CBO: Obama stimulus harmful over long haul

RightinNYC · Feb 8, 2009

Indy said:
Did you even bother to follow this thread before posting? If you did you'd notice the multiple maps that discredit this silly notion that Democrats pay less taxes than Republicans since the Democrats come from states with much higher household incomes. Try again genius.

Because all states are obviously monolithic entities! Everyone in NY is a democrat! Everyone in Texas is a republican!

Indy said:
AAAAAND exit polls are somehow now believable? Oh ok, I wasn't aware Kerry wasn't the pres for the last 4 years. :roll:

lol. The exit polls in 04 were off by a margin of 1-2 points across the nation. Unless you have any evidence that they were off by FIFTY points in 2008, this is a terrible argument on your part.

Again, will somebody please explain why the New England area is ALWAYS blue and yet is comprised of some of the wealthiest states in the nation?

Monolithic entity, etc.

You can't have it both ways, either Democrats typically make less and as such pay less in taxes, or they make more and pay more in taxes. Just repeating the same mantra when its shown to be incorrect (see previous maps) is something we've been seeing for 8 years now. Do we really need to continue this?

I seem to recall trying to explain this once, but I'll try again.

Imagine a city with 10 people in it. In that city, there are 3 millionaires and 7 poor people. 2 of the 3 millionaires are republicans, but 6 of the 7 poor people are democrats. In elections, that city will always vote 70-30 for Democrats, despite the fact that the majority of the rich people are Republicans.

Do you see why it's foolish to say "Oh, well area X votes for Y and is rich so rich people must support Y"?

Again, I've provided you with the evidence. If you go back and look at the exit polls for each recent election, you will see that the Republican candidate has always overperformed among the wealthy, while the Democratic candidate has always won massive majorities among the poor. You can yell "BLUE STATE RICH" all you want, but that doesn't change the facts.

Indy said:
You seem to be missing a very basic idea: If you make more you pay more in taxes. Did I loose you? Here, one more time: If a dish washer makes 4/hour MORE in a blue state than a red state, guess what? He pays more taxes.

Of course. The point of THAT portion of my post was to disprove your claim that increased income necessarily indicated increased intelligence.

Crying about how democrats don't pay as much taxes as republicans is silly unless you are trying to claim that famous 1% who pays 20% of the nation's taxes.

wut

In this climate I'm not so sure if bragging that you own that coveted 1% of the populous is a good thing.

So you talk about how the Dems are richer, but then say it's not a good thing to claim that the Dems are richer?

At least try to maintain consistency throughout the post.

Also, it isn't hard to understand why a poor person would vote democrat in a southern state if that state is historically controlled by republicans

LOLOLOL

Pick up a history book and tell me about how the southern states have been historically controlled by Republicans.

2008 Party Control Maps

and that state also has one of the highest income gaps in the nation.

Where are you getting this garbage from?

1) New England Has Highest Increase In Income Disparity In The Nation

New England Has Highest Increase In Income Disparity In The Nation

Income inequality in New England is rising at the highest rate in the nation, a new brief from the Carsey Institute at the University of New Hampshire finds. Between 1989 and 2004, the region experienced the largest increase in income inequality in the country, due to both growth among top earners and the hollowing out of the middle class caused by significant changes in the nation’s economy.

2) What state has the highest Gini coefficient? Hint: It's not a southern state:

Many Eyes: US Gini Coefficient By State: 2006

NY and Connecticut are 1-2.

ludahai · Feb 8, 2009

Harry Guerrilla said:
Most of rural Georgia, except for the rural black enclaves and larger cities vote Republican, I thought.

Most of GEorgia PERIOD votes Republican, but with higher concentrations in the affluent northern suburbs than anywhere else.

rudedog · Feb 8, 2009

Indy said:
When you live in the rural areas you forget how the real US lives (meaning the MAJORITY of us). How you can say that farmers are the real world is beyond me. When you farm you forget what its like to actually have to use your brain for an income.

