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Schumer is talking a 500 billion to 700 billion dollar stimulus bill, spread over 2 years. The Obama campaign is talking about 2.5 million jobs. This is good, a very large stimulus bill is needed.
As with everything, the devil will be in the details. There are good ways to do stimulus, such as food stamps and unemployment extensions, and there are bad ways to do stimulus, like tax cuts for the rich or giving money to corporations which aren’t efficient at creating jobs.
In general, here’s some of what I’d like to see in a stimulus bill, from most important to least:
- Unemployment benefits extension
- Food stamp increase, with food stamps worth more when buying healthy foods like produce
- Welfare extension, undoing some of the damage done by "welfare reform"
- Buying back low mileage vehicles, scrapping them and giving credits for buying high mileage vehicles
- A massive refit of the nation’s building stock to make it more energy efficient (lots of jobs)
- A refit of the nation’s power infrastructure to encourage micro-power generation, especially by individual households
- A massive rollout of real high speed internet, as part of a general encouragement of working from home
- General infrastructure repair and rebuild. Less important than folks think, but not bad.
- Help with healthcare, ideally single payor (at the bottom of the list because it will cost some jobs, but it will also free up a ton of money for spending)
Now a word on taxes.
The current plan is twofold – a huge stimulus bill, and a big tax cut. The second is a mistake. Yes, it’s what FDR should have done, rather than letting Hoover’s tax raises stay in place, but the current situation is not identical to the Great Depression by any means, mostly because FDR was not facing an energy supply bottleneck, and America today is. Giving people tax cuts means they will spend money as they’re used to spending money, and they have been spending money badly. A huge stimulus bill, combined with huge tax cuts, minus fixing the supply bottleneck, will cause oil prices to surge back up if it actually works. That will cause another bout of inflation in food and resources, similar to the one we had earlier this year, and will shake the economy apart.
Any stimulus bill must tackle the supply bottleneck as part of the spending, but it will take a few years for that to happen. In the meantime, tax cuts are not the best way to get people the help they need. Spend money on their behalf, in ways that will help them rather than giving them money to spend on an economy where their spending will exacerbate built-in problems like oil shortages. Reducing energy costs, health care costs, housing costs and so on will put more real spending money in folks hands than any tax cuts.
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Ian! I’ll let ‘em know you’re here!
Is spending on healthy food better for the economy than spending on cheetos?
Hope nobody minds if I drag this question up from last thread: May be as good a spot to ask this as any — Somewhere saw that tax breaks are given to companies if they can move their manufacturing activities offshore. Does anyone have more info on what this might be about? And why such a policy has been allowed? And why there isn’t pressure to make it the other way around: tax breaks if you make stuff here?
Might be higher than 500 – 700B, could be 1.2 trillion.
I’ll be happy if it isn’t 10 trillion.
Ian !
Remember back when you had pegged the bailout at around $2.5 Trillion ?
… that was chump change …
Yes, because lettuce will cause fewer trips to the emergency room in two ways: long term – fewer heart attacks; short term – who has ever choked on lettuce?
Do you comprehend the entire conspiracy yet?
The entire crash of the economy was planned years in advance – before 9/11.
9/11, the quagmire in Iraq, the boom, the bust…all of it, planned
Do you see the banksters looting YOUR Treasury before your eyes?
Do you see Goldman and JP Morgan Chase stealing YOUR money?
Who will stop them from stealing YOUR MONEY to enrich themselves?
NOBODY.
Have you had enough evidence seared into your eyes and brain to comprehend the conspiracy yet, or are you still content to live life as a coincidence theorist while they load all of your worldly belongings onto a truck bound for David Rockefeller’s bank?
What will it take, folks? What will it take?
http://plungerspeaks.blogspot.com
WAKE UP!
If you want to cut personal income taxes, raise gas taxes and give some level of tax credit for a baseline amount of gas (to ease the pain on Joe Sixpack the Commuter from the regressive nature of the gas tax while encouraging fuel efficiency and reducing consumption) – that makes sense.
Just cutting taxes is senseless.
