So let me get this straight:
George W in 2008 pushed through a $150 Billion Stimulus package that he said was necessary to 'prime the pump' to avoid a recession
After he did this, we got hit with a recession. And major businesses who had over leveraged began to fail. we were told we needed to give $700 billion to the banks to keep them from failing or else we'd go into a liquidity crises and the economy would suffer. We also needed to bail out the auto industry and fannie mae / freddie mac, or else unemployment would shoot through the roof and mortgage foreclosures would skyrocket. outside of TARP since 2008 we've spent almost a trillion ($1,000,000,000,000) in bailouts of specific companies.
After they did that, unemployment began to climb and mortgage foreclosures began to skyrocket.
Then, Obama pushed through a $800 Billion Stimulus package that was needed to go to "shovel ready projects" in order to get us out of the recession and keep unemployment below 8%
After he did this, unemployment shot past 8%, and the recession - instead of turning around as predicted - at best limped along and at worst appears headed for a double-dip
NOW Obama tells us he needs another $50,000,000,000 in order to "prime the pump" through "shovel ready projects".
if this stupid crap works, then what the hell happened to the first $2,707,000,000,000 we gave you people!?!
GDP = private consumption + gross investment + government spending + (exports − imports)
So what's the easiest way to get GDP to rise? Have the government spend money and pay people for worthless work so that they will spend money too.
Why haven't people realized that GDP is a deeply flawed measure of national wealth?
GDP is merely an accounting identity used to aggregate (observable) income. It is by no means a measure of national wealth.
I know, it sounds crazy, it was terrible policy.
Not the fact that they spent a zillion dollars, but the way they spent it. But at this particular point in time with this particular set of economic situations, what would happen if a bunch of hard core ideolog conservitives took over our governement? What if they immediately slashed the heck out of government spending, what if they immediately slashed the top income tax rate and eleminated inheritance tax and eleminated capital gains tax and all the other things that radical conservitives preach (by the way, I am actually for doing a lot of that stuff)? Would our economy immediately be healed or would it take years of misery on the middle class before things would get better?
Whether you agree or disagree with the stimulus plans, fact is that all that money hasn't been spent yet. Its spent on a progressive plan, so it comes year by year not all in one giant lump sum. So the vast majority hasnt been spent yet.
I don't think anyone here actually knows that.
phattonez said:GDP = private consumption + gross investment + government spending + (exports − imports)
So what's the easiest way to get GDP to rise? Have the government spend money and pay people for worthless work so that they will spend money too.
Why haven't people realized that GDP is a deeply flawed measure of national wealth?
Whether you agree or disagree with the stimulus plans, fact is that all that money hasn't been spent yet. Its spent on a progressive plan, so it comes year by year not all in one giant lump sum. So the vast majority hasnt been spent yet.
I don't think anyone here actually knows that.
Whether you agree or disagree with the stimulus plans, fact is that all that money hasn't been spent yet. Its spent on a progressive plan, so it comes year by year not all in one giant lump sum. So the vast majority hasnt been spent yet.
I don't think anyone here actually knows that.
Acutally thats one of the many reasons that I say that the spendulous bill was flawed. What our economy likely needs(ed) is a "jump start" to start up the private sector job engine, not a slow transformation to dependancy on government spending. All that money entering our private sector economy at one time inorder to create a surge of economic activity would have been much better than the slow trickle of money to soften the effects of the recession.
It would have been no different if it was all at once. The problem is that you necessarily destroy economic activity with government activity and replace it with less efficient government spending.
That's not the point. The rate of spending will continue to diminish and the global economy will feel the stress as stimulus dwindles down. What we can observe is the correlation between the rate of spending (at its max) and the rate of output growth during that period vs now.
Simply stated, $800 billion was inadequate.
That's not the point. The rate of spending will continue to diminish and the global economy will feel the stress as stimulus dwindles down. What we can observe is the correlation between the rate of spending (at its max) and the rate of output growth during that period vs now.
Simply stated, $800 billion was inadequate.
Another one of my reasons that the spendulous was misdirected (and thus was not effective) was that only a fairly small percent went for infrastructure spending. Most of it should have gone to infrastructure spending (real infrastructure that has immediate value). Sooner or later our roads and bridged and whatever else qualifies as infrastrure have to be repaired, rebuilt, and expanded. Spending 800 billion doing it during economic downturns just speeds up the gov spending cycle during a time when we need more spending. Once the infrasture is upgraded then the need for future expenditures (when the economy has recovered) on infrasture is significantly reduced and most of the spending can be recouped as it was already on a schedule to be done sometime in the future. By being able to reduce government expenditures during good times we also reduce the effect of the government expenditures choking out our private sector (particularly private sector construction industires).
The reason that I suggest that infrasture spending should have been faster and expanded is that our construction companies could have easily kept close to full employment, taking up the slack from the private sector constuction decline. Those people who would have kept their livelyhood would have continued spending, purchasing homes, purchasing cars, and paying their debts instead of defaulting. With that more or less "normal" level of spending due to the construction sector not shutting down, banks would not have been damaged as bad, nor would our manufacturing and service sector. Also, businesses that depend on good infrastucture would have been positively effected (although possibly temporarally inconvienanced) by the improved infrastructure and would have had better long term industry projections, thus increasing their economic confidence level - and would have been less likely to lay off people and hord cash. At this point, many of those businesses may be terrified of the uncertain future, whether or not bridges and roads are going to be safe and passable in the future because they really don't know if the government is going to be able to fund much infrasturcture spending in the future (because the gov blew all our money on stupid crap).
I doubt that businesses are putting off hiring because they're worried about infrastructure. They're worried about onerous regulation and new taxes.
And the part about government spending being inefficient is true no matter how the government spends the money. They don't know our demands as well as we do so they won't earn a return on investment that is as large as that which we could have gotten spending our own money.
When did fiscal responsibility get shoved out the door?
On my level, all the small business (really micro-business - most of them have less than 50 employees) people that I deal with every day are holding of on expanding due to the lack of customers. There are only so many hours in a day that we can work, we would all love to hire more employees, I cant tell you how tired I am of 16 hr days, but until we have more customers I will continue to work 16 hrs a day just to meet the bills and debts that I obligated myself and my business to during better times. If I was to see a 1/3rd increase in sales today, I would have to increase my staff by 1/3rd, because I can't work any more hours, regardless of future tax rate expectations.
Personally, I am MUCH more concerned with the volume of business that we have (we have lost 40% of our business during the past two years) than the potential of future tax rates. Without an increase in sales I will not start replentishing my staff regardless of whether tax rates go up or down or neither.
It would be interesting to see a poll of business owners that asks them:
1) At your current level of sales would you choose to increase your staffing level if tax rates were reduced.
2) At your current level of sales would you reduce your staffing level if tax rates were increased.
3) If your sales significantly increased for several consecutive months leading you to the expectation of operating at a higher sales level during the next year, would you increase your staffing level?
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