I take it you must be a city boy?
Well think about this,if their ever is a severe food shortage, most of the people in the cities will be the first to starve,because if it doesn't come in a box, package,or can,most city folks won't make it.
And being liberals and smarter then country folks, most won't have weapons,who needs them, we have the police to take care of us.
Let's just hope that day never comes,because if it does,you'll find out what the real world really is,and not what you thought it was.:mrgreen:

RightinNYC · Feb 8, 2009

rudedog said:
I take it you must be a city boy?
Well think about this,if their ever is a severe food shortage, most of the people in the cities will be the first to starve,because if it doesn't come in a box, package,or can,most city folks won't make it.
And being liberals and smarter then country folks, most won't have weapons,who needs them, we have the police to take care of us.
Let's just hope that day never comes,because if it does,you'll find out what the real world really is,and not what you thought it was.:mrgreen:

Wow, I totally missed that post. As someone who moved from a farm to a city, I can say with confidence that he has absolutely no idea what he's talking about. If you don't need a brain to be a farmer, I wonder why my mom bothered getting her second degree in agricultural science.

Harry Guerrilla · Feb 8, 2009

RightinNYC said:
Wow, I totally missed that post. As someone who moved from a farm to a city, I can say with confidence that he has absolutely no idea what he's talking about. If you don't need a brain to be a farmer, I wonder why my mom bothered getting her second degree in agricultural science.

I've troubled myself with a few fruiting plants and a small garden. It is a lot more than tossing some seeds and walking away.

I do enjoy it though.

justone · Feb 8, 2009

I tried to mainatin a salt water 100 gal fish tank....

Then just started on tomatoes - did not go too far.

I have almost an acre of wasted certainly fruitful (grassy) land get mowed...one day when I retire I will study..

Harshaw · Feb 9, 2009

Indy said:
And thank you for your input. Now, if you will excuse us we'll go with the plan of the man we voted into office.

I didn't. And unless something has changed in the last month, dissent is still the highest form of patriotism, right? Right?

Rodney · Feb 9, 2009

rudedog said:
I take it you must be a city boy?
Well think about this,if their ever is a severe food shortage, most of the people in the cities will be the first to starve,because if it doesn't come in a box, package,or can,most city folks won't make it.
And being liberals and smarter then country folks, most won't have weapons,who needs them, we have the police to take care of us.
Let's just hope that day never comes,because if it does,you'll find out what the real world really is,and not what you thought it was.:mrgreen:

I just read [a month or so ago] in the,"Fox Fire" series, almost exactly what you said... they were interviewing an old mountain man. You are correct sir. I think I`d do ok in the first few days, weeks, months? I`d sure like to know some root eaters though.... Snake vs. steak ! You can`t buy the latter if the store is no more.

Dezaad · Feb 9, 2009

RightinNYC said:
I think there's a critical point here that you might be misreading:

You're assuming that the projections for 2019 are not taking into account the increases in 09/10 when they detail what will be happening in 2019. That would be an absurd way for the CBO to make the calculations. My reading of the plain language of the CBO's letter, and what I see as the only logical conclusion, is that the projections in 2019 will be lower than it would otherwise be, even when factoring in the increases in 2009/10.

Think about it. Say it was a three year window they looked at.

In the first year, GDP grows 4% more than it otherwise would
In the second year, GDP grows 3% more than it otherwise would
In the third year, GDP shrinks 1% more than it otherwise would

The CBO is not going to put out a report saying that "CBO estimates that by third year the legislation would reduce GDP by 1% on net." The only way they would say that is if this were the case:

In the first year, GDP grows 3% more than it otherwise would
In the second year, GDP grows 1% more than it otherwise would
In the third year, GDP shrinks 5% more than it otherwise would

In that case, it would be appropriate to make the above statement. I think that's what they're saying will happen here, only obviously spread over the decade.

It is not absurd to calculate it that way. It only seems like that to people whose perceptions of the report were colored by the manipulative way that the Washingon Times reports the information.

I will try to find some definitive information so that the matter can be settled. I will, of course, report back, no matter which way the information points.

LennyD · Feb 9, 2009

I have to admit when I first saw the title of this thread I was thinking it would be a debate of weather this was really a stimulus or just a bunch of spending plans grouped together.

Since the plan itself is so in depth and complicated (very likely by design) it is really hard to discuss without being able to dedicate a couple hundred hours to it, and I have no interest in that even if the time was available (I prefer to remain employed lol).

