A review of the debate and reality of the first stimulus package.

[ProSense]

It's interesting to review the debate and reality of the first stimulus package. It's clear the package was too small, but even the economists were off before Obama took office. There is also the reality of passing a bill in the Senate, which even Krugman understands needed Republican support.

Krugman (Nov. 2008)

So we need a fiscal stimulus big enough to close a 7% output gap. Remember, if the stimulus is too big, it does much less harm than if it’s too small. What’s the multiplier? Better, we hope, than on the early-2008 package. But you’d be hard pressed to argue for an overall multiplier as high as 2.

When I put all this together, I conclude that the stimulus package should be at least 4% of GDP, or $600 billion.

Krugman (Nov. 2008)

All indications are that the new administration will offer a major stimulus package. My own back-of-the-envelope calculations say that the package should be huge, on the order of $600 billion.

So the question becomes, will the Obama people dare to propose something on that scale?

Let’s hope that the answer to that question is yes, that the new administration will indeed be that daring. For we’re now in a situation where it would be very dangerous to give in to conventional notions of prudence.

Dean Baker (Nov. 2008)

This is important. We know how to keep the economy from collapsing. We didn't have this information 80 years ago. The secret is to spend money, lots of it.

CEPR just circulated a letter that garnered 375 economists' signatures arguing for a stimulus between $300 billion and $450 billion. This might be too small given all the bad news that we are seeing. We may need to spend $500 billion or $600 billion a year to get the economy back on its feet, possibly more. The key point is that we can get the economy back on its feet; we just have to spend the money to do it.

Nouriel Roubini (Dec. 2008)

My first observation would be that even if they do everything right, the recession is going to proceed through the end of next year. I don't think that there is anything that the government can do at this point to reverse that. What they can do is to try to ensure that there is at least the beginning of an economic recovery toward the end of next year and into 2010. What needs to be done is actually many different things. The first thing is we need a huge fiscal stimulus because private demand, consumption, and spending are collapsing. So you need a huge stimulus—$500 billion to $700 billion of government spending in infrastructure, money to state and local governments, unemployment benefits...

Obama stimulus could reach $1 trillion: report (Dec. 2008)

(Reuters) - President-elect Barack Obama's team is considering a plan to boost the recession-hit U.S. economy that could be far larger than previous estimates and might reach $1 trillion over two years, the Wall Street Journal reported on Saturday.

Obama aides, who were considering a half-trillion dollar package two weeks ago, now consider $600 billion over two years "a very low-end estimate," the newspaper said, citing an unidentified person familiar with the matter.

The final size of the stimulus was expected to be significantly higher, possibly between $700 billion and $1 trillion over that period, it said, given the deteriorating state of the U.S. economy.

Officials with Obama's camp have declined to comment on media reports about the size of the boost his administration might seek to give the economy through increased public spending and tax cuts.

Obama is due to take office on January 20.

Battered stock market investors around the world have taken heart from previous indications of how Obama's administration may seek to kickstart growth in the world's largest economy.

Obama has promised he will launch a massive public works program to help lift the U.S. economy out of recession.

The president-elect is likely to be briefed by his aides on the outline of the stimulus plan next week with a view to getting it passed by Congress by the time he is sworn in next month, the Journal said.

Economists have previously said they expect Obama to quickly sign a multi-year spending package that could be worth up to $750 billion, or almost 5 percent of U.S. gross domestic product.

Krugman (Jan. 2009)

Let’s be generous and assume that the overall multiplier on tax cuts is 1. Then the per-year effect of the plan on GDP is 150 x 1 + 240 x 1.5 = $510 billion. Since it takes $300 billion to reduce the unemployment rate by 1 percentage point, this is shaving 1.7 points off what unemployment would otherwise have been.

Finally, compare this with the economic outlook. “Full employment” clearly means an unemployment rate near 5 — the CBO says 5.2 for the NAIRU, which seems high to me. Unemployment is currently about 7 percent, and heading much higher; Obama himself says that absent stimulus it could go into double digits. Suppose that we’re looking at an economy that, absent stimulus, would have an average unemployment rate of 9 percent over the next two years; this plan would cut that to 7.3 percent, which would be a help but could easily be spun by critics as a failure.

And that gets us to politics. This really does look like a plan that falls well short of what advocates of strong stimulus were hoping for — and it seems as if that was done in order to win Republican votes. Yet even if the plan gets the hoped-for 80 votes in the Senate, which seems doubtful, responsibility for the plan’s perceived failure, if it’s spun that way, will be placed on Democrats.