I have no problem with tax cuts for low and middle class Americans. I’ve read that Obama is leaning toward letting tax cuts for the wealthy expire in 2010 instead of repealing them one year early. I see no upside to pumping money into the most unproductive part of the economy and the part which needs it least.
I wrote in a comment in an oxdown post by Beau Friedlander on Obama’s job pledge:
It should be obvious, but it isn’t, that concentration of wealth in few hands destroys a capitalist economy based on demand. We need consumers. While the wealthy consume high end stuff, they do not consume nearly enough to keep an economy the size of ours going. Raising taxes on the wealthy and taxing accumulated capital should be the first order of business. Sounds very left wing, and I suppose it is, but printing money for stimulus packages, however they are managed, cannot go on forever. I’ve said that for a while and have been wrong. Perhaps I am wrong now and printing money is the way to beat the rap.
That’s cut personal income taxes on the working low and middle classes – not the rich (over $250k/yr). They’ve had a very nice ride and can suck it up.
Ari at oxdown also has what are supposed to be the leaked terms of the Citibank deal here.
Needless to say it is expensive, sticks taxpayers with the bill, and is mindlessly stupid.
#10, i tried to be nice. :)
Ian,
I’d also throw in a “greening” of the household appliance industry simi9lar to what has been done with lightbulbs. During the 1950’s-’60’s millions of jobs from manufacturing down to retail were generated through home appliances. That market has now been almost tiotally captured by Asia (principally Haider in China).
Imagine if ambient solar-ovens (with some photocell technology thrown in) could be manufactured so that they would reduce the use of power or be used off the grid. Remember when every apartment had a hibachi on the balcony? Why not little solar ovens for food, or solar stills, that would help clean rainwater. These would be particularly useful in non-industrialized countries or places off the grid. But many Americans would use them as well.
Solar stills are also very important in the clean water campaign, and will progressively become critical down the road. Some industries really need to get on this to make these as efficient as possible. They are also very important in emergencies.
I should point out that the $500-$700 billion price tag is not as big as it seems since it is spread over two years. Roubini, me, others have been arguing for a $400-$600 billion package now.
This summer we were told, by virtually everyone, that the price of gas was going to be $5, $6, $7 and on up per gallon for as far as the eye could see into the future. Today I filled up for $1.71/ gallon.
Frankly, I don’t think anyone knows what the hell is going to happen and I am suspicious of anyone who claims to. The song “Do the Hustle” keeps playing in my head. Perhaps, it is time for everyone to cool their jets for a while.
solar/wind, etc is the way of the future. needs to be mass produced. i remember back in kc in the 70s people were building out of / into earth.
i wonder if the chinese want to lend us that much. they have their own infrastructure program, ya know.
The notion of unbridled and never ending growth has to be challenged. Yes we need to spread the wealth and provide for a decent standard of living for all but this grow the population, grow the economy, grow the amount of crap that we consume has got to have some kind of endpoint.
or even yesterday.
1,836 DAYZ AND THE KILLIN’ GOEZ ON AND ON AND…
Citizen Ian Welsh and the firepup Freedom Fighters:
What about brankruptcy reform and remuscling of anti-trust legislation? Seems to me no economic stimulus is really gunna be able to reach the common folks and make the road to economic recovery and restructuring one-way unless we get these two tools sharpened and in the handS of the new administration lickitysplit.
KEEP THE FAITH AND PASS THE AMMUNITION…AND DON’T SHOOT THE FRIENDLIES!!!
If you take my #8 and #15 together, Obama’s plan is less than meets the eye and probably isn’t enough to push us out of recession. I should also note that, like Bush or Paulson, Obama has suggested nothing that will actually address and fix any of the fundamental problems which underlie and precipitated the current financial meltdown. His selection of Geithner, Summers, Oszag, and Romer for his economic team indicates that none of these will be looked at anytime soon.
one thing i want to know about the so-called stimulus package is this: is it designed to re-inflate a bubble and the phony economy or is it designed to stimulate the real economy?
