The Stimulus Seems to have failed

[BeAChooser]

there is no evidence to support any other conclusion then job losses would have been even higher without the stimulus.

You are wrong. There is the history of recession after recession where stimulus and no-stimulus approaches were tried. And based on that data set, the overwhelming likelihood is that the stimulus has prolonged and deepened the recession from what it would have been had the government not massively intervened. Why can't you liberals learn from history? Ever.

 

[lomiller]

You are wrong. There is the history of recession after recession where stimulus and no-stimulus approaches were tried. And based on that data set, the overwhelming likelihood is that the stimulus has prolonged and deepened the recession from what it would have been had the government not massively intervened.

By all means show us this “data”, because the last time “no stimulus” was tried for anything more then a mild recession we ended up with the great depression. I think it’s a fairly safe bet that “no stimulus” was tried in the half dozen depressions before that.

 

[BeAChooser]

By all means show us this “data”, because the last time “no stimulus” was tried for anything more then a mild recession we ended up with the great depression. I think it’s a fairly safe bet that “no stimulus” was tried in the half dozen depressions before that.

You're problem is that you not only never bothered to learn any history, you won't even pay attention when history is discussed on this forum, as it was in this very thread. And do you really think there was "no stimulus" tried in the Great Depression? FDR is probably rolling over in his grave.

 

[BeAChooser]

Here's a good contrast in approach …

http://townhall.com/columnists/LuritaDoan/2010/07/19/reaganomics_rules_-_obamanomics_fools/page/full

Reaganomics Rules - Obamanomics Fools

 

[BobTheDonkey]

Here's a good contrast in approach …

http://townhall.com/columnists/LuritaDoan/2010/07/19/reaganomics_rules_-_obamanomics_fools/page/full

Being as that site has an ad for Beck...I'm going to go ahead and say it's probably full of ********.

Now, I'm going to read it, and find just where this ******** is.


Oops, didn't even make it past the 2nd paragraph. I think I'm not even going to bother reading the entire article. Suffice it to say, you have yet to substantiate your argument and/or refute those presented in support of the stimulus.

You have claimed that lowered taxes would have helped the economy more than this stimulus package, all without acknowledging that this stimulus package was mostly tax cuts. Unfortunately for you, you cannot have it both ways.

ETA: Yay! for blogs. Want me to find a few blogs supporting Obama's economic plans? I'd bet I could. Would it add any actual weight to any arguments in this discussion? Nope, not a bit. Same as your blogs

 

[kevinquinnyo]

I've been following this thread (lurking mostly) and it seems that many of you refuse to accept that the stimulus has failed.

The "snake oil" argument seems to be the only argument against his (BeAChooser's) reasoning, whereby you state that, without this snake oil, your cancer, (that you still have, and has actually gotten worse) would be EVEN WORSE, so we should all be thankful that we took a bath in it.

It's not a valid argument. It's just speculation.

Despite that, BAC has argued and provided evidence that during times of recession/depression, throughout history, massive stimulus has not improved the situation compared to little government intervention.

This seems to contradict the dubious snake oil argument that so many of you are clinging to out of desperation.

And I resent the ad hom partisan attacks on BAC. If you disagree with him, then present an argument. You will not prove him wrong by calling him a republican shill. Whether he is or is not doesn't change the facts.

Facts are facts. The stimulus seems to be a big, fat failure. If anyone can present a valid counterargument, I would love to hear it. But I'll stick to traditional medicine, so if you have a snake oil type argument, save it. I like actual facts, not speculation.

 

[Malerin]

Not unanswerable. We have the data: two million jobs lost since the stimulus was passed. Record long-term unemployment, collapse of the housing market, depressed consumer sentiment, etc. Objectively, it's failed.

Proponents can only make the counterfactual argument that there would have been four million jobs lost without it. Of course opponents can also make counterfactual claims: the economy would have gained a million jobs without so much government interference. That's the beauty of counterfactuals.

But on the objective evidence, the stimulus has failed spectacularly.

Speculative, not objective.

Nothing I said was speculative. The objective facts are 9.5% unemployment, abyssmal housing market, etc. This is not speculative. This is what we measure the stimulus against.

The stimulus failed to achieve stated goals, but that does not mean it has had a negative or neutral effect. The truth is, we can never know what would have happened without it.

Again, we're back to hypotheticals. We can't go back in time. Maybe things would be a lot worse. Maybe they'd be better. We don't know. All we know is, a year and a half since the stimulus passed, things are not good right now. That is objective fact.