I see the following scenario: a weak stimulus plan, perhaps even weaker than what we’re talking about now, is crafted to win those extra GOP votes. The plan limits the rise in unemployment, but things are still pretty bad, with the rate peaking at something like 9 percent and coming down only slowly. And then Mitch McConnell says “See, government spending doesn’t work.”

Let’s hope I’ve got this wrong.

Stimulus Bill Near $900 Billion (Jan. 2009)

WASHINGTON -- The U.S. economic stimulus package neared $900 billion in the Senate, as President Barack Obama wooed Republicans ahead of an expected House vote Wednesday.

The rare trip by a president to Capitol Hill revealed the urgency in Congress and the White House over a cure for the souring economy. More than 70,000 layoffs were announced this week and fresh data showed unemployment last month rose in all states.

House Passes Stimulus Package (Jan 2009)

The House passed an $819 billion tax-and-spending bill Wednesday, in a recession-fighting effort that would extend the reach of the federal government across the U.S. economy by reshaping policy on energy, education, health care and social programs.

The House bill is one of the largest single stimulus packages in history, almost equal to the entire cost of annual federal spending under Congress's discretion. A parallel Senate measure, which is expected to come to a vote next week, is now valued at nearly $900 billion.

Additions by Senate Push Stimulus Near $1 Trillion (Feb. 2009)

WASHINGTON — The Senate on Tuesday pushed the cost of the economic stimulus package above $900 billion by adding billions for medical research and tax breaks for car buyers.

Paul Krugman: Stimulus Too Small, Second Package Likely (VIDEO) (Feb. 2009)

Paul Krugman, the professor of economics at Princeton University and a Nobel Prize winner, spoke Tuesday to CNBC, where he discussed his views on the stimulus package.

The $787 billion stimulus is not nearly enough to fill the "well over $2 trillion hole" in the economy, Krugman said. "A fair bit of the bill is not really stimulus," he adding, noting that just about $650 billion would actually spur consumer spending and other types of stimulus.

How much should the next stimulus be and will Congress pass it?

[NJmaverick]

1. We don't need another stimulus. What the nation needs is for the corporations

to get off the piles of cash they are hoarding and put that $$$$ to work

[zipplewrath]

3. Doing what?

corporations don't generate markets, they supply them. The action needs to be on the consumer side. Right now, the only consumers with money, and something to do, are the world governments. What is really needed is a stimulus package out of Germany, and the UK, and China.......

[NJmaverick]

6. R&D for new products that will generate new markets

you think the record I-Pad sales were just an existing market? In fact the whole advertising industry is based on the concept that demand can be artificially created. The companies that can't do R&D or infrastructure upgrades (or even more aggressive marketing) could at least part with some of the cash as dividends.

That said, I would like to see other nations do a better job with their own nations to stimulate world demand.

[zipplewrath]

10. New products for customers with no money?

There is R&D going on out there. It is generally aimed at products to be brought to market within the next 2 years. What corporate America is basically suggesting by sitting on their cash is they don't see consumer markets with cash to spend in the next 2 years. That's why the governments have to step up and create the markets for products and services for companies to invest in creating.

[NJmaverick]

13. Record sales of I-Pads (which is why I used that example) shows cash is there

for the right products

[zipplewrath]

16. For some products

Ipad sales aren't going to turn around this economy. It's a blip. There are new products being developed as we speak. The magnitude of future sales for them that we need isn't anywhere near what these companies are seeing.

[NJmaverick]

18. My point is there is money out there

if more companies would provide improved and new products than demand would grow and spur the economy. The 90s were driven by computers, other tech and improved autos.

[zipplewrath]

20. R&D doesn't spur the economy

R&D develops the products that an economy will purchase, if it has the money. Yes, there is a "cart/horse" problem here. It is why governments have to be consumers right now. The '90s were driven by computers, mostly because of the Y2K fiasco. But that market was created by the consumers (the companies that needed upgraded IT infrastructure), not by R&D.

[NJmaverick]

22. It was far more than Y2K which was pretty much just a blip

the internet expanded, as did cellular tech, as did computer networking and computers in general. However don't under estimate the auto industry. That is a huge part of the US economy. The quality of vehicles drastically improved (spurring the desire for new cars) and SUVs were a profitable and hot offering that the domestic makers thrived on.

