The Stimulus Package

[Professor S]

Originally Posted by Bond

It's interesting how our discussion of the stimulus package has turned away from facts and quantitative economic measures, to more of "feelings" arguments. I think this only mirrors the larger discussion in our country around economic issues, though. Complex economic discussions get boiled down to class-warfare and emotional arguments in the twenty-four hour news cycle that we live under.

Part of this is the idea I maintain and shared earlier, that politicians just think we're too stupid to understand the economics and/or they want to "slip" something past us. I keep being reminded of Rahm Emanuel's statement that a good crisis should never go to waste.

In the end, the Republicans have the best argument based on real numbers but they are afraid to voice it (or apply those pronciples looking at the past 8 or so years), and democrats have the best argument based on "social justice" simply because pandering to class envy and anger is effective. Just look at Jason1's political views for a perfect illustration. Keep someone angry and spiteful against a common enemy and they'll stop thinking.

What has really angered me during all of this is how damaging it has been to our democratic process. We're passing massive bills that haven't been read or understood out of FEAR and ANGER, not reason. The only real argument we hear repeatedly from those that support this bill is that of immediacy; "something has to be done now!". But no one is talking about what that something is or how it will affect our nation beyond broad political arguments.

The last time that happened we ended up with The Great Depression and a lost decade of failed economic policies.

[BreakABone]

I do wonder how the GOP will continue going forward with this, I mean the House none of them voted for the stimulus and I believe only 3 in the Senate, but when aspects supports their followers... will they continue saying it was a bad move or try and save face.

GOP lawmakers tout projects in the stimulus bill they opposed


By David Lightman | McClatchy Newspapers
WASHINGTON —

Rep. John Mica was gushing after the House of Representatives voted Friday to pass the big stimulus plan.

"I applaud President Obama's recognition that high-speed rail should be part of America's future," the Florida Republican beamed in a press release.

Yet Mica had just joined every other GOP House member in voting against the $787.2 billion economic recovery plan.

Republicans echoed their party line over and over during the debate: "This bill is loaded with wasteful deficit spending on the majority's favorite government programs," as Minority Whip Eric Cantor, R-Va., put it.

But Mica wasn't alone in touting what he saw as the bill's virtues. Rep. Don Young, R-Alaska, also had nice things to say in a press release.

Young boasted that he "won a victory for the Alaska Native contracting program and other Alaska small business owners last night in H.R. 1, the American Recovery and Reinvestment Act."

One provision would have made it harder for minority businesses to win contracts, and Young explained that he "worked with members on the other side of the aisle to make the case for these programs, and was able to get the provision pulled from the bill."

Yet later in the day Young — who recently told McClatchy that he would've included earmarks, or local projects, in the bill if it had been permitted — issued another statement blasting the overall measure.

"This bill was not a stimulus bill. It was a vehicle for pet projects, and that's wrong," he protested.

That was more in line with the Republican message. Young wouldn't return a request for comment on the apparent contradiction of his press releases.

Mike Steel, a spokesman for House GOP Leader John Boehner of Ohio, at first ducked when asked about Mica and Young issuing press releases praising the bill they'd opposed.

"I don't work for Mica or Young," Steel said initially.

But then he explained that what Mica and Young did in touting aspects of the bill was in fact consistent with the Republican message.

"Being supportive of one portion of a trillion dollar bill, but voting against the entire trillion dollar bill, is perfectly reasonable," Steel said.

Mica is the top Republican on the House Transportation and Infrastructure Committee, and a longtime backer of high-speed rail. GOP committee spokesman Justin Harclerode explained that Mica saw the bill's $8 billion for rail as a "silver lining," and "he's encouraged others are supporting high speed rail too."

But nowhere in the Young or Mica statements was any mention that they opposed the bill.

Harclerode wasn't sure why Mica didn't mention his opposition. "It's not really secret," he said. "I guess it just wasn't the focus."

[Professor S]

To use a cliche: The proof is in the pudding.

If the bill succeeds, the Republicans were against a successful economic policy and they'll be crushed come 2010 elections. If the economy continues to stumble and fail for the next two years, the Republicans look like prophets that no one listened to and when the mid-term elections come, and they will gain seats quite easily.

This bill and the coming banking and housing bills are a huge gamble for both sides, and our political landscape will be shaped by the outcome for YEARS.

In any case, I hope that I am proven wrong by these actions by our legislature. Now that it whas bee passed I truly hope the bill succeeds, because in the end thats what everyone wants, we just disagree in what will succeed. My fear is that it will fail and fail spectacularly.

[Typhoid]

Personally, I don't think anything will change.

You can pour money into whatever you want, but as long as people are scared enough about another "depression", they will hoarde their money, and not spend it as frivilously (in most cases).


Once things tend to get really bad, they don't get better until they hit what appears to be rock bottom - and I just don't think there is any stopping that. Slowing it down, sure.

[BreakABone]

Originally Posted by Typhoid

Personally, I don't think anything will change.

You can pour money into whatever you want, but as long as people are scared enough about another "depression", they will hoarde their money, and not spend it as frivilously (in most cases).


Once things tend to get really bad, they don't get better until they hit what appears to be rock bottom - and I just don't think there is any stopping that. Slowing it down, sure.

That's the bottomline really.
As long as people continue to believe in a recession and hard times, they just won't spend money as much.

Or if they get extra cash will save it or use it to pay down debt more rapidly than spending on frivolous things.

[Bond]

Originally Posted by Professor S

In the end, the Republicans have the best argument based on real numbers but they are afraid to voice it (or apply those pronciples looking at the past 8 or so years), and democrats have the best argument based on "social justice" simply because pandering to class envy and anger is effective. Just look at Jason1's political views for a perfect illustration. Keep someone angry and spiteful against a common enemy and they'll stop thinking.

