The[URL="http://www.washingtontimes.com/topics/congressional-budget-office/"] Congressional Budget Office[/url] on Tuesday downgraded its estimate of the benefits of President Obama’s 2009 stimulus package, saying it may have sustained as few as 700,000 jobs at its peak last year and that over the long run it will actually be a net drag on the economy....
CBO said it has concluded there is less of an indirect multiplier effect of federal spending. Those changes caused it to drop its estimates for total employment sustained by the spending in 2011 from between 1.2 million and 3.7 million down to between 600,000 and 3.6 million.
As for the long-term situation, CBO said its basic assumption is that each dollar of additional federal debt crowds out about a third of a dollar’s worth of private domestic capital. CBO does not calculate crowding out in the short term, which is why the Recovery Act boosts the economy in the near term.
WOW!!!! The Moony Times speaks.:roll:
and in the short run... but hey, movement in the right direction, and (politically) a welcome realization of reality by the CBO.
Greenspan: ‘We’ve already seen the bottom’ - ABC News"There's been a very significant improvement in the financial system and it's been the financial system where the problems have been," he said.
When I asked him about the possibility of a collapse, Greenspan responded, “Collapse now, I think, is off the table.”
When he last appeared on “This Week” in September 2008, the economy was in the midst of the financial crisis which Greenspan then called a "once-in-a-century type event."
This morning, he told me that the U.S. economy had gotten past the crisis.
"We were teetering for awhile,” he said, “but I do think that the TARP program, for example, was very helpful in shoring up the capitals, that stock of banks and the like. And not an insignificant event is the $3.5 trillion increase in the stock market value of American corporations.
Now, he says business inventories are so depleted that he anticipates a sharp turnaround in growth.
"It strikes me that we may very well have 2.5 percent in the current quarter," he said.
That would be significant because it would be near the level necessary to ease huge job losses.
“The unemployment rate is going to continue to rise," Greenspan told me, "but more slowly than it’s been.”
This short sighted quote completely ignores what the alternative was, which was much worse than the negatives from the stimulus program. The alternative was a meltdown of the US economy.
Here we have Greenspan's view at the time:
Prove it.
not to mention it cost around a million a job.
THE ECONOMIC OUTLOOK
CBO expects that, in 2012 under current law, The unemployment rate will remain close to 9 percent and GDP growth will be about 2½ percent, with the level of GDP remaining well below its potential.
FISCAL POLICY OPTIONS FOR INCREASING ECONOMIC GROWTH AND EMPLOYMENT IN 2012 AND 2013
One criterion for evaluating fiscal policy options is the impact on the economy per dollar of budgetary cost. Based on that measure of cost-effectiveness:
Higher-impact policies: Reduce the incremental cost to businesses of adding employees or are targeted toward people who would be most likely to spend additional income.
Lower-impact policies: Primarily affect businesses’ cash flow but have little impact on their incentives to hire or invest. Reductions in taxes and increases in government spending would produce short-term economic benefits—but without offsetting actions to reverse the accumulation of government debt, future output and future incomes would tend to be lower than they otherwise would have been
I have supported my position with quotes from Greenspan, a lifelong republican and chairman of the federal reserve for 16 years, across repub and dem administrations.
You tell me what your alternative was, or show that collapse of the US economy was NOT an alternative, then we can talk. I'm already on the record with a supported position, and you've provided nothing but one liners. Your move.
Again, you say you can prove it by quoting the guy who is as responsible for the collapse as much as anyone. It's like quoting Captain Hazelwood if your arguement is that drinking on the job can be safe.
We were told that if we did not enact TARP that the markets might fall all the way to 7000. We did enact TARP and the markets still fell to 7000. All TARP did was put those who should actually be in prison back in the drivers seat.
I thought in this country it was ok to let businesses fail. I didn't like when Bush gave money to the auto industry, and I didn't like it when Obama gave them more. Furthermore, the financial institutions should have failed. Other banks would have bought their valuable assets to offset the loss of bad investments. Instead we gave them money to get rid of their bad investments, and they kept the good ones. We didn't let the free market work, and we are now paying the price for it.
And still we have no alternate plan, and no facts to support why it would have worked better.
I don't remember ANYONE saying if we did not do TARP the market would fall to 7000, please cite a source.
This short sighted quote completely ignores what the alternative was, which was much worse than the negatives from the stimulus program. The alternative was a meltdown of the US economy.
Printing large sums of money is always bad in the long run. There is no disputing that. Anyone who thinks different is a fool.
In 2008-2009, the question is "what was the alternative", what was your "other plan".
Here we have Greenspan's view at the time:
Greenspan: ‘We’ve already seen the bottom’ - ABC News
The economy could have COLLAPSED, like, that's REALLY BAD! But, the economy DID NOT COLLAPSE! TARP and the stimulus did that for us.
In August, 2009, what had caused the 3.5 billion increase in the value of US corporations that Mr. Greenspan spoke of? It was the stimulus, it was passed in Feb. 09 by the dems, and in March 09 the stock market started back up. The stimulus did that, with TARP having laid the foundation with the security there would not be any large scale bank failures.
So, I agree with the CBO there will be some long term negative results from the stimulus, however if that is the cost of PREVENTING ECONOMIC COLLAPSE of the US economy, it is a good trade-off, and your assertion that the stimulus was a bad thing is incorrect, because it lacks context and perspective.
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