[zipplewrath]

24. All because there was cash

Don't under estimate the importance of having consumers with cash to spend. Right now huge portions of the market place are paying down debt. SUV's were a big market because consumers were insensetive to their costs of ownership.

I think one of the quickest places that the government could spend is on the "smart grid" technologies. Companies have cash and if a smart grid was made available, many companies would choose to invest. This would probably be especially true of anyone with large property holdings. If the utilities (and many untilities are government owned/run) would get the basic infrastructure in place, private industry would step up to leverage that. Heck, let's get going on a new WTC campus with the highest tech buildings we can.

[NJmaverick]

27. It all works together. It didn't start out with a bunch of Americans with money burning holes in

their pockets. It started with new products that drove demand which caused more people to be hired which allowed for more spending that increased demand and created more jobs and os on. The money needed to prime the economic pump is being sat on by corporation (it's my belief that in some cases that action is politically driven).

As for WTC campus that was one of the biggest shames (that is rarely talked about) of our last Republican President and the Republican mayors and a few others- the gaping hole/wound where the Towers used to stand. It's been nearly 10 years, there is simply no excuse for us not defiantly rebuilding years ago.

[zipplewrath]

29. Actually, it did

The price of oil was historically low in real terms, and credit was easy to get. So people had (borrowed) money to spend. Thus begins the classic bubble. You remember that there was a recession at the end of the '90s. Many reasons for it, but one was that there was too much speculative (borrowed) money floating around.

By the by, there is one thing that alot of these companies could do with their cash. LEND IT. There are credit problems right now, and it would help alot if they'd lend it to people who do want to start products and companies.

[BootinUp]

2. As big as possible.

We cannot let the economy drop into a deflation spiral. The best that can be said about the economy is that things have leveled off. We have not replaced the millons of jobs lost, the first stimulus makes things look better than they are.

[Oregone]

30. The arbitrary, politically safe number they guessed was probably all that was possible

(so they thought)

If you accept that politicians will only stick their neck out so far with large numbers, not a lot will change in terms of the volume. At such a point, its more important to probably argue for maximum efficiency than increased size (and this was not a very efficient stimulus).

[MadHound]

4. Yet the stimulus that was passed was made up of forty percent tax cuts,

The least stimulating tool in the box. Hell, the Dems cut out 16 billion for school construction and repair in favor of more tax cuts.

Whatever the size of the next stimulus, make sure that it is all spending, not tax cuts. Tax cuts are part of what got us into this mess, they certainly won't help us get out of it.

[flpoljunkie]

5. Krugman: A fair part of the bill is not really stimulus

'Obama has promised he will launch a massive public works program to help lift the U.S. economy out of recession.'

Krugman's right on that. No one could call the stimulus they passed a 'massive public works program.' And, as a consequence, the economy has not been lifted out of recession and unemployment remains dangerously high.

It's a damn shame. Our dysfunctional Senate at work.

[ProSense]

8. True, but

Krugman originally called for "4% of GDP, or $600 billion"

The fact is that minus tax cuts, the stimulus was $550 billion.

[zipplewrath]

11. Much of it poorly focused

he wanted alot of the money to go to helping the states avoid major manpower reductions. Much of that got cut out of the bill, and so we have states reducing spending when the federal government is increasing spending. Bad trade.

[ProSense]

14. No one ever claimed the spending was poorly focused

except Republicans

WASHINGTON—Democrats, stung by criticism of their $787 billion economic-stimulus plan, are targeting Republicans who have attacked the program and then lobbied to get money for their districts.

<...>

Most of the stimulus spending so far has gone to state and local governments to plug holes in their schools, Medicaid and unemployment-benefits budgets. Spending on infrastructure projects is expected to pick up in 2010.

[zipplewrath]

17. Krugman did

He mentioned at the time that some of the more useful expenditures were cut at the last minute to satisfy conservative democrats and to get republican support. For him, the size was one issue, but it was also important where it was spent.

[ProSense]

19. Krugman complained about cutting spending, not how the money was allocated

Krugman:

According to the CBO’s estimates, we’re facing an output shortfall of almost 14% of GDP over the next two years, or around $2 trillion. Others, such as Goldman Sachs, are even more pessimistic. So the original $800 billion plan was too small, especially because a substantial share consisted of tax cuts that probably would have added little to demand. The plan should have been at least 50% larger.