In the words of the catastrophe denier “you must be a conspiracy theorist”. I wonder why there are laws against “conspiracy” if there aren’t any??? Hmmmmm
More people need to read “The Shock Doctrine – rise Of disaster capitalism” Even if it IS heartbreaking.
doesn’t say anything about a bank so i think it is directed to main st, ie us.
Citizen ekinin:
“Raising taxes on the wealthy and and taxing accumulated capital should be the first order of business.”
BINGO!! You jest hit the coverall…you must a been readin’ yer Marx.
I was suggesting (at change.gov) paying living wages (gecause the federal minimum wage generally is less than that) as well as a version of the WPA to build and rebuild. I figure if people are paid a living wage, fewer will need second and third incomes, and more jobs will be available, as well as more people being able to actually buy stuff – which allows more businesses to hire, and so on. (It ought to be bloody obvious to economists, if we can see this.)
I don’t give a shit about the people with multi-million-dollar annual incomes – that’s beyond any reasonable level, and there’s no reason for it beyond ‘my income is bigger than your income’ childish boasting – and I hope that taxes are raised on those to a level that actually makes sense.
I also suggested that they hire Roubini, because he’s been right more often than some of the ones they’re actually trying to get.
one arguement against constant raising of the minimum is that corresponding changes are not made to stabilize standard needs. it is a vicious cycle toward inflation. don’t know what to do about it.
fyi – obama is going to have a press conference in 20 min to announce his economic team. cspan will cover..
well whadda ya know . . . some foreign guy named Welsh agrees with you :D
Mornin’ All
Michael Rivera
i don’t think it matters if it’s not directed to a bank. must see details.
Gas went up because of excessive speculation. Like the housing bubble, it burst, a result of the financial meltdown, and prices fell sharply. Now you can see this happening way out, even years in advance. What you can’t tell from that distance is when the bubble will burst. As you get closer though, you can see the bubble in the process of bursting.
So it really runs something like this. We knew back in 2005 around here that there was a housing bubble. We knew it would burst best guess sometime in 2006-2007. Once this happened the house of cards of the financial system would be put under severe stress because it had not one but many weak and unsustainable components. When all this would hit the fan though depended on what Paulson and Bernanke decided to do or not do. They chose to pursue a hands off policy with only sporadic forays into the markets. This delayed a collapse but made it worse when it happened. But again it was difficult to say which or what the precipitating factor was. It could have been Bear Stearns but turned out to be Lehmann. If it hadn’t been Lehmann, it could have been AIG or Fannie and Freddie. In any case, we had 6 months where we could see things coming apart, and we could also see as speculative money leaving not just oil but commodities in general. So we knew at that point that $5 and $6 gas was out of the question and that prices were going in the other direction. But how it all would play out wasn’t clear because again we didn’t know what Paulson and Bernanke would do and if they would get real about the problems of the financial system. They didn’t. They have been throwing money at the system but not fixing its problems.
So yes, we can see a lot about what will happen and even how it will happen. But it is a dynamic event so no we could not sit back in 2005 and say how and when everything would play out.
Digg this post
I never, never again in my lifetime want to hear a Republican sneer
at the idea of
throwing money at it.
Actually, it will cost some and create many more as the focus shifts from denial of coverage to provision of actual, you know, health care.
Not to mention how much secondary wealth is created/sustained by having a healthier citizenry not frozen in place by fear of losing health coverage.
I think this is overstated. Inflation has been an excuse used for 30 years to keep wages stagnant. At the same time, the money which could have gone into raising wages as gone instead into financing a series of bubbles and creating a paper economy which is, as we are currently seeing, dangerously unstable.
I love your ideas Ian, why aren’t you in Obama’s cabinet? Of course all the stimulus in the world isn’t going to produce sustained help if we don’t also re-regulate and strengthen anti-trust legislation AND enforcement. That’s technically a different issue than stimulus, but needs to be considered at the same time.