Here are a few thoughts on this, or areas where the plan just makes no sense.

The main thing I see missing is addressing the GDP. We need to manufacture products again, and in a large way. While we sent our wealth over to China in exchange for cheap inexpensive products that made many corporations billions of dollars it also stripped our country of the majority of its manufacturing capacity. We need to be able to employ people at jobs that will allow them to be able to enjoy a certain level of quality of life, and though some of these replacement industries (home building, insurance, financial etc) have provided better levels than others (Fast food, walmart, other retail etc) they have the instability of cyclical tendencies are no longer have the normal industrial manufacturing base to fall back on like in years past.

We need to bring real jobs back to America, and in large numbers. Sure there is that little problem of China (and other foreign interests) holding the majority of the paper on countless loans etc (hmmm could this be why the initial payment was such an emergency? Could China have wanted it money before there was a problem?) and that could affect legislation that would slow down imports from certain countries, but the need remains none the less.

Another problem that seems obvious is that all these plans only put cash in the hands of major corporations and foreign interests etc, and only seem to supply low level jobs through the generosity of various government contractors (read campaign supporters) that will profit greatly.

Consider the changes to health care over the last 30 or so years, and it becomes obvious that the costs to this industry have risen well above those of many others. This is now to the level of a national problem as well, but so few can see where the problem actually is (and those who can do not seem to be talking), and therefore like the current economy there is more disagreement than not.

Why I bring this up is because just looking at the obvious we can not ship ourselves to china to be treated at third world rates. Unlike all the things so many value themselves by like their flat screen lcd, or fancy new cell phone etc our corporations can not purchase our health care and import it at 5 cents on the dollar.

I have enough friends and family in the medical field to know that they do expect a fair return on their investment in education and learning their profession, and that some have much higher expectations etc. Problem is that all but the most uppermost class of Americans have seen their wealth striped from them and they just can not afford to pay what is needed to keep these professionals in the status they desire.

Sorry for the little story, but the idea was to get you to thinking about the very good possibility that the only reason most working class Americans can afford to exist at a level that does not cause them to believe they are poverty is the exploitation of inexpensive third world labor for most every product and service that can be imported.

So spending billions to supposedly save the economy of the country by having the recipients of those billions end up spending mere millions that will end up being used as low level wages for the unemployed will most likely not be effective, and many will continue to suffer.

At the end of the day most will still only be able to afford more of the same cheap imports, and be without the opportunity for finding a better paying or more prosperous position of employment because like them most other working class Americans can not afford products made here as well.

Remember when you are not making something and selling it to someone etc you are not making anything (money included) and end up just recycling the money. Now consider that this money is taxed several times during the recycling process and you realize it has to shrink as the government slices off the top to cover all the countless things it spends money on.

Sorry for the length, and also if I over simplified things too much for those who do fully understand the economics and how it is affected by the imbalance of imports, ever growing government, and corporate greed.

We may not be doomed as some are trying to portray in the news, but we are in for some real changes, and I expect they will not be the same as those promised during the campaign.

LennyD · Feb 9, 2009

I also have a request to see if any of you can help me with something.

I received an email detailing some of the various things that were remaining in the stimulus package, and one of these was $5.2B going to Acorn.

Since I can not find information to support or deny this I was wondering if any of you who have more experience with these things could?

Thnx

RightinNYC · Feb 9, 2009

Dezaad said:
It is not absurd to calculate it that way. It only seems like that to people whose perceptions of the report were colored by the manipulative way that the Washingon Times reports the information.

I will try to find some definitive information so that the matter can be settled. I will, of course, report back, no matter which way the information points.

I just honestly don't know how the language of the report could be read that way. It seems pretty clear that when they say:

Including the effects of both crowding out of private investment (which would reduce output in the long run) and possibly productive government investment (which could increase output), CBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net.

that that's exactly what they mean. The decrease is compared to a baseline figure of what they estimate it would be without the package. It just wouldn't make sense otherwise.

And it's not just the Washington Times.

CBO: "Stimulus" Package Has Negative Long-Run Payoff

The message is along the lines of "eat more broccoli, avoid dessert."

The Congressional Budget Office reports that the enormous debt that would be required to implement either the House or the Senate "stimulus" would slightly reduce economic output in the long run.

