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Thread: Where Did the Stimulus Go?

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    Where Did the Stimulus Go?

    A very interesting piece on the whole stymulus situation...

    Where Did the Stimulus Go?

    During the recent recession, the U.S. Congress passed two large economic stimulus programs. President Bush’s February 2008 program totaled $152 billion. President Obama’s bill, enacted a year later, was considerably larger at $862 billion. Neither worked. After more than three years since the crisis flared up, unemployment is still very high and economic growth is weak...

    In the 2008 stimulus, the U.S. Treasury began issuing one-time payments to households in the spring. This temporary boost in income was designed to jump-start personal consumption of goods and services and thereby increase production and jobs at the firms that produce those goods and services. It didn’t work...

    This should not have surprised anyone. Long ago, the Nobel Prize–winning economists Milton Friedman and Franco Modigliani explained that individuals do not increase consumption much when their income increases temporarily. Instead, they save most of the funds or use the money to pay back some of their outstanding debts...

    Despite the large size of the 2009 act, the change in federal-government purchases it has generated has been remarkably small. Thus far, such purchases have increased by $20 billion, or only 3 percent of the $862 billion spent. Of that $20 billion, only $4 billion has been devoted to infrastructure projects. Compared to GDP, the expenditures are even smaller. Federal infrastructure spending due to the 2009 act was only .04 percent of GDP in the most recent quarter. The stimulus money went elsewhere...

    Federal grants, which began to flow in the first quarter of 2009, dampened the initial revenue decline and then caused total revenues to grow. By the third quarter of 2010, state- and local-government revenue,s including the act grants, were 10 percent higher than they had been in the fourth quarter of 2008.

    And what of state- and local-government purchases? Well, they declined with the initial reduction in revenues—and despite the addition of those $170 billion in ARRA grants, remained at this lower level throughout...
    To sum up: the federal government borrowed funds that it mainly sent to households and to state and local governments. Only an immaterial amount was used for federal purchases of goods and services. The borrowed funds were mainly used by households and state and local governments to reduce their own borrowing. In effect, the increased net borrowing at the federal level was matched by reduced net borrowing by households and state and local governments.

    So there was little if any net stimulus. The irony is that basic economic theory and practical experience predicted this would happen. If policymakers had only remembered what Milton Friedman, Franco Modigliani, and Ned Gramlich had said, we might have avoided these two extremely costly policy failures.

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    Re: Where Did the Stimulus Go?

    The borrowed funds were mainly used by households and state and local governments to reduce their own borrowing. In effect, the increased net borrowing at the federal level was matched by reduced net borrowing by households and state and local governments.
    Reduced net borrowing by households is not necessarily a bad thing. Think of a person with a certain amount of debt, who plans to pay off at least $X of that debt before he spends his income on anything discretionary. Well, a stimulus from the government will get him closer to paying off that debt, and therefore closer to being able to spend his money on something else.

    I agree that the result from state/local governments was very bad...but I fail to see how that's an argument against the stimulus. As the article acknowledges,

    So there was little if any net stimulus.
    Exactly. It's not so much that the stimulus "didn't work," as the article claims earlier...it's just that there wasn't any net stimulus to speak of. The federal government did the right thing in trying to stave off depression by pumping money into the economy. But the states and local governments adopted drastic austerity measures (either by choice or by necessity) that counteracted it.
    Last edited by Kandahar; 01-24-11 at 11:44 AM.
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    Re: Where Did the Stimulus Go?

    Quote Originally Posted by Kandahar View Post
    Reduced net borrowing by households is not necessarily a bad thing. Think of a person with a certain amount of debt, who plans to pay off at least $X of that debt before he spends his income on anything discretionary. Well, a stimulus from the government will get him closer to paying off that debt, and therefore closer to being able to spend his money on something else.

    I agree that the result from state/local governments was very bad...but I fail to see how that's an argument against the stimulus. As the article acknowledges,



    Exactly. It's not so much that the stimulus "didn't work," as the article claims earlier...it's just that there wasn't any net stimulus to speak of. The federal government did the right thing in trying to stave off depression by pumping money into the economy. But the states and local governments adopted drastic austerity measures (either by choice or by necessity) that counteracted it.
    They spent the money on things like, the study og cocaine habits in monkies and trips to China to study dinosaur eggs and a study of Alaskan grandparents.

    There's plenty of argument against the stimulus.
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    Re: Where Did the Stimulus Go?

    It was only named "the stimulus" so that we American people would fall for the idea of the government bailing out banks, former wealthy corporations, and the idiots on Wall Street.

    We did get to dodge a sure depression bullet that would have happened if the too big to fail institutions would have gone down. Other than that, it benefited the wealthy at the expense of the middle class. That happens a lot.
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    Re: Where Did the Stimulus Go?

    Quote Originally Posted by Mickey Shane View Post
    It was only named "the stimulus" so that we American people would fall for the idea of the government bailing out banks, former wealthy corporations, and the idiots on Wall Street.

    We did get to dodge a sure depression bullet that would have happened if the too big to fail institutions would have gone down. Other than that, it benefited the wealthy at the expense of the middle class. That happens a lot.
    You're talking about TARP, not the porkulus package.
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    Re: Where Did the Stimulus Go?

    Quote Originally Posted by apdst View Post
    They spent the money on things like, the study og cocaine habits in monkies and trips to China to study dinosaur eggs and a study of Alaskan grandparents.

