Consensus Among Economists Says Stimulus Working

By On November 21, 2009 · 17 Comments

You could probably have figured this out by now.? The more liberal economist is saying the stimulus was not big enough and another infusion will be needed to get the economy fully on track.? The more conservative economist is saying the stimulus has been a disaster and is not working, proving that big government is bad.

The snipping is all well and good.? Those less likely to inject politics into the mix admit the stimulus is working to, um, stimulate the economy despite it’s failings:

But with roughly a quarter of the stimulus money out the door after nine months, the accumulation of hard data and real-life experience has allowed more dispassionate analysts to reach a consensus that the stimulus package, messy as it is, is working.

Jobs savings and creation are on track. The recession didn’t turn into a depression. By all accounts we are beginning the slow – and painful – turnaround. Government spending did indeed prevent the Republican fueled economy from eating itself. The policies of 8 years of Bush are going to take some time to fix. You don’t turn such things around in 100 days, much less a year in office. As we pointed out in our recent Palin book signing camp out video, those who voted for George W. Bush fucked up the country and they can’t have it back…at least until we fix it.

One of the nice young fellas in the video (the one who duct taped over McCain on his McCain-Palin tee – duct tape boy we’ll call him) got into an extended argument with us about the cost of the stimulus being greater than the Iraq war. Again, the stimulus cost $787 billion. Cost of the Iraq and Afghanistan wars so far? $915 billion.

Now, if you want to argue the relative importance of such spending of taxpayer money, I’m all ears. I, for one, would much rather like to spend it on jobs for American families than bombs for Iraq. Especially when you consider the payback. Iraq and Afghanistan will most likely fall back into old patterns of rogue nations and failed states. The cost benefit analysis of such a fools errand in Iraq has always been highly questionable, even at the start.

The interesting thing about the stimulus is that a concession to Republicans took $70 billion of the impact out (emphasis mine):

Even the $787 billion price tag overstates the plan?s stimulus value given changes made in Congress, economists say. Nearly a tenth of the package, $70 billion, comes from a provision adjusting the alternative minimum tax so it does not hit middle-income taxpayers this year. That routine fix, which would do nothing to stimulate the economy, was added in part to seek Republican votes. But to keep the package?s overall cost down, provisions that would stimulate the economy ? like aid to revenue-starved states and infrastructure projects ? got less as a result.

Hey wingnuts. Want your country back? You can’t have it. You fucked it up. You might get it back just in time to fuck it up again after we fix it.

Evangelize!
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  • jeffhess

    Shalom Eric,

    I, for one, would much rather like to spend it on jobs for American families than bombs for Iraq.

    As one of at least two people on this blog who once drew government paychecks and were the beneficiaries of military hardware entrusted to our safekeeping, you know that the vast majority of the $915 billion spent on the wars in Iraq and Afghanistan were spent right here in the United States on military pay, benefits and the salaries of the men and women working for the American Corporations who manufacture the equipment and fuel our troops use.

    The material cost of a bomb is probably less than $10. It's American business people, and to a lesser extent their employees, who get the real money to spend here as they see fit.

    What I think you might have meant is that it is much better to spread that kind of money around to the whole nation rather than concentrate it in the corporations that make up what President Dwight Eisenhower named the Military Industrial complex.

    B'shalom,

    Jeff

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  • http://www.plunderbund.com Eric

    You are probably right in what I meant. I don't know the line items expense breakdown on that money. I, of course, don't mean the actual material cost of bombs, but you are wrong on the cost. Modern day “smart bombs” are more like 20-50k.

    Let's not fret over the specifics of cost, of course my point is the return on such investments are less than the same amount of monies spent to rescue our economy.

    Having a discussion about what types of jobs are good and what type are bad is a whole other ball of wax. If a nuclear weapons plant comes to town and provides thousands of jobs is that necessarily a good thing on balance?

    The bottom line to the post is that the money we have spent on wars that appear to be at best ineffectual exceeds that of a stimulus bill that so far seems to have had at least the intended effect.

  • jeffhess

    Shalom Eric,

    First, I agree with your broad position, the money we have spent on wars that appear to be at best ineffectual exceeds that of a stimulus bill that so far seems to have had at least the intended effect.

    The narrow, and picky, point I'm trying poorly to make is that money doesn't really leave the United States. Even most foreign aid goes to buy American products and services that is then delivered overseas by U.S. carriers.

    Governments spend money. Republicans spend it one way. Democrats spend it another. The argument is not how much money but rather to whom do we send the checks.

    I much prefer the checks that President Barack Hussein Obama is signing to those signed by president's Bush, Bush and Reagan.

    And on the smart bombs? The bill may be in the tens of thousands of dollars, but the material cost is in the tens of dollars. It's like the material cost of a human body. Depending upon which chemical list you consult, it's somewhere between one and two dollars. The added value is not in the bomb, but rather in the wages and benefits of the people who are involved in the research, development, manufacture and delivery of that bomb.