CBO: Stimulus Bill Could Meet Obama's Job Creation Goal in Short Term - US News and World Report

The letter, sent yesterday to Sen. Judd Gregg and copied to eight other leading legislators, estimates that the bill would stimulate the economy the most in 2010. By the end of that year, the analysis estimates, 1.3 to 3.9 million jobs would be created. The unemployment rate would be 0.7 to 2.1 percentage points lower than the 8.7 percent forecasted. And GDP would increase from 1.2 to 3.6 percentage points over a baseline forecast.

But after another year, CBO estimates, the bill's effects would diminish. GDP would be 0.4 to 1.2 percentage points higher than otherwise, 0.6 to 1.9 million more jobs would be available, and unemployment would be lower by 0.3 to 1 percentage points. And in 2019, thanks to the national debt, the GDP could actually be slightly lower than if the government had done nothing.

CBO: Obama Stimulus Plan Lowers Long-Run Growth - Capital Commerce (usnews.com)

In contrast to its positive near-term macroeconomic effects, the Senate legislation would reduce output slightly in the long run, CBO estimates, as would other similar proposals. The principal channel for this effect is that the legislation would result in an increase in government debt. To the extent that people hold their wealth in the form of government bonds rather than in a form that can be used to finance private investment, the increased government debt would tend to “crowd out” private investment—thus reducing the stock of private capital and the long-term potential output of the economy.

The negative effect of crowding out could be offset somewhat by a positive long-term effect on the economy of some provsions—such as funding for infrastructure spending, education programs, and investment incentives, which might increase economic output in the long run. CBO estimated that such provisions account for roughly one-quarter of the legislation’s budgetary cost. Including the effects of both crowding out of private investment (which would reduce output in the long run) and possibly productive government investment (which could increase output), CBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net.

conquer · Feb 10, 2009

Is president Obama stupid?

It is clear that giving money to the banks is not only a bad deal but that incentives more corruption.

President Obama must take the 350 billion left from the Bush administration to be used in HIS programs to stimulate the economy.

Simple steps to make great tasks, and this is what president Obama must establish in his administration because he won the elections, he can do it...:coffeepap

Dezaad · Feb 10, 2009

RightinNYC said:
I just honestly don't know how the language of the report could be read that way. It seems pretty clear that when they say:

that that's exactly what they mean. The decrease is compared to a baseline figure of what they estimate it would be without the package. It just wouldn't make sense otherwise.

And it's not just the Washington Times.

CBO: "Stimulus" Package Has Negative Long-Run Payoff

CBO: Stimulus Bill Could Meet Obama's Job Creation Goal in Short Term - US News and World Report

CBO: Obama Stimulus Plan Lowers Long-Run Growth - Capital Commerce (usnews.com)

Actually, we're saying the exact same thing. At least as far as the baseline GDP. I am sorry I didn't make it clear from my post where I talked about this.

In any case, my analysis still stands, it is saying what you are saying, but totalling up all the deltas in the GDP for an overall delta for the 10 year run. However, as I stated in the rough analysis, I am not taking into account the compounding (GDP builds on the year before, just like a bank account does with interest). Compounding favors the early effects more than the late ones, so it would only favor those who say the stimulus will have a positive effect overall (over the full ten years).

I don't understand why you think my analysis is flawed, other than that it is too restrained.

In any case, I agree, the numbers talked about are the change in the expected change in the GDP. So if GDP is projected to be -4 in 2009, their number should be added to this for the expected change in GDP with the stimulus. The same for each year for which they project the effect of the stimulus.

RightinNYC · Feb 10, 2009

Dezaad said:
Actually, we're saying the exact same thing. At least as far as the baseline GDP. I am sorry I didn't make it clear from my post where I talked about this.

In any case, my analysis still stands, it is saying what you are saying, but totalling up all the deltas in the GDP for an overall delta for the 10 year run. However, as I stated in the rough analysis, I am not taking into account the compounding (GDP builds on the year before, just like a bank account does with interest). Compounding favors the early effects more than the late ones, so it would only favor those who say the stimulus will have a positive effect overall (over the full ten years).

I don't understand why you think my analysis is flawed, other than that it is too restrained.