There have, without a doubt, been jobs created and/or saved through the stimulus package. There have also been further unforeseen economic problems - notably the meltdown of the Greek economy and the oil spill - that have hindered job creation and market growth.

You'd be hard pressed to spend $700 billion+ without creating/saving jobs. But the title of the OP is "The Stimulus Seems to Have Failed". Are you disputing this? Can you cite any prediction by proponents of the stimulus that we would have near 10% unemployment over a year later?

Personally, I would like to have seen the stimulus targeted differently. Interestingly, this article in The Washington Post in Feb 2009 had this to say:

[C]ongressional negotiators have since trimmed billions of dollars from the package to satisfy Senate Republicans, diminishing its potential for job creation along with its overall cost.
...
Many analysts had been more optimistic about the House version of the stimulus bill. At $820 billion, it was not much bigger than the final package agreed to Wednesday by a House-Senate conference committee. But the House version contained about $50 billion more in direct government spending -- such as payments to state governments and cash for school construction -- which economists say is spent quickly and ripples broadly through the economy. The final package, by contrast, is weighted more heavily toward tax cuts, which have a less powerful effect, according to many economists, because taxpayers tend to save a portion of the money.

Most of those changes originated in the Senate, where Democrats needed the votes of three moderate Republicans to clear a procedural hurdle. Among the biggest changes: the addition of a $70 billion provision to protect millions of taxpayers from the alternative minimum tax, a measure Congress was universally expected to approve anyway.

my bold
[/quote]

I agree with you. It was a mishmash of poorly thought out tax cuts, aid to state and local govt's and a smattering of infrastructure. But it failed. That's the salient point.

So, not only was the bill watered down due to Republican opposition, the bill wound up cutting taxes more than direct spending - so the claim by BaC that tax cuts would have been more effective is belied by the fact that the stimulus was mostly tax cuts.

It would appear, therefore, that BaC has been caught arguing against the stimulus simply because it was a Democratic led/passed bill, not because of what was actually contained within the bill.

BAC's claim, as far as I understand it, is the title of the OP: The Stimulus Seems to Have Failed. Why it failed is a whole nother topic, but we can't move on till we get a consensus that it actually failed. There are too many people still peddling the snake-oil argument that we would be even sicker without a stimulative tonic. This is supposed to be a skeptical crowd. Put the partisan blinders aside and admit that it didn't work. For whatever reason.

And, yes, I know. I'm sure there will be a "Hung by your own petard" post against myself (and most of those who have claimed the stimulus was not a failure) claiming that we are supporting a stimulus that relied on tax breaks while showing that tax breaks are ineffective. Surprisingly, these are not contrary positions. I, at least, have not claimed that the stimulus was a smashing success. Rather, my claim is that we cannot know whether it had any overall effect. We only can be sure that jobs have been saved/created and money has continued to flow, even if only in some small part.

Not knowing if a $750 billion bill had "any overall effect" is a failure, in and of itself.

 

[Malerin]

There are good numbers of how many jobs were directly created by the stimulus, economists are pretty good at that sort of thing. We also have solid numbers on the total job losses despite those gained by the stimulus, these are done by the same economists so you really can’t doubt one but accept the other. From that point it’s math.

You are correct anyone could claim any number they liked but there is no evidence to support any other conclusion then job losses would have been even higher without the stimulus. There are always going to be some who will chose to believe the political dogma however. IOW just saying something is counter-factual over an over doesn't make it so.

You're wrong. The proponents of the simulus cannot point to the economy, as it is, and claim success. That would be laughable. So the only thing they have is "Things would have been a lot worse without the stimulus". That's an unprovable counterfactual argument, whether you like it or not.

 

[BobTheDonkey]

...snip...

But it did have an effect. It might not have had the stated effect (for reasons unforseen at the time the bill was passed), but that does not diminish that there was a positive effect.

Call it snake oil all you want, but it doesn't change that jobs were created/saved via this stimulus. Therefore, in that respect, it was successful.

Call it snake oil all you want, but it doesn't change that it helped keep money flowing into the economy. Therefore, in that respect, it was successful.

One of you (Kevin) claims we're (those of us who don't agree the stimulus failed) making ad-hom attacks against BaC's partisanship (which, by the way, is an accurate assessment of BaC's arguments thus far), the other turns around and accuses us of wearing partisan blinders. The hypocrisy/irony is absolutely astounding.