See, this is the thing that really ticks me off. The Democrat's economic platform doesn't benefit the middle class any more than the Republican's economic platform. In fact, one could argue that Democratic economic policies perpetuate poverty and feed class warfare. So really, they're simply perpetuating a lie to feed political desires.

Here's my question: Why are Chemistry and Physics required classes to graduate from high school, but Economics is not? Why can most high school seniors solve any basic chemical formula, but not balance a check book? Maybe there is something in keeping people uninformed. It creates the ability to tap in to these "feelings" arguments.

[TheGame]

Originally Posted by Bond

Here's my question: Why are Chemistry and Physics required classes to graduate from high school, but Economics is not?

Economics is a requirement at all the high schools in my town.

By the way, if you haven't noticed I've pulled out of the economic discussion in his thread. The reason being that I don't want to argue off of anything but results. Everyone is quickly jumping on Obama's back about his plan, even though nothing he has done so far has affected the economy whatsoever.

The republicans had their chance to help the economy, but had a historic fail. The reason for the big fallout is the government not taking enough action and setting stricter regulations for the banks. The reason they didn't do that is because the republicans where over the government at the time, and allowed it to happen.

[Professor S]

Originally Posted by TheGame

Economics is a requirement at all the high schools in my town.

By the way, if you haven't noticed I've pulled out of the economic discussion in his thread. The reason being that I don't want to argue off of anything but results. Everyone is quickly jumping on Obama's back about his plan, even though nothing he has done so far has affected the economy whatsoever.

The only blame I place on Obama is that he's pushing for "a" plan, not this one. I believe he fears inaction to crisis and how it will shape his public opinion. The bill itself was not written by him, but I think he's felt a little pressure to back it even though even he has disagreements. But in the end, if thats true he's suffered a failure of leadership.

The republicans had their chance to help the economy, but had a historic fail. The reason for the big fallout is the government not taking enough action and setting stricter regulations for the banks. The reason they didn't do that is because the republicans where over the government at the time, and allowed it to happen.

Actually, you could make the argument that regulation helped create the problem. It's called the Community Reinvestment Act that was signed into law by Pres. Carter and expanded by Pres. Clinton. Basically, the act twisted the arms of lenders to offer loan products to low income people who would ordinarily not be approved. This created the need for "bad loans", such as interest only adjustable rate mortgages (ARMs) that were traditionally only for investors who wanted to "flip" houses for quick profit and lower their overhead created by carrying a mortgage from month to month until the house sold. These loans made the homeowners especially vulnerable to time constraints (most readjusted in 5 years for much higher monthly costs) and market conditions (interest only for the first few years, so when the market takes a hit and the owner has to sell he has little to no equity in house). This created whats called "upside down" mortgages, where the owner owes more than the house will bring on the open market and we find ourselves in the housing mess we're in right now.

Also Fannie Mae was compensated by the government for every "bad loan" they acquired from loan originators (those asses are another topic), so literally we all helped to create this mess using our tax dollars. We can thank Barney Frank for that mess, who is a democrat and somehow got out of this entire debacle unscathed.

Not every lender abided by the CRA, and while they lost out on immediate government incentives, those that didn't follow the act have proved to be more resillient in these times (Wells Fargo for example) but even these companis are getting hammered by the credit crunch because most large companies traditionally work on credit, not liquid assets.

Now I'm not saying tat there weren't other factors (loan originators beign a big one), but the topic you posed is about regulation and making blind statements blaming one party or another doesn't help the matter. The fact is that regulation doesn't, the right kind of regulation helps. Also, more than one party was responsible for this debacle, so our discussion should be about IDEAS, not who came up with those ideas.

Keep in mind FDR installed more regulations than one would care to remember, and also resided over the longest (8 years, and it was getting WORSE before WWII, not better) and most severe economic duldrum in American history. If we'e not careful, rushing to place blame and change the nature of economy can do far more harm than good.

[Professor S]

Back to the stimulus package, probably the biggest and most obvious mistake is the complete lack of any incentives for investment. Our stock market is down almost 50% and from what I've read there were ZERO credits or tax cuts for capital gains or anything else that would spur investment. We can see the effects of this ommission in how the market has reacted, IMO

Also, most the tax "cuts" appear to be credits based on specific qualifiers, which is a big mistake, IMO. Just let EVERYONE share in the relief, not just those with childen or kids in college. I may be wrong, but from what I understand tax credit monies are realized during the refund process making then work more like the useless stimulus checks we got last year. Tax CUTS would have put more money in the pockets of everyone on a regular basis, which makes them less "found money" and more of a manageable boost. Not only that, but I believe tax credits are a trick the government plays on you to give the impression that it's THEIR money, not YOURS. To me refundable tax credits are the equivalent and getting a Christmas present, then rewrapping it and giving back to the person who gave it to you with the thought they'll never notice.

I may be wrong on this, though, as the recovery website was VERY vague about pretty much everything.

[Bond]

Originally Posted by TheGame

Economics is a requirement at all the high schools in my town.

That makes me a happy camper.

By the way, if you haven't noticed I've pulled out of the economic discussion in his thread. The reason being that I don't want to argue off of anything but results. Everyone is quickly jumping on Obama's back about his plan, even though nothing he has done so far has affected the economy whatsoever.

I thought we were talking about historic results of tax cuts back on page three?

This idea of how to break out of a recession is nothing new. The results will be rather predictable: a short-term boost that sets our economy up for the next, inevitable, bust.