In any case, I agree, the numbers talked about are the change in the expected change in the GDP. So if GDP is projected to be -4 in 2009, their number should be added to this for the expected change in GDP with the stimulus. The same for each year for which they project the effect of the stimulus.

I would assume that the CBO is considering the compounding of the GDP as well.

To eliminate any confusion:

What I am contending that the CBO is saying is that if there are two universes, one where we don't implement the stimulus and one where we do, the GDP in the universe where we don't implement the stimulus will be .1-.3% higher as of 10 years from now. That seems like a completely reasonable projection to me, because it makes sense that we would pay a long term premium for a short term fix.

Dezaad · Feb 11, 2009

RightinNYC said:
I would assume that the CBO is considering the compounding of the GDP as well.

To eliminate any confusion:

What I am contending that the CBO is saying is that if there are two universes, one where we don't implement the stimulus and one where we do, the GDP in the universe where we don't implement the stimulus will be .1-.3% higher as of 10 years from now. That seems like a completely reasonable projection to me, because it makes sense that we would pay a long term premium for a short term fix.

Ok, I still don't know if there is a diffference in what we are saying. The universe where we don't implement the stimulus will have a GDP .1 to .3% higher in 2019 for that year. That is to say this:

Suppose GDP, without the stimulus, would be 10,000,000,000,000 in 2018 and would be 10,300,000,000,000 in 2019 because the change in GDP for that year is projected to be 3%.

Now, one of the things I think we are disagreeing about is the level of GDP when we get 10 years out. It is my contention that, even with the long term negative impact, GDP level will be higher than otherwise at that point, but that the change in GDP will be lower, at around 2.7 to 2.9%.

I will show the numbers in a minute, but it is important to keep in mind that the CBO never states what the overall impact of the stimulus will be. It is the commentators trying to spin it that are saying the impact is negative.

Now for some real numbers. In the analysis I have drawn up below, I have used actual numbers and projections for the baseline GDP and baseline change in GDP for first three years (2009, 2010, 2011). For the remaining years, I did a reasonable projection of the change in GDP.

As you can see, GDP is better off, even by 2019, with the stimulus, even though the impact for the years 2012 to 2019 is negative for those years.

If you will run a similar projection for what you think will happen, then we can concretely understand how we differ.

American · Feb 11, 2009

So if the CBO is negative on the stimulus, what isn't Congress paying attention to them?

Dezaad · Feb 11, 2009

American said:
So if the CBO is negative on the stimulus, what isn't Congress paying attention to them?

The CBO isn't negative on the stimulus. Please provide a quote from the CBO which indicates that the CBO considers the stimulus to be an overall negative for the economy.

RightinNYC · Feb 12, 2009

Dezaad said:
Ok, I still don't know if there is a diffference in what we are saying. The universe where we don't implement the stimulus will have a GDP .1 to .3% higher in 2019 for that year. That is to say this:

Suppose GDP, without the stimulus, would be 10,000,000,000,000 in 2018 and would be 10,300,000,000,000 in 2019 because the change in GDP for that year is projected to be 3%.

Now, one of the things I think we are disagreeing about is the level of GDP when we get 10 years out. It is my contention that, even with the long term negative impact, GDP level will be higher than otherwise at that point, but that the change in GDP will be lower, at around 2.7 to 2.9%.

I will show the numbers in a minute, but it is important to keep in mind that the CBO never states what the overall impact of the stimulus will be. It is the commentators trying to spin it that are saying the impact is negative.

Now for some real numbers. In the analysis I have drawn up below, I have used actual numbers and projections for the baseline GDP and baseline change in GDP for first three years (2009, 2010, 2011). For the remaining years, I did a reasonable projection of the change in GDP.

As you can see, GDP is better off, even by 2019, with the stimulus, even though the impact for the years 2012 to 2019 is negative for those years.

If you will run a similar projection for what you think will happen, then we can concretely understand how we differ.

Again, we're coming back to the same disagreement about what the CBO means.

I completely understand what you're saying. If the GDP increases now, then a small decrease later might still leave us better off than otherwise. If your interpretation of what the CBO is projecting is correct, then you'd be right.