Another part of actual stimulus is to find a way to encourage entrepreneurs to grow green businesses, like vertical-axis wind turbines for urban/suburban locales, new car companies producing affordable and efficient vehicles (since the govt. seems intent on letting the big three fail.) There are probably at least a dozen people (or many more) reading this Web site who have a great idea for a new business, but don’t have the financial ability or business experience to take the plunge. How can we make that process much easier for average Joe’s and Jane’s to start a business?
New Lisa Derrick post up: “Arizona Gets Busy Boycotting Over Equal Marriage Rights”
What I would add
1-massive amount of money to repair infastructure-roads,bridges, water, sewer and schools
2-modify current welfare rules-no lifetime welfare but perhaps a slight increase in the 5 year limit. Insure realistic job training and education
3-the US currently has-and has had for several years-at least a 30% drop out rate for HS students. This is an emergency that needs to be fixed. How, I have no idea, but current methods are not working
4-get rid of segregating students due to their lack of english. A program that teaches kids in their milk language does not allow them access into society at large
5-We need to increase the minimum wage. People can not live on minimum wage jobs.
6-A national health insurance plan that insures that if you get sick you will not have to go bankrupt
7-re revise the bankruptcy laws that now favor big business
8-We are not-by far-the greatest country in the world because we do not have the lowest deaths per birth rate and we are not the longest lived, we have the most uninsured of any country in the world, we have the most over worked and under paid workforce of all 1st world countries.
9-people should be able to retire without the worry of whether they should pay for meds or food.
10-we need defined pension plans, not 401Ks which as we found out, can be gone in a flash-I am retired on a defined pension plan, I am getting a 5.8% increase this year(I am not in social security)
11-We need to level the playing field between workers and management. Right now the tilt is towards management.
obama press conference to introduce his economic team – now beginning on cspan (and presumably elsewhere).
Another thing about single-payer health care is that it would help existing businesses by reducing the money they currently spend on health care. Combine that with improving social security and you can greatly reduce not only legacy costs for existing corporations, but also eliminating two huge barriers to future entrepreneurs.
The bubbles were also created by the creation of money (wealth) as housing values went up many used the perceived asset increases as a piggy bank. This “wealth” was transfered at a higher pace to the wealthiest who in turn funneled it to ownership abroad.
Shorter Obama: Fluff and BS.
i can’t stand this – obama is giving summers credit for the wonderful economic policy of the ’90s.
q: does obama believe what he’s saying?
oh shit. obama just put ss on the table.
No idea. I’m surprised he didn’t Peter Oszag who is supposed to head OMB.
from the wsj:
Timothy F. Geithner, Secretary of the Treasury
Lawrence H. Summers, Director of the National Economic Council
Christina D. Romer, Director of the Council of Economic Advisors
Melody C. Barnes, Director of the Domestic Policy Council
Heather A. Higginbottom, Deputy Director of the Domestic Policy Council
Obama just mentioned the 2.5 million number. Haven’t heard anything about the size of the stimulus. Very, very short on specifics or even principles.
market not reacting yet. small downturn right before speech.
Melody Barnes has an interesting bio
http://en.wikipedia.org/wiki/Melody_Barnes
i don’t know what obama is talking about. it sounds more like campaign rhetoric than governance.
Fix everyones primary residence interest rate at 4.2%
Any primary residence underwater: Governement pays off 25% of the amount underwater right away if the mortage holder will wipe out 10% of the amount underwater.
Give auto a bride loan, then make the large requirements on the followup auto stim pacakge (that is going to be about 100b).
Raise taxes on income as follows (with the sliding Obama plan – you only pay the higer rate on the amount above the income from the previous braket; if 100k is new bracket and you make 110k you pay the 100k + rate on 10k):
starting where Obama said he would start:
250k +1%
300k +2%
350k +4%
500k +5%
1m-10m +10%
10m+ +20%
Lower taxes dramitcally on anyone under 250 or 200k or 100 (something that takes into account people in high-cost areas are in a tough place as well when taking into account a house and property taxes).
Leave money aside for comprensive health care (allow people to retire and not have to work only for health insurance – this should increase wages and lower unemployment).
Stimulus that will help everyone:
- local and state govt aid w/ focus on education
- give extra tax break on corps that provide health insurance >= 80% until that problem is solved.