    Or to look at it another way, the pill your insurance company pays $50 for contains maybe $.000001 worth of chemicals.

    B'shalom,

    Jeff

  • http://www.plunderbund.com Eric

    Hi Jeff,

    You are most certainly right that I could have been more precise in my point. I appreciate you jumping in and helping me do that. As usual your comments add to the conversation and I'm glad you read and decided to do so.

  • http://www.plunderbund.com Eric

    Interesting that I find this just as we are having this conversation:

    http://www.nytimes.com/2009/11/21/world/middlee…

  • http://www.rightohio.com Right Ohio

    MV=PQ

  • http://www.plunderbund.com Eric

    Q = 0

  • jeffhess

    Shalom Eric,

    Thanks for the link:

    “And whether or not the American-built health centers and power plants are ever used as intended, the American companies that won the lion?s share of rebuilding contracts from the federal government have been paid.”

    B'shalom,

    Jeff

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  • http://www.plunderbund.com Eric

    Yeah. Supports your point. I still think wars are pretty shitty ways to do job stimulus. Especially when you have mercenary contractors mucking up our credibility around the world. I think we both agree on this, but your point is well taken that the actual money is not necessarily wasted. I could argue it is in the case of Iraq because the money spent, though funding American companies and businesses, has done more fundamental harm to us than good.

  • Nifty Lawrence

    I'd certainly like to see cites for both these claims:

    1) Material cost of “a bomb” being less than $10.
    2) The “vast majority” of $915 billion in war money being spent in the U.S for pay, benefits & salaries.

    And, for the sake of discussion, let's say both are correct. The bottom line is the money we spend on our military is more than every other country on the planet COMBINED. Want to dig up some badly needed money? I think I found the place.

    Regarding the stimulus – I'd like to think it saved the U.S. from even further financial calamity. But I don't think it's much of a prediction to say the U.S. needs to *fundamentally* change it's economic ways & I don't see either party as up to the task.

    The stimulus & other economic measures are band-aids for a system steadily going kablooey. Consider this:

    * The real unemployment rate is well more than 10% & expected to continue its increase in the near future (yes, I know it's a lagging indicator).
    * More people continue to slide into poverty (even using the current but grossly outdated measure of poverty)
    * A huge amount of U.S. workers & students are not educated in and/or trained for the jobs & economy of the 21st century.
    * Wages have been stagnant for decades, with workers being double-whammied by paying more & more for their benefits.
    * Foreclosures & delinquencies are now at a record rate & are expected to continue their increase.
    * The retirement & aging of Baby Boomers is a ticking financial timebomb.

    The above are but a few examples. Heck, the very fact we've spent $1 billion+ to “stimulate” the economy, with many saying it's not nearly enough, is proof positive our economy – for many of us, at least – is in dire straits & no longer works.

    And don't forget – this is money we're spending WE DON'T HAVE. It's borrowed & will need paid back. Who exactly will do that? Will we look back years from now & recognize this era as the eventual tipping point?

    So, I'm willing to agree life is temporarily a little better with the stimulus than without. But we have a loooong way to go before declaring the economy fixed (whatever that is).

    It's going to be a severely bumpy ride ahead.

  • jeffhess

    Shalom Nifty,

    Think scrap value, which is exactly what we're leaving in any war zone (if you could collect all the pieces) of any ordinance. If you take your$160,000 Ferrari to the junk yard, just how much do you think you would get for it?

    With the exception of whatever we pay locals for services, defense dollars go to American military personnel, their support staff and the manufacturers of their equipment. All spent right here in the good old U.S.A.

    I don't disagree with you, or Eric, that those dollars would be much better spent on other services. I hate the military-industrial complex as much as the next progressive. My point is that we need to stop thinking of all those dollars going to Iraq, Afghanistan or where ever our troops are stationed.

    The reason defense spending is so popular is that a large number of Americans depend upon that money for their paychecks.

    B'shalom,

    Jeff

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  • Hamilton

    I find this comment, '…they can?t have it back?at least until we fix it. ', totally insane! Do you give a child another $400 PS3/XBOX every time he pisses on it? A crack addict more crack! Hell No! If you give them, the blind, uninformed ideologues, the country back, they'll will just fuck up again.

    Of course we as progressives, independents, and some sane 'Republicans', must vote in ever larger numbers in every election to keep the country on the right track. We must also hold our elected officials feet to the fire to keep the focus on why we elected them to office.

  • fjl307

    Haha that?s funny. I saw the Camp Palin II video and decided to look up how much the war cost vs the stimulus.
    Well at least one of them is working…

  • fjl307

    Haha that?s funny. I saw the Camp Palin II video and decided to look up how much the war cost vs the stimulus.
    Well at least one of them is working…

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