However, I think that it's clear from the text of the CBO's letter and from the context that what they are saying is not the same as what you're saying. In my reading, their statement that the GDP in 2019 will be lower than it otherwise would is not referring simply to the year over year % change in GDP, but rather is referring to the cumulative change of the GDP over the entire period. It simply wouldn't make sense for the CBO to calculate their numbers like that, because that information would be totally pointless if, as you are asserting, the total GDP would still be higher than otherwise.

RightinNYC · Feb 12, 2009

American said:
So if the CBO is negative on the stimulus, what isn't Congress paying attention to them?

Because Congress is making the entirely reasonable calculation that the long term costs are worth the short-term gains.

It's the same thing that all of us do when we take out loans.

LennyD · Feb 17, 2009

RightinNYC said:
Because Congress is making the entirely reasonable calculation that the long term costs are worth the short-term gains.

It's the same thing that all of us do when we take out loans.

Well the same thing except for the facts that they do not expect to be a physical part of its being paid back, and are betting on the fact that someone else will end up making the sacrifice much later in the future.

I would be pretty sure they also do not plan to be losing their jobs or their family wealth as most Americans may see happen from further reduction in US manufacturing from new pressures on our legislators to allow an increase in imports from those who are actually holding paper on most of our debt as a country.

Where does this end?

dirtpoorchris · Feb 17, 2009

The way he tried to pushed it through REEKED of evil carsales-man. But dirtpoor is just some crazy young kook.

conquer · Feb 17, 2009

When president Bush "invented" the amount of 700 billions to bailout banks and other corporations and only a few people was opposite to such measurement. I myself have been against such bailout which I still calling it as the worst investment ever made by the US government. The money is directed to the banks and corporations and not so to the affected ones who are the population in general.

Now president Obama wants to pull 900 billion to be invested creating jobs, this is to say, giving the money straight to the companies and workers. To this action, the opposition is growing, and the more exited to attack the idea of president Obama are the ones who own the banks and big corporations.

My position still the same, do not give a single cent to the corporations and create more jobs.

And yes, the government creating jobs is a need at this time, because people must get busy and work. This measure must be in charge until the economy recovers itself.

My suggestion is to use the 350 billion left from the former pull out of money, and use them as part iof the 900 billion proposed to incentive the economy, and this proposed action is justified because the banks have failed to present the records of how the bailout money given to them was used.

President Obama must not only demand for the explanatory records but impose the immediate return of the money if the banks fail to do so.:coffeepap

Kushinator · Feb 17, 2009

Dezaad said:
Ok, I still don't know if there is a diffference in what we are saying. The universe where we don't implement the stimulus will have a GDP .1 to .3% higher in 2019 for that year. That is to say this:

Suppose GDP, without the stimulus, would be 10,000,000,000,000 in 2018 and would be 10,300,000,000,000 in 2019 because the change in GDP for that year is projected to be 3%.

Now, one of the things I think we are disagreeing about is the level of GDP when we get 10 years out. It is my contention that, even with the long term negative impact, GDP level will be higher than otherwise at that point, but that the change in GDP will be lower, at around 2.7 to 2.9%.

I will show the numbers in a minute, but it is important to keep in mind that the CBO never states what the overall impact of the stimulus will be. It is the commentators trying to spin it that are saying the impact is negative.

Now for some real numbers. In the analysis I have drawn up below, I have used actual numbers and projections for the baseline GDP and baseline change in GDP for first three years (2009, 2010, 2011). For the remaining years, I did a reasonable projection of the change in GDP.

As you can see, GDP is better off, even by 2019, with the stimulus, even though the impact for the years 2012 to 2019 is negative for those years.

If you will run a similar projection for what you think will happen, then we can concretely understand how we differ.

Projections are fallacious, because it is dependent on the velocity of money to be at a constant, when this current situation proves it to be otherwise. GDP numbers are constantly revised from years back, as they are extremely lagged by incoming and conflicting data.

I would love to see your math on the matter though, if you do not mind...

Goobieman · Feb 17, 2009

Indy said:
And thank you for your input. Now, if you will excuse us we'll go with the plan of the man we voted into office.

I'm sure you felt exactly the same way 2001-2009.

CBO: Obama stimulus harmful over long haul

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