I think you both (Kevin and Mal) fail to recognize that your pal BaC over there - he has been arguing for tax cuts. Tax cuts, coincidentally, are what this bill was based in large part on. Therefore, it is not merely an ad hom attack to state that it would appear BaC's issue is not with the stimulus itself (as that wouldn't quite make sense - he's for tax cuts, just not those tax cuts?), but with who passed/stumped for the stimulus. That, whether you choose to agree or not, is partisan politics.


I'm not quite as liberal as you would believe. I did not vote for Obama in the last election.

I do, however, believe that the basis for the current recession is due, in large part, to a freeze in money flow instituted by the banks. The only way to counter that freeze in money flow (if no money is flowing, then no economy exists, btw) was for the Fed to spend money.

As for BaC's graphs and arguments in regards to past stimulus packages, I believe they have been quite handily dealt with.

 

[ideogram]

OK, this is what I'm looking for:

- Cases where recessions/depressions were ended in a relatively short time through cuts (or at least no or very minor increases) in government spending, taxes and regulations. I listed lots of these in this thread.

Are you talking about this:

I point you to examples like the recessions and depressions that took place in 1837, 1893, 1921, 1815, 1873, 1958 and 1979.

It seems to me the U.S. economy in the 19th century would be vastly different from today. Can you explain to me why that is not important?

- Cases where recessions/depressions did not end in a relatively short time after cuts (or at least no or very minor increases) in government spending, taxes and regulations. And as far as I can tell there are hardly any of these.

- Cases where recessions/depressions ended in a relatively short time after massive government intervention of the sort pushed by Obama and the democrats (and admittedly, Bush). And as far as I can tell, there are none of these.

- And, finally, cases where recessions/depressions ended after a long period of time following massive government intervention. And there are several of these.

So how many data points do we really have?

 

[ideogram]

What is your understanding of the "liquidity trap"?

 

[ideogram]

I cannot believe you are trying to drag me into an argument between Nobel Prize winners.

 

[YoPopa]

....
I do, however, believe that the basis for the current recession is due, in large part, to a freeze in money flow instituted by the banks. ....

Worst analysis of the cause of the recession ever.

 

[BeAChooser]

You have claimed that lowered taxes would have helped the economy more than this stimulus package, all without acknowledging that this stimulus package was mostly tax cuts.

You have an odd definition of the word "mostly". Does socialist math now make 36% mean "most"? Because only 36% of the $787 billion was in the form of "tax cuts" (http://uk.reuters.com/article/idUKN1248080420090217?pageNumber=1&virtualBrandChannel=0 ) and I use the word "cuts" skeptically. Let me explain why.

You forget to mention that almost all of those tax "cuts" were actually tax "credits". Tax credits to low income workers, for example, most of whom actually pay no income tax. And tax credits for children to people already on welfare. Now a tax credit works like this. Say you don't make enough money to even pay taxes. A tax credit means the government still sends you a check. So a tax credit really isn't a cut at all. It's additional spending that the government has to come up via more debt. It's really a delayed tax because someone will eventually have to pay that debt through increased taxes.

You also forget that tax cuts in the form of tax credits don't have any effect if the event that's supposed to allow a reduction in a tax never takes place. The stimulus bill allowed, for example, $2500 in tax credits for college expenses and $8000 in tax credits for first time homes purchased in 2009. But how much of the amount they estimated that would be "credited" actually was "credited"? Remember, there was a recession and the housing market collapsed. Did the housing market come back? No. So, perhaps the government's prediction about first time home buyers didn't come to pass. A prediction that was wrong, just like their predictions about unemployment were wrong. Likewise, the bill offered temporary relief from the AMT (Alternative Minimum Tax) but how many people had AMT obligations in a year of deep recession? Probably fewer than expected.

Calling tax "credits", tax "cuts", is a cheat in yet another way. A true tax cut means that the government lets people keep more of their own money AND make decisions on spending all their money as they wish. But tax credits like the first home tax credit are actually attempts to influence people to spend their money a certain way in order to get rewarded. It's still the government mucking around with the economy, which often back fires as history has shown. Unintended consequences. In this case, perhaps people then got into homes over their head, which would only add to the mortgage crisis down the road and necessitate government relief to those buyers. Remember Obama's spending proposals to do just that?

No, I think what we have here is an attempt by you to not acknowledge the whole story.

 

[BeAChooser]

For those who are curious, here's what Obama said when he signed the "pay-as-you-go" law in February:

It’s pretty simple. It says to Congress, you have to pay as you go. You can’t spend a dollar unless you cut a dollar elsewhere. This is how a responsible family or business manages a budget. And this is how a responsible government manages a budget, as well.