Now the centrists have shaved off $86 billion in spending — much of it among the most effective and most needed parts of the plan. In particular, aid to state governments, which are in desperate straits, is both fast — because it prevents spending cuts rather than having to start up new projects — and effective, because it would in fact be spent; plus state and local governments are cutting back on essentials, so the social value of this spending would be high. But in the name of mighty centrism, $40 billion of that aid has been cut out.

They cut $86 billion in spending, and that's the whole point of the debate: the bill wasn't large enough.

Krugman, at that point, was advocating a package of more than a $1 trillion.

[zipplewrath]

21. Exactly

You posted it right here.

Now the centrists have shaved off $86 billion in spending — much of it among the most effective and most needed parts of the plan. In particular, aid to state governments, which are in desperate straits, is both fast — because it prevents spending cuts rather than having to start up new projects — and effective, because it would in fact be spent; plus state and local governments are cutting back on essentials, so the social value of this spending would be high. But in the name of mighty centrism, $40 billion of that aid has been cut out.

It wasn't just how much was spent, but where it was spent. It was the aid to the state governments that was most needed, and was cut by the centrists. It seemed like a small cut, but it was critical.

[ProSense]

23. That has nothing to do with how the stimulus was allocated.

He is merely stating that the cuts were to spending. Of course they were, they were negotiating with Republicans.

The fact that the stimulus should have been larger is a separate issue from how it was allocated.

[zipplewrath]

25. I agree

But what was spent, wasn't as well focused as it could have been.

[Oregone]

28. A lot of people did

Thats why this data you love was so widely circulated during the debate (here and other places)



EPI's take on tax cuts:

"Less than half the personal tax cuts, or rebates, are likely to be spent in the first two years. The rest will be used to pay down debt, build savings or buy imports—none of which help boost the U.S. economy. Therefore, the cumulative impact of tax rebates will be much lower than that of public spending."

http://www.epi.org/analysis_and_opinion/entry/public_investment_far_better_than_tax_cuts/

More:

http://www.epi.org/analysis_and_opinion/entry/obama_stimulus_plan_is_smart_necessary_--_except_business_tax_cuts/

[ProSense]

31. That is simply showing bang for buck, it doesn't show the allocation of the stimulus. In fact,

as I pointed out before that is a chart from 2008. Here is a similar and more recent chart, which includes some of the provisions of the current stimulus:




Still, here is a chart of the actual stimulus:

[Oregone]

32. "No one ever claimed the spending was poorly focused"

:rofl:

I guess it depends on what you mean by "poorly focused". I take that as not at maximum efficiency, due to allocating funds towards stimulatory methods that have less bang-for-buck than other methods those funds could otherwise be directed towards.

Moody's models illustrate (consistently, despite what year you pick) that the allocation of funding towards tax cuts will inject less money, dollar for dollar, into the economy than infrastructure spending. A stimulus that failed to heed this model would be what I would call "poorly focused".

But feel free to parse your way out of this one.

[ProSense]

34. Do you understand what you're saying?

"Moody's models illustrate (consistently, despite what year you pick) that the allocation of funding towards tax cuts will inject less money, dollar for dollar, into the economy than infrastructure spending. A stimulus that failed to heed this model would be what I would call 'poorly focused'."

The chart is two years old, and even the current version makes no assesment about how the stimulus was allocated. In fact, the chart shows that unemployment offers the biggest bang, and among the tax cuts in the current stimulus, there were unemployment tax credits.

[Oregone]

37. "The chart is two years old"

Oh God, thats a foolish response. Reminds of this thread when you first saw this data:
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=433&topic_id=364819#364958

:rofl:


"the current version makes no assesment about how the stimulus was allocated"

Its not intended to make any assessment on its own. This model can be used in conjunction with a designed stimulus to determine how efficient its spending may be. Thats why this data was often applied in late 2008 & early 2009 regarding stimulus proposals.

[ProSense]

38. "Its not intended to make any assessment on its own."

Then why are you offering it as a response to a statement about the actual allocation of the stimulus?

As for the link you provided, the response is the same as when you first posted it.

[Oregone]

39. Because it was "often applied in late 2008 & early 2009 regarding stimulus proposals"

:rofl:

You don't actually read people's posts do you?!?

Oh God...you are too, too funny.

