My Daily Domestic Diigolet 02/11/2009

• Martin Feldstein – The Current Stimulus Plan: An $800 Billion Mistake – washingtonpost.comtags: no_tag
  • . But the fiscal package now before Congress needs to be thoroughly revised. In its current form, it does too little to raise national spending and employment. It would be better for the Senate to delay legislation for a month, or even two, if that’s what it takes to produce a much better bill. We cannot afford an $800 billion mistake.
  • Instead, the tax changes should focus on providing incentives to households and businesses to increase current spending. Why not a temporary refundable tax credit to households that purchase cars or other major consumer durables, analogous to the investment tax credit for businesses? Or a temporary tax credit for home improvements? In that way, the same total tax reduction could produce much more spending and employment.

    Postponing the scheduled increase in the tax on dividends and capital gains would raise share prices, leading to increased consumer spending and, by lowering the cost of capital, more business investment.

  • On the spending side, the stimulus package is full of well-intended items that, unfortunately, are not likely to do much for employment. Computerizing the medical records of every American over the next five years is desirable, but it is not a cost-effective way to create jobs. Has anyone gone through the (long) list of proposed appropriations and asked how many jobs each would create per dollar of increased national debt?

  • The plan to finance health insurance premiums for the unemployed would actually increase unemployment by giving employers an incentive to lay off workers rather than pay health premiums during a time of weak demand. And this supposedly two-year program would create a precedent that could be hard to reverse.

  • A large fraction of the stimulus proposal is devoted to infrastructure projects that will spend out very slowly, not with the speed needed to help the economy in 2009 and 2010. The Congressional Budget Office estimates that less than one-fifth of the $50 billion of proposed spending on energy and water would occur by the end of 2010.

    If rapid spending on things that need to be done is a criterion of choice, the plan should include higher defense outlays, including replacing and repairing supplies and equipment, needed after five years of fighting. The military can increase its level of procurement very rapidly. Yet the proposed spending plan includes less than $5 billion for defense, only about one-half of 1 percent of the total package.

  • The problem with the current stimulus plan is not that it is too big but that it delivers too little extra employment and income for such a large fiscal deficit. It is worth taking the time to get it right
• “Economists across the Spectrum” Continue to Flee Stimulus Bill (Cato @ Liberty)President Obama et al want to claim that most conservatives economists approve of the stimulus package. They even point out that Mark Zandi, who advised John McCain (not that any true conservatives consider John McCain the poster boy for conservative thought) supports the stimulus.

  Turns out Mr. Zandi is a registered republican and is very open to advising anyone who asks him regardless of his political philosophies.

  The other economist, Martin Feldstein, works at Harvard (not known as the bastion of conservative thought) bue he considers this bill an $800 million mistake!

  So that would make … 0 Conservative/Republican economists who agree with the current Stimulus package.

  So last night the president got on the television and at best, misspoke, at worst – lied. tags: politics, economy, stimulus

• Will the Stimulus Plan Work? – myFOX DFW Community Blog post – KDFW FOX 4 viewer submitted news, photos, video and more.tags: no_tag
  • President Obama says it’s our patriotic duty to support his plan.  He says that, “if you delay acting … you potentiall

    y create a negative spiral.”  He says, “most economists

    agree, almost unanimousl

    y.”

    But even the best minds in the world of economics are divided.  And it’s not just the “pork barrel” portion of the bill that has its critics.
    Former Treasury Secretary,

    Robert Reich, who served under President Clinton, says “The danger is not that the government

    will do too much; the danger is that it will do too little, too late.”  He makes a persuasive

    argument for spending a lot of our money in his blog.

    On the other hand, a panel of conservati

    ve economists

    took out full-page ads opposing the spending plan and arguing for tax cuts instead.

    One of the arguments for the Obama plan is that Franklin Roosevelt’

    s New Deal helped spend the country out of the Great Depression

    .

    But other experts make the case that it was the U.S. entry into World War II that really ended the depression

    . 

    There’s no doubt that we, as a country, are in trouble. The question is, can we borrow and spend our way out of it? I honestly don’t know, but I feel like a guinea pig for two kinds of people I’ve long distrusted

    : economists

    and politician

    s. 
• The FoundrySome of the things that are really in this bad bill and how Obama’s words deceive. tags: obama, politics, stimulus
  • While 92% of those polled viewed Obama as a good communicator, those Americans that were paying the most attention to the stimulus debate also were the most opposed to the plan. The more that Obama’s lofty rhetoric is tested against fact and common sense, the less support his policies have.  Below are just the five most audacious sales pitches Obama employed to gin up support for his Trillion Dollar Debt Plan.
  • when Speaker Nancy Pelosi (D-CA) and Rep. David Obey (D-WI) wrote the bill, they included billions of line-item spending elements to payoff leftist interest groups, including: $450 million for NASA “climate-research missions”, $600 million for NOAA “climate modeling”, $2 billion for a single power plant in Obama’s home state of Illinois, and on and on.
  • Obama’s Trillion Dollar Debt Plan would create only 3.6 million jobs and could produce only 1.2 million jobs. And one in five of these jobs will be a government job.
  • The Obama Trillion Dollar Debt Plan doubles the size of the Department of Education and creates 32 brand new government programs. Worse it sneaks in a major down payment on Obama’s health care plan creating the bureaucracy and tracking systems necessary to force socialized medicine on the American peopl
  • Japan: “We saw this happen in Japan in the 1990s, where they did not act boldly and swiftly enough, and as a consequence they suffered what was called the “lost decade” where essentially for the entire ’90s they did not see any significant economic growth.” – This statement is audacity defined. Since 1992 Japan has spent $6.3 trillion in stimulus spending, racking up the largest public debt in the developed world — totaling 180 percent of its $5.5 trillion economy. And this massive borrow-and-spend splurge did nothing to help the economy. And Obama thinks this is evidence in support of his Trillion Dollar Debt Plan
• DC Republican Examiner: Harvard Economist: “Stimulus is probably the worst bill that has been put forward since the 1930s”tags: politics, economy
  • One keen Democrat notes that this is neither a stimulus bill nor a pork bill. It is actually a permanent Democrat patronage bill, designed to create an army of people beholden to the Democrat Party for decades to come.
  • The Big Lie is that Obama knows this and yet deliberately uses phony numbers and rhetoric to pass a bill that may itself cause a depression. Change we can believe in? 

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