It was this rule that helped lead to balanced budgets in the 1990s, by making clear that we could not increase entitlement spending or cut taxes simply by borrowing more money. And it was the abandonment of this rule that allowed the previous administration and previous congresses to pass massive tax cuts for the wealthy and create an expensive new drug program without paying for any of it. Now in a perfect world, Congress would not have needed a law to act responsibly, to remember that every dollar spent would come from taxpayers today – or our children tomorrow.

But this isn’t a perfect world. This is Washington. And while in theory there is bipartisan agreement on moving on balanced budgets, in practice, this responsibility for the future is often overwhelmed by the politics of the moment. It falls prey to the pressure of special interests, to the pull of local concerns, and to a reality familiar to every single American – the fact that it is a lot easier to spend a dollar than save one.

That is why this rule is necessary. And that is why I am pleased that Congress fulfilled my request to restore it. Last night, I signed the “pay as you go” rule into law. Now, Congress will have to pay for what it spends, just like everybody else.

Now I ask you folks, why is it so unreasonable that the GOP demand the unemployment extension be pay-as-you-go before they approve it? Why has Obama changed his tune and is now trying to mischaracterize the GOP as the Party Of The Rich, just for wanting to apply a law that he himself signed and praised in this fashion? Could it be desperation on his part to draw attention away from the Stimulus' failure and the absolute mess he's making of any hopes of recovery?

 

[lomiller]

You're problem is that you not only never bothered to learn any history, you won't even pay attention when history is discussed on this forum, as it was in this very thread. And do you really think there was "no stimulus" tried in the Great Depression? FDR is probably rolling over in his grave.

For all your talk of “learning history”, you seem fixated on your own special version of history that is different from what actually happened. The US economy went into recession in 1929 and the President at the time reacted with a policy of no government stimulus and a misguided attempt to balancer the budget. By 1932 when FDR took over unemployment was pushing 25%.

Four years of regulation and stimulus brought that back down to around 9%, but then the “no stimulus, balance the budget” forces took over and unemployment went back up to 16% and didn’t come back down until the massive government spending on WWII. Most people learned the lesson and we haven’t had that type of a downturn since, but apparently some people who didn’t learn history are aiming for a repeat.

 

[Chris L]

Iomiller, instead of attacking BeAChooser's version of history, perhaps you might want to explain why your opinion on the actual question of the thread, is better than his. The point is, neither you, nor I, nor anyone else can really go back to the exact set of circumstances and replay this economic experiment, so the "it would have been worse" argument tends to be unfalsifiable. That's why goals are set at the outset of a project and success or failure is measured by how close reality matched those goals. Any else is just BS.

 

[lomiller]

Iomiller, instead of attacking BeAChooser's version of history,

Why should I ignore erroneous posts?

The point is, neither you, nor I, nor anyone else can really go back to the exact set of circumstances and replay this economic experiment, so the "it would have been worse" argument tends to be unfalsifiable.

Popper would role over in his grave if he say the way ani-intellectual forces want to try and abuse his work.

As already pointed out (many times already) the number of jobs created/saved by the stimulus is directly measurable and is therefore absolutely testable.

The only way these jobs could have “not improved the overall situation” is if they are offset in by the stimulus itself offset these jobs in some unknown/undocumented fashion. This of course untestable until some mechanism is proposed and then would still be untested.

 

[ServiceSoon]

For all your talk of “learning history”, you seem fixated on your own special version of history that is different from what actually happened. The US economy went into recession in 1929 and the President at the time reacted with a policy of no government stimulus and a misguided attempt to balancer the budget. By 1932 when FDR took over unemployment was pushing 25%.

Four years of regulation and stimulus brought that back down to around 9%, but then the “no stimulus, balance the budget” forces took over and unemployment went back up to 16% and didn’t come back down until the massive government spending on WWII. Most people learned the lesson and we haven’t had that type of a downturn since, but apparently some people who didn’t learn history are aiming for a repeat.

Evidence? A graph would be great. I couldn't find anything out there.

 

[Chris L]

The only way these jobs could have “not improved the overall situation” is if they are offset in by the stimulus itself offset these jobs in some unknown/undocumented fashion.

The stimulus did not do what the proponents of it said it would do. That is the measure of failure or success. The administration laid out a specific result (less than 8.5% unemployment rate for example) that did not come to pass. Yes, I'm sure the bill helped some people, but that was not the stated goal. If the result does not reach (or exceed) your stated goal, you failed. That is the point of this thread, not "well he did better than the other guy would have".