Moody's models were all over the place in the early stimulus debate. Models that you seem to not recall ever being expose to until recently. Heh :)

[ProSense]

40. It isn't that funny, and it still doesn't make the chart an actual assessment of the stimulus. n/t

[Oregone]

42. Its not an assessment. Its a projection

These models were applied during the development of the stimulus to estimate how efficient it would be (and most authorities found the tax cuts sorely lacking and having a negative impact on the stimulus' efficiency).

Look. I realize you don't understand this. Thats no reason to continue mucking and trying to parse language to make yourself look "right". When you are drowning, you are drowning

[ProSense]

44. A model is not an assessment of the actual allocation.

You don't seem to understand that.

[Oregone]

46. For the love of God....use your brain

This model was used to assess the proposals. It does nothing on its own but present data on stimulus methods. Ive already provided you with an assessment using this model in conjunction with a stimulus proposal.

Thats why it made its rounds during the stimulus debates here, there, and everywhere.

[ProSense]

49. It was used to assess how the program should be designed.

It has nothing to do with the actual allocation, and any dispute of it.

[Oregone]

50. Head, meet wall

Im not even sure if you are sure of what you are saying anymore

This thread is titled: "A review of the debate and reality of the first stimulus package."

Yes, and this was part of the debate on that package. The debate was about "how the program should be designed"

Are you just parsing words again to try and make yourself look "right". Isn't this about the point in the thread where you throw in an irrelevant link? Sometimes its better to http://en.wiktionary.org/wiki/save_face">save face

[ProSense]

51. While you quote the title of the thread, your comment seems to have left out something

"reality"

How the program should be designed is the debate. It's actual size and how it was allocated is the reality.

[Oregone]

54. Yep, if allocation slightly shifted right before passing, it invalidates prior analysis completely

[Oregone]

41. Example of its application in the stimulus debate:

Recovery plan creates millions of jobs by any estimate
John S. Irons
January 14, 2009

...

The EPI estimates use multipliers derived by Mark Zandi for various kinds of stimulus.<3> These multipliers range from 1.73 for an increase in food stamps, to 0.25 for accelerated depreciation provisions for businesses. The EPI analysis assumes about $300 billion is in the form of tax cuts, with half of that for business; about $200 billion for aid to state governments; about $160 billion over 2 years for infrastructure; and the remainder is for unemployment insurance and assistance to low-income consumers.

Since tax cuts generally, and certain kinds of tax cuts for businesses in particular, tend to have a smaller per-dollar impact on gross domestic product than does direct spending, differences in assumptions about the size of tax cuts vs. spending increases will impact final job creation estimates. For example, our estimates suggest that reallocating $100 billion in business-related tax provisions (such as accelerated depreciation allowances or cuts in corporate taxes) to other recovery components could lead to approximately an additional 600,000 jobs, for a total employment increase of 5.6 million over 2 years.

...

<3> M.Zandi. Written Testimony Before the U.S. Senate Budget Committee “The Economic Outlook and Stimulus Options” November 19, 2008, at http://www.economy.com/mark-zandi/documents/Senate_Budget_Committee_11_19_08.pdf

http://www.epi.org/analysis_and_opinion/entry/recovery_plan_creates_millions_of_jobs_by_any_estimate

Yes, people were most certainly looking at the allocations and making arguments about the efficiency (focus) of this stimulus

[ProSense]

43. "people were most certainly looking at the allocations and making arguments about the efficiency"

You just posted something about the job creation impact, not an assessment critical of the allocation. In fact, the piece opens with:

The Obama transition team recently released a report estimating the impact of the President Elect’s Recovery and Reinvestment program.<1> The analysis by economic advisers Jared Bernstein and Christina Romer suggested that a 2-year $775 billion recovery package would create 3.7 million jobs by the end of 2010. These jobs would be spread throughout the economy with over 90 percent of jobs created in the private sector.

Recent analysis by EPI suggests a similar impact of theprogram. Our preliminary analysis suggests that a $775 billion program would likely create approximately 5 million jobs.<2> Both estimates are built using similar economic models; however, slight differences in assumptions—including impact multipliers, underlying assumptions about the evolution of GDP, and the assumed composition of the package—would account for the differences between the two figures. Given the uncertainties involved in this kindof estimation, we view our estimates to be roughly consistent with the estimates from the Obama team. As further details emerge on the plan, we anticipate refining our estimates.

The piece ends with this:

Thus,expanding the package beyond its current size would seem appropriate.

Which is the entire point of this thread, a look at the debate in relation to the size of the package.