- Allocate targeted funds/grants (an example, in other words spread it around; some focus on Urban is going to be needed as well as over the tracks in any city is in really bad shape):
10% – public higher ed
10% – kind-grammer public school & teacher bonus
10% – genomic/biotech/pharama (perhaps to promote scale up of helpful but non-profitable treatment; would need a watchful eye here)
10% – hospital and elder care (including oversight)
10% – public/social works
25% – manufacture
25% – green econ (some of this will be in manufacture since there is overlap)
Make increase to minimum wage all vest now + 50 cents per hour and also tie to inflation. Lower salary of congress by 20% and cut their health care (until health care is solved).
Leave social security money alone. Remove cap (or make a hole where you pay in from 1 – 200k and then again on income 400k+).
Cut military spending by 25%; use 5% of savings to figure out how to run the military better with less and if possible cut more.
Investigate and hold people accountable in: banks, governemnt, justice, regulation.
If possible legalize some drugs: free up prisons, take money way from gangs and crime. Regulate and tax heavy; use some of the income in prevention & counsel. Take police no longer engaged in the war on drugs and patrol the roads and freeway to write tickets to law breakers (speeding, reckless driving, drunks, etc) to save tens of thousands of lives and along with the road works hopefully have massive productivity savings from people no longer sitting in traffic.
Law to make sale of power by consumer back to grid at minimum of 80% of real-time charge to consumer.
I realize this is more than just items that would be in a stimulus bill but as you note just giving money to people might not be such a good idea and there are many things to consider. For example as noted the other day building crap for 5 cents in China and selling that crap for 30 dollars in USA is not such a great world.
We tend to conflate the NEC and the CEA but Summers will be calling the shots and Romer will have a secondary role. No surprise there. I’m thinking that some of the women were chosen to make the choice of Summers more palatable but all 3 of them have less influential positions. The men Geithner and Summers (and Oszag) have the heavy hitting ones.
wsj:
These are the kinds of things we should be hearing from Obama and aren’t.
Big cars to small cars makes no sensse. First, the cost is just not worth it, in energy or otherwise. Second, in the medium to long term, the vehicles we need are something a lot more efficient than 2 tons of metal on pneumatic tires carrying 1 person – in other words:
Railroads! Wooooo woooooo!
Lord I’m five hundred miles away from home.
Oh, remove all tolls – add a gas tax and distribute states. Any additional money needed by states madate they use a gas tax increase.
Other than control in an emergency there is no reason to sit in traffic burning tons of gas and time waiting to pay a toll.
send this to bama pls. he needs help.
i’m been called a feminazi for my concern about women in science but i don’t give a flying fuck if summers is the most sexist guy on the planet. i want someone at treasury who has a track record that is not one of getting it wrong.
How many adults are there in the US? 200,000,000?
20,000,000,000,000/200,000,000 = 100,000
Why not just give everyone $100,000 and see what that stimulates?
I’m kidding, but . . . .
Obama continues not to answer any questions: We will do stuff. I still haven’t heard a stimulus number. I am vastly unimpressed by Geithner, Summers, and Goolsbee.
You know put a Texas accent on this, some mispronounced words, and fractured syntax and this could be a Bush speech in terms of its lack of content.
excellent ideas. thank you.
Excellent – public transport.
I recall doing current events on this in grammer school 25+ years ago…and NOTHING.
I hope gone are the days where people can say commuter rails are “faggy” and that is the end of the debate and they are elected and pocket billions.
We have lost 30 years in this country and its taken a roar from China over a very brief 5 year period for us all to crap our pants.
PROACTIVE PLEASE. Along with an educated public and honest political debates so we can make the best choices and omg…evolve.
yes, but i like the women none the less. blacks even. i’ve had enough of the white men who screw everything up.
auto fix: guaranteed loans to buyers, much like student loans, for cars that meet energy/environmental criteria.
I agree. I’m just trying to describe the politics of the sell.
i’m waiting for the “it’s hard work”
i know.
just sick of the atmospherics instead of substance.
