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Thread: CBO: Obama stimulus harmful over long haul

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    Re: CBO: Obama stimulus harmful over long haul

    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..

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    Re: CBO: Obama stimulus harmful over long haul

    Quote Originally Posted by Indy View Post
    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?
    “Offing those rich pigs with their own forks and knives, and then eating a meal in the same room, far out! The Weathermen dig Charles Manson.”-- Bernadine Dohrn

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    Re: CBO: Obama stimulus harmful over long haul

    Quote Originally Posted by rudedog View Post
    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.
    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.
    Last edited by Rodney; 02-09-09 at 10:31 PM.

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    Re: CBO: Obama stimulus harmful over long haul

    Quote Originally Posted by RightinNYC View Post
    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.

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    Re: CBO: Obama stimulus harmful over long haul

    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.
    "Great spirits have always encountered violent opposition from mediocre minds"
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    Re: CBO: Obama stimulus harmful over long haul

    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
    "Great spirits have always encountered violent opposition from mediocre minds"
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    Re: CBO: Obama stimulus harmful over long haul

    Quote Originally Posted by Dezaad View Post
    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.
    People sleep peaceably in their beds at night only because rough men stand ready to do violence on their behalf.

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    Re: CBO: Obama stimulus harmful over long haul

    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...

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    Re: CBO: Obama stimulus harmful over long haul

    Quote Originally Posted by RightinNYC View Post
    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.

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    Re: CBO: Obama stimulus harmful over long haul

    Quote Originally Posted by Dezaad View Post
    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.
    People sleep peaceably in their beds at night only because rough men stand ready to do violence on their behalf.

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