[Oregone]

45. "not an assessment critical of the allocation"

our estimates suggest that reallocating $100 billion in business-related tax provisions (such as accelerated depreciation allowances or cuts in corporate taxes) to other recovery components could lead to approximately an additional 600,000 jobs, for a total employment increase of 5.6 million over 2 years.

That was based on Zandi's 2008 bang-for-buck data!

:rofl:


* GURGLE *


* GURGLE *


....


Drowning

[ProSense]

48. " The EPI analysis assumes about $300 billion is in the form of tax cuts

...with half of that for business."

An assumption prior to the package actually passing.

The stimulus tax cuts were even lower, at $275 billion, and more targeted to other stimulus like tax credits for unemployment, the things that offer a higher bank for the buck.

Again, EPI assessment was really about the job creation impact, and the EPI agreed with the administration's projection.

In fact, there was only $51 billion for business (much less than $150 billion), including only $5 billion for depreciation.

So, again, the actual allocation was not disputed.

The EPI did conclude that increasing the overall package was necessary.

[Oregone]

52. Are you still arguing that people didn't debate the focus/efficiency on the stimulus?

"No one ever claimed the spending was poorly focused"

Do you think they didn't do this before, during, and after the bill passed (in all its different proposals and forms)? Your argument is essentially people weren't operating on the EXACT figures, so it invalidates their entire analysis. As the figures changed, Zandi's data was constantly being reapplied by multiple economists.

That is a silly argument you are attempting to win a point. Im not sure what date range and what figures you would accept for a valid argument. You really like to move goal posts, I take it, and parse out words. The reality is the composition of the bill was constantly being examined and criticized, and Zandi's figures were a fundemental tool used to anaylize the bill and make projections on its efficiency. Sorry you slept through that.



"The stimulus tax cuts were even lower, at $275 billion"

Oy, yes, they were only 92% as much as the proposal the EPI was analyzing! Oh wow...what a drastically different reality. This TOTALLY invalidates any point they make...Oh God.....now you are just talking nonsense. Its great...please don't stop.



"The EPI did conclude that increasing the overall package was necessary. "

So do you agree more Keynesian stimulus is needed?

[ProSense]

53. Is there a reason why you're mischaracterizing my original claim?

My claim: "No one ever claimed the spending was poorly focused"

My point still stands, and it has nothing to do with the debate. It was a statement about the actual package.

[Oregone]

56. Im not even sure what you would accept as proof that people were critical of the composition of it

As far as I remember, it was a recurring theme at the time. I wondered myself if the http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=389&topic_id=5004950">funds would be spent most efficiently

I mean, was this forum in a vacuum, or were people posting even here asking things about http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=389&topic_id=5010207">stimulus scenarios

We know for a fact that in January 2009 even Krugman was highly critical of the level of tax cuts being included in this bill. I just don't get what you are asking for. I think you are making a wild claim. Your method of holding and affixing this believe involves moving goalposts.

[ProSense]

58. You're still linking to the same model. Also,

As far as I remember, it was a recurring theme at the time. I wondered myself if the funds would be spent most efficiently

I mean, was this forum in a vacuum, or were people posting even here asking things about stimulus scenarios

Now that's funny.

:rofl:

[Oregone]

59. Of course I am

And you are still in denial.

Its always been an inefficient stimulus, and most people with their heads removed from their ass have always known it.

[ProSense]

60. "Its always been an inefficient stimulus" No,

it's considered an insufficient stimulus.

[Oregone]

61. *facepalm*

:rofl:

You really don't understand economic issues, do you? You think you pretty graph tells it all, right?

That graph says NOTHING regarding the efficiency of the stimulus. The only way to do that is analyze the direct GDP growth and compare it to the money used to make that happen (bang for buck...ring a bell?). With the multiplier factors associated with the large chunk it sent out in tax cuts, it was anything but optimally efficient.


"it's considered an insufficient stimulus."

It was that too. Does that mean you want another stimulus?

[ProSense]

62. "That graph says NOTHING regarding the efficiency of the stimulus. "

Is that clever?

Do you think the graph that shows a dramatic turnaround would actually show an even more dramatic turn around if the stimulus had been allocated differently?

Are you saying the stimulus was adequate, but inefficient? That by simply altering the allocation formula the chart would show a more improved situation?

Really?

[Oregone]

65. GDP growth and the lagging indicator of jobs would have been more dramatically increased, yes.

Of course, any stimulus is beneficial to varying degrees; putting money into the economy is not zero sum, so of course we saw a reaction from what was implemented, even if it wasn't optimally efficient.