But they aren’t in the really heavy hitting positions, and the white guys who have screwed everything up are in fact in those big positions.
he actually said sometin like that.
when asked about the second half of the tarp. obama says he has spoken with bernanke and bush today. not sure what they talked about.
There is no there there in this press conference.
agreed. i believe it will take leadership to make them go in the right direction, that’s all.
oh, heck, he IS a politician.
the fucking campaign is over. when are we going to more than campaign rhetoric?
new post from jane: Lost In America: Wall Street Pundits Jonesing On Shock Doctrine
Well Obama gets to keep his tax break until 2011
That’s right perhaps a super majority and the POTUS still means that there is just not the will to elimiate 100k on each million tax breaks for paper pushers. Gee that’s not what I remember the people who were voting saying.
Had some other ideas but looks like these jokers are working to de-motivate people from being involved. I am going to be watching to see if Obama really wants people getting involved or he keeps this up.
That is to say no repeal of Bush tax cuts so will have to let them expire…not in this congress, not in the next congress, in the one after.
Another thing to track carefully is how the infrastructure projects are done. If the Iraq model is followed, a few big contractors get billions in contracts, but they farm off the work to subcontractors and sub-subcontractors, and siphon off more than half the money. At the very bottom, non-union/undocumented workers do the work for a pittance, and the bureaucracy is too complicated to hold anyone to account for shoddy work.
This cartoon from truemajority tells us where we can get money we need for our programs.
http://www.truemajority.org/oreos/
If schrub’s objective is to leave the treasury dry then BO may have to go to the military budget to get some dollars. And if there are none there, then maybe he’ll just put some of their stuff on the ole auction block.
Is spending US dollars on the US economy more important than military spending? What good is a military and it’s huge budget if our country is in shambles? If you watched the truemajority clip above you have seen how ridiculously spending of our tax dollars goes to the military budget.
Bloomberg: US could lend as much as $7.4 trillion
Published: Monday November 24, 2008
“The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago,” according to an estimate by Bloomberg News.
http://rawstory.com/news/2008/….._1124.html
I’m a no nothing about economics. Am trying to understand from a common sense perspective. The building is on fire. Is the implication that addressing the causes is going to put the fire out? Don’t we need to put the fire out first?
About Geithner, some positives are that he doesn’t come from Wall Street, he’s worked mostly in the public sector, and while connected to Rubin, he has the capacity at least to be an independent thinker. Also, he’s worked in international finance, and he speaks Chinese and Japanese! The latter could be useful.
http://www.dailykos.com/story/…..298/665847
Yup. Fat and unhealthy people use resources best used for other things.
The Obama tax cuts, as I understand them, give a break to the working poor and small businesses. As our current problem is founded on the bad mortgages I don’t see why Obama’s cuts would be wrong. If anything I’d boost them and find more ways to help people with their mortgages.
So what you’re saying is George had a hand in it?
The retail economy doesn’t need that much extra cash shoved at it. Retailers would just jack prices up to absorb it all. You’d just be shifting cash from the investment world to one sector of the economy (and not the really productive sector at that).
No, we must remember that aside from the crazy financial sector the rest of our economy was working fairly well. We need to complete this deflation of financials, fix mortgages and use stimulus to keep the rest of the real economy moving while we do new investments into energy efficiency, health care and war-ending.
Along the way we might fix some significant, but smaller things like tax craziness that sends jobs overseas and giving billions to oil companies.
I couldn’t help noticing how healthcare was at the bottom of your list. Do you have insurance? I lost mine years ago due to a decade and a half of chronic illness. I am totally disabled and looking at my life with below subsistence level social security income. I’m thinking that along with those who already have what they need, the government would like me to crawl away and die, quietly. No, really. Follow me through the nightmare of poverty healthcare and support. It looks like third world care with shaming providers. Healthcare will raise everyone’s ability to function well. Shouldn’t it be closer to the top? The big picture you’ve suggested leaves out individual humanity. But then perhaps certain numbers fail to appeal to the bland ramparts.