    There's plenty of argument against the stimulus.
    No, they spent money on various universities, some of whom allocated money to research departments, some of which elected to research things you don't personally understand the benefit of.

    The fruit fly research is my personal favorite. Over and over and over the fruit fly thing was brought up by conservatives, because it sounds dumb, right? Mating fruit flies for research? What the hell?
    Fruit flies are fast breeders, have a very steady life cycle, and are fairly homogenous. They're awesome for research.
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    Re: Where Did the Stimulus Go?

    Quote Originally Posted by Deuce View Post
    No, they spent money on various universities, some of whom allocated money to research departments, some of which elected to research things you don't personally understand the benefit of.

    The fruit fly research is my personal favorite. Over and over and over the fruit fly thing was brought up by conservatives, because it sounds dumb, right? Mating fruit flies for research? What the hell?
    Fruit flies are fast breeders, have a very steady life cycle, and are fairly homogenous. They're awesome for research.
    You're not making a very good argument against the contention that the stealfromus money wasn't flushed down the toilet.
    Quote Originally Posted by Top Cat View Post
    At least Bill saved his transgressions for grown women. Not suggesting what he did was OK. But he didn't chase 14 year olds.

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    Re: Where Did the Stimulus Go?

    Quote Originally Posted by Deuce View Post
    No, they spent money on various universities, some of whom allocated money to research departments, some of which elected to research things you don't personally understand the benefit of.

    The fruit fly research is my personal favorite. Over and over and over the fruit fly thing was brought up by conservatives, because it sounds dumb, right? Mating fruit flies for research? What the hell?
    Fruit flies are fast breeders, have a very steady life cycle, and are fairly homogenous. They're awesome for research.
    I thought PORKULUS was a "Jobs Bill".........an "economic stimulus".....

    ........while we can all sleep easier knowing Fruit Fly Research is underway........I dont think it justifies stealing from our Grandchildren's grandchildren.
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    Re: Where Did the Stimulus Go?


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    Re: Where Did the Stimulus Go?

    Yes thats wonderful........except PORKULUS was touted as a "Jobs Bills".......as an "Economic Stimulus".......not the "Inovations for a better life for our Bankrupt Grandchildren" Bill.........

    After a flurry of stimulus spending, questionable projects pile up | Susan Ferrechio | Politics | Washington Examiner

    - $300,000 for a GPS-equipped helicopter to hunt for radioactive rabbit droppings at the Hanford nuclear reservation in Washington state.

    - $30 million for a spring training baseball complex for the Arizona Diamondbacks and Colorado Rockies.

    - $11 million for Microsoft to build a bridge connecting its two headquarter campuses in Redmond, Wash., which are separated by a highway.

    - $430,000 to repair a bridge in Iowa County, Wis., that carries 10 or fewer cars per day.

    - $800,000 for the John Murtha Airport in Johnstown, Pa., serving about 20 passengers per day, to build a backup runway.

    - $219,000 for Syracuse University to study the sex lives of freshmen women.

    - $2.3 million for the U.S. Forest Service to rear large numbers of arthropods, including the Asian longhorned beetle, the nun moth and the woolly adelgid.

    - $3.4 million for a 13-foot tunnel for turtles and other wildlife attempting to cross U.S. 27 in Lake Jackson, Fla.

    - $1.15 million to install a guardrail for a persistently dry lake bed in Guymon, Okla.

    - $9.38 million to renovate a century-old train depot in Lancaster County, Pa., that has not been used for three decades.

    - $2.5 million in stimulus checks sent to the deceased.

    - $6 million for a snow-making facility in Duluth, Minn.

    - $173,834 to weatherize eight pickup trucks in Madison County, Ill.

    - $20,000 for a fish sperm freezer at the Gavins Point National Fish Hatchery in South Dakota.

    - $380,000 to spay and neuter pets in Wichita, Kan.

    - $300 apiece for thousands of signs at road construction sites across the country announcing that the projects are funded by stimulus money.

    - $1.5 million for a fence to block would-be jumpers from leaping off the All-American Bridge in Akron, Ohio.

    - $1 million to study the health effects of environmentally friendly public housing on 300 people in Chicago.

    - $356,000 for Indiana University to study childhood comprehension of foreign accents compared with native speech.

    - $983,952 for street beautification in Ann Arbor, Mich., including decorative lighting, trees, benches and bike paths.

    - $148,438 for Washington State University to analyze the use of marijuana in conjunction with medications like morphine.

    - $462,000 to purchase 22 concrete toilets for use in the Mark Twain National Forest in Missouri

    - $3.1 million to transform a canal barge into a floating museum that will travel the Erie Canal in New York state.

    - $1.3 million on government arts jobs in Maine, including $30,000 for basket makers, $20,000 for storytelling and $12,500 for a music festival.

    - $71,000 for a hybrid car to be used by student drivers in Colchester, Vt., as well as a plug-in hybrid for town workers decked out with a sign touting the vehicle's energy efficiency.

    - $1 million for Portland, Ore., to replace 100 aging bike lockers and build a garage that would house 250 bicycles

    .....perhaps our Bankrupt grandchildren will appreciate the benefits of Fruit Fly Research or the importance of locating radioactive rabbit droppings......

    .......from the soup lines......
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    Last edited by Badmutha; 01-29-11 at 04:52 PM.

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