Conversely, are you suggesting in their omniscience that they picked the absolute most perfect composition of stimulus for the economy that could not be surpassed in any manner in terms of job growth? I think that would be a foolish belief to cling to.


"Are you saying the stimulus was adequate, but inefficient?"

I have issues with both the size and scope (both of which, http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=389&topic_id=5016016">Obama declared as "right", though Krugman disagreed to in that article (especially the tax cuts))


"by simply altering the allocation formula the chart would show a more improved situation?"

While I wish they could have altered both, the arbitrary, politically-safe package ceiling may of been less negotiable than the composition.


That aside, why won't you answer the question? Are you advocating for additional stimulus?

You wouldn't be alone....

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=3776437">Zandi (03-10-2009): “I think another stimulus package is a reasonable assumption because of the way things are going.”

[Oregone]

47. "Which is the entire point of this thread..."

BTW, are you in agreement that more Keynesian stimulus is needed, or are you just a Monday-Morning Quarterback playing a game of Gotcha?

Seriously...is this thread to bash people who "guessed wrong" (credit to Biden), or are you here to advocate more stimulus?

Or what?

[paulk]

35. by the time the stimulus passed

he was saying that $600 billion was not enough.

He changed his mind with the changing circumstances...

I don't see how what he originally thought was enough is relevant

[ProSense]

36. Well,

I understand that.

"I don't see how what he originally thought was enough is relevant"

It's relevant to a review of the debate. In fact, the President did advocate a near $1 trillion stimulus.

Krugman would surely have been a lot happier with a $1 trillion package.

The reality is that $787 billion while less than most would have liked to see passed, is the amount that Congress was able to deliver.

[KeyWester]

7. Am I reading this right ?

Krugman says we need a stimulus of about 600 billion.

But when the stimulus gets passed it's almost 900 billion and he then claims it's to small ?

[ProSense]

9. He later advocated

for a larger stimulus package. The fact is that despite the tax cuts ($275 billion), which included stimulative spending such as tax credits for unemployment, home buyers, cash for clunkers and home energy, the stimulus spending was more than $500 billion.

Krugman did not advocate that these things shouldn't be included, he wanted more spending. The fact is that amounts near $1 trillion were considered, but the Congress cleared only $787 billion.

[KeyWester]

12. I don't get it ...

He said he wanted 600 billion for stimulus spending.

He then admits that 650 billion of the package was for stimulus spending, and then claims it's to small ?

In my world, 650 is larger than 600.

The $787 billion stimulus is not nearly enough to fill the "well over $2 trillion hole" in the economy, Krugman said. "A fair bit of the bill is not really stimulus," he adding, noting that just about $650 billion would actually spur consumer spending and other types of stimulus.

[ProSense]

15. Krugman would have been

happier with a package that was $150 billion to $300 billion more allocated to spending.

Obviously, Congress had trouble passing a nearly $1 trillion package.

[Oregone]

26. EPI estimated about 3 trillion was needed in infrastruction stimulus

Ill see if I can find the link

On edit: After rebrowsing what I read a year ago, they were making this figure not based on filling the output gap specifically, but filling the need of infrastructure investment. It could be debatable if they thought this was "overkill", but thats moot if this killed two birds with one stone:

http://www.epi.org/economic_snapshots/entry/snapshots_20090204/

[Better Today]

55. Sounds about right, as well as the right focus. The stimulus should be based on what

our infrastructure requires. If 9/11 was GWBs boon to head into two wars and use up our national treasure, then I hate to say we need an infrastructure failure beyond the level of the Minneapolis bridge collapse to become the keystone argument for infrastructure updating and re-vamping that will lead to job stimulus.

[Enrique]

33. hey, we agree on something

we certainly need another stimulus. How much? Very big, imo.

[Oregone]

57. "we certainly need another stimulus."

Im not sure ProSense thinks this. I think this is a Monday-Morning Gotcha thread, rather than a constructive look ahead. While PS seems to acknowledge people may have "guessed wrong" yesterday, PS will not advocate what we should do tomorrow (as far as I can tell)

Is this topic constructed as an apology for inappropriate action from the administration, or to propose we advocate for more action?

[depakid]

63. Under the bus with Krugman... again!

:rofl:

He criticized Obama!

:cry:

[ProSense]

64. That tired cliche does not apply to this thread. n/t

[Moochy]

66. awesome review