The Tip O'Neal Bill
Well, it appears that Democrats who were angry at the cost of the Iraq war (a feeling to which I was always sympathetic) are attempting to even the score by spending approximately the same amount in a single bill.
Looking at the stimulus bill was kind of an odd experience for me. Despite everything I preach here about politicians, I must have, somewhere in my deep back brain, under the onslaught of cultish media attention, absorbed some small hope that maybe perhaps Obama was really different. Then I looked at the stimulus bill. It is all the same crap that various folks have been trying to peddle unsuccessfully for years, repackaged in a hurry-up emergency form to avoid close scrutiny. This is politics as usual, but even more so. Jeez, this easily could have come from Tip O'Neal. Everywhere you look in the bill, it smells. And Republicans are almost going to have to go along because they have pissed away any credibility they have by doing the exact same thing under the guise of TARP.
By the way, if you are confused about Keysian stimulus, here it is in a nutshell: The economy is contracting some as people deleverage from over-spending and an asset bubble. I mean, that's certainly what we are doing in the Coyote den, setting goals for both de-leveraging the business and our household. But folks are worried, because while this has happened many times, one of those times we had a depression. So the government does not want you to deleverage. It wants you to spend and spend. But it knows you won't, and that it has not yet accumulated enough power to force you to. So it will borrow and spend for you. Government stimulus means that when you are trying to save and reduce debt, government is going to run up debt in your name.
By the way, for those wondering how well this works, the last time we tried it was during the aforementioned depression, and the depression lasted another 8-10 years.
Noumenon:
You have three really good posts up today. This one, the GM one, and the panic one. Awesome.
January 22, 2009, 9:49 pmYoshidad:
"By the way, for those wondering how well this works, the last time we tried it was during the aforementioned depression, and the depression lasted another 8-10 years."...
That would be true, except it is not.
From: Nobel Laureate Paul Krugman here: http://www.nytimes.com/2008/11/10/opinion/10krugman.html
"Now, there's a whole intellectual industry, mainly operating out of right-wing think tanks, devoted to propagating the idea that F.D.R. actually made the Depression worse. So it's important to know that most of what you hear along those lines is based on deliberate misrepresentation of the facts. The New Deal brought real relief to most Americans.
...the definitive study of fiscal policy in the '30s, by the M.I.T. economist E. Cary Brown, reached a very different conclusion: fiscal stimulus was unsuccessful 'not because it does not work, but because it was not tried.'
....Didn't all these public works amount to a major fiscal stimulus?
.... The effects of federal public works spending were largely offset by other factors, notably a large tax increase, enacted by Herbert Hoover, whose full effects weren't felt until his successor took office. Also, expansionary policy at the federal level was undercut by spending cuts and tax increases at the state and local level.
And F.D.R. wasn't just reluctant to pursue an all-out fiscal expansion — he was eager to return to conservative budget principles. That eagerness almost destroyed his legacy. After winning a smashing election victory in 1936, the Roosevelt administration cut spending and raised taxes, precipitating an economic relapse that drove the unemployment rate back into double digits and led to a major defeat in the 1938 midterm elections.
What saved the economy, and the New Deal, was the enormous public works project known as World War II, which finally provided a fiscal stimulus adequate to the economy's needs."
January 23, 2009, 3:29 pmAdam Eran:
"By the way, for those wondering how well this works, the last time we tried it was during the aforementioned depression, and the depression lasted another 8-10 years."...
That would be true, except it is not.
From: Nobel Laureate Paul Krugman here: http://www.nytimes.com/2008/11/10/opinion/10krugman.html
"Now, there's a whole intellectual industry, mainly operating out of right-wing think tanks, devoted to propagating the idea that F.D.R. actually made the Depression worse. So it's important to know that most of what you hear along those lines is based on deliberate misrepresentation of the facts. The New Deal brought real relief to most Americans.
...the definitive study of fiscal policy in the '30s, by the M.I.T. economist E. Cary Brown, reached a very different conclusion: fiscal stimulus was unsuccessful 'not because it does not work, but because it was not tried.'
....[but] Didn't all these public works amount to a major fiscal stimulus?
.... The effects of federal public works spending were largely offset by other factors, notably a large tax increase, enacted by Herbert Hoover, whose full effects weren't felt until his successor took office. Also, expansionary policy at the federal level was undercut by spending cuts and tax increases at the state and local level.
And F.D.R. wasn't just reluctant to pursue an all-out fiscal expansion — he was eager to return to conservative budget principles. That eagerness almost destroyed his legacy. ...
What saved the economy, and the New Deal, was the enormous public works project known as World War II, which finally provided a fiscal stimulus adequate to the economy's needs."
January 23, 2009, 3:30 pm