that project anyway so we should just cut it short and use the money for unemployment. The Democrats arguing we need both the highway and the unemployment to be paid for because we still lack the overall stimulus to get out of the ditch.
Do you have a cite for your claim that ALL of the stimulus money is dedicated to projects that have already started? If this is not the case then projects that have not begun could be canceled to pay for the unemployment extension. I found one link that lists spending in process (presumably what you are talking about) and money that has yet to be spent: http://projects.propublica.org/tables/stimulus-spending-progress
I don’t know how reliable this site is but I’m willing to bet that the Dems could have found 30 billion that has not been spent from the stimulus. Since many on this board have argued that dropping money from a helicopter would stimulate the economy I would argue that using the stimulus for unemployment benefits would, indeed, be stimulus.
If extended unemployment benefits really are stimulus, and if unemployment benefits really do help unemployed people, then why are the extended benefits only for 99 weeks? …and why do only a few of the unemployed get these extended benefits instead of all unemployed people?
Why do just a couple million unemployed benefit for just 99 weeks? Why cut off somebody after 99 weeks? What is that family going to do after 99 weeks with no unemployment check coming in any more?
Forget the 99 week limitation, why not give unlimited extended unemployment benefits forever, and also give unemployment checks to everyone who is unemployed, thus helping everyone instead of a few, and also creating much more"stimulus"?
Seems to me the 99 week limit unemployment extension only for just a few million of the tens of millions of unemployed was not thought out very well. What about people who dont get any unemployment checks like independent contractors and former business owners who lost their business?
This additional 99 week extension that just passed seems to have a lot of loose ends, and a lot of holes, that dont make any sense.
My attempt at a neutral answer, with the disclaimer that I’m pretty economics-ignorant: an economic stimulus doesn’t make sense in many (most?) situations. However, many people (economists, SDMB members, etc.) think that we’re currently (still) in a situation where stimulus does make sense. Now, unemployment is supposed to be one of the most effective forms of stimulus spending, as it practically injects money directly into the economy – the theory being that the unemployed have to spend the money just to make ends meet.
My guess at answering some of the other questions broadly comes down to: we have an unemployment program in place. That is, the rules exist (why some people qualify and some don’t), the infrastructure is there (so there’s little additional overhead – i.e., extra cost – involved), and it can be stopped quickly (at least, for a government program).
The same reason we don’t allocate a million zillion dollars to eradicating malaria, or to buying every America a Corvette, or whatever - we can’t afford to extend unemployment benefits indefinitely.
If the unemployment benefits really are stimulus, then the more people that get it, the bigger the unemployment checks are, then the more stimulus the economy gets and the richer America gets, and the faster and bigger our economy grows - which means the more we can afford to give away.
If we made unemployment checks big enough, long enough, and to enough people, then the economy would be so stimulated that we could easily afford to give everyone a Corvette.
Think of the minimum wage as an example. If the minimum wage is a good idea, then instead of making the minimum wage only $5.80, lets make the minimum wage $15.80.
Or, on a more serious note, why not give tax incentives for companies to hire unemployed people. About a month ago in a pit thread there was this article which states that some companies only want to hire people who are currently employed.
Since unemployment is part of the reason our economy is so crappy, I would think that getting people hired would help, so why haven’t we seen any government incentives for businesses to hire those of use who need a job?
I suspect you are being facetious, since I would not have taken you for a proponent of increased government spending. However, since you’re also somewhat credulous, I’ll take your post at face value.
Anyway, the answer is the law of diminishing marginal returns, etc. Just because something is beneficial, it doesn’t mean that more of it will be equally beneficial. Or, like your mother used to say, “there is such a thing as too much of a good thing”.
In this particular case, extension of unemployment benefits is not really for its stimulative effect so much as for its ability to reduce a depressive effect. Fact is, if unemployment benefits don’t get extended, that means even less consumer spending, even more foreclosures, and even more layoffs. In essence, we’re not just extending unemployment benefits for the benefit of unemployed people. It also helps make sure that more of us employed people don’t join them on the dole.
Um, we have. Both TARP and the stimulus contained large (ie., tens of billions’ worth) tax breaks to employers who take on new full time workers.
Here’s the thing. In order for stimulus to be effective it has to have a multiplier effect. If borrowing $1 and giving it to peter doesn’t make Peter puts the mony in his IRA then you have accomplished nothing. Peter’s propensity to save has to be low and the people who have the lowest propensity to save are the unemployed and the poor. That is why things like food stamps and unemployment benefits are such great stimulus even in an environment where the general propensity to save has gotten very high. It is targetted at people who almost HAVE to spend that money.
An example of a really bad stimulus would be accelerated depreciation, which was literally half the stimulus package passed under Bush. I never understood why the Democrats agreed to allocating half the stimulus package to such an ineffective stimulus. They were in teh majority and they gave the Republicans HALF the stimulus package in exchagne for stuff like more food stamps.
This is not exactly true. If someone puts a dollar into an IRA (which is really just a tax-law bucket - I’m sure you mean into some investment vehicle), then they’ve either lowered interest rates some infinitesimal amount by providing money to a bank or other lending institution, which can then loan it out productively, or provided capital to a company to either hire, expand, etc., assuming they bought stock or some basket of stocks like a mutual fund or ETF.
Normally it’s not exactly true, but in this particular instance, where the banks are sitting on piles of cash and refusing to loan most of it out, the money might as well be stuffed under a mattress for all the good it does the economy in the short term.
Now, increasing the savings rate certainly has beneficial effects in the long term, but that’s a separate thread.