Tuesday, February 10, 2009

Since I can't let paT keep driving this ship into the port-side bank...

I give you an alternate theory on the 'stimulus' package being oinked up by both houses of Congress currently. The 'Do-Nothing' theory. Actually, I don't give it to you, because I'm not an economist. Fortunately, Walter Williams is.

Mr. Williams cites historical precedent in that the proposed 'stimulus' plan will in fact, have decidedly the opposite effect:

In 1929 came an economic downturn, most notably featured by the stock market collapse, after which came massive government intervention — you might call it the nation's first stimulus package.

President Hoover and Congress responded to what might have been a two- or three-year sharp downturn with many of the policies President Obama and Congress are urging today. They raised tariffs, propped up wage rates, bailed out farmers, banks and other businesses, and financed state relief efforts.

When Franklin Roosevelt came to office, he became even more interventionist than Hoover and presided over protracted depression where the economy didn't fully recover until 1946.

Never let a little thing like 'historical precedent' get in the way of a good spending orgy, right paT?


Not to be left out of the parade, Stephen Spruiell and Kevin Williamson of National Review Online chime in with their '50 De-Stimulating Facts'. Of note, a large chunk of your tax dollars appropriated to one of paT's favorite punching bags, the Army Corps of Engineers -


The problem with trying to spend $1 trillion quickly is that you end up wasting a lot of it. Take, for instance, the proposed $4.5 billion addition to the U.S. Army Corps of Engineers budget. Not only does this effectively double the Corps’ budget overnight, but it adds to the Corps’ $3.2 billion unobligated balance—money that has been appropriated, but that the Corps has not yet figured out how to spend. Keep in mind, this is an agency that is often criticized for wasting taxpayers’ money. “They cannot spend that money wisely,” says Steve Ellis of Taxpayers for Common Sense. “I don’t even think they can spend that much money unwisely.”


Folks, this bill is bad news for everyone remotely involved. If this is the first spending salvo from this, hopefully blessedly short administration, what's next?

7 comments:

Cousin Pat from Georgia said...

"Never let a little thing like 'historical precedent' get in the way of a good spending orgy, right paT?"

Again, and I don't know how many times I can say it: I don't like this bill, and have constantly enumerated what I would rather have seen and how I would rather have seen this presented.

But I don't like calling it "pork" when it ain't, and when many, many, many parts of the bill (before negotiations began) are money spent on infrastructure, education and capital projects where the Federal government spends money anyway.

There is also precedent that, spending money on infrastructure, education and modernization actually does stimulate the economy. Two of the most major examples being the states of Georgia and North Carolina.

And then there is the disconnect: if tax cuts alone create sustained economic growth, WTF was going on for the last 8 years? That's a very real and very immediate historical precedent. I also don't remember the 80's being much financial fun for anyone who didn't have a stock portfolio or a hair-metal band.

But what will win out here, either way, is competency. If business is not run competently, it doesn't matter how many tax breaks you give it, it fails. If government is not run competently, it doesn't matter how many programs it has, it fails. We'll know very, very quickly what works and what doesn't.

Because of recent events, a lot of folks aren't too receptive to the "more tax-cuts" lines of the last 8 years because of where we have landed right now.

And, for the record, I would love to sing praises to the USACOE for fixing the levees, making navigation more efficient and restoring the coast. They're working on their credibility right now, because they didn't have a lot of "benefit of the doubt" after 8-29-05.

S.A.W.B. said...

A couple of counter points -

But I don't like calling it "pork" when it ain't, and when many, many, many parts of the bill (before negotiations began) are money spent on infrastructure, education and capital projects where the Federal government spends money anyway.

Color me stupid, but, isn't that what we have a FEDERAL BUDGET FOR? Why are we funding things that should be funded within the normal confines Federal Budget? Because funding it now will 'stimulate' it sooner rather than in June, or August, or Never, in the case of the 2008 budget that never was? This is why the bill is full of 'pork'. It's needless spending on things that are/will be funded anyway if/when the jerks in Congress can get around to passing a budget.

And then there is the disconnect: if tax cuts alone create sustained economic growth, WTF was going on for the last 8 years? That's a very real and very immediate historical precedent. I also don't remember the 80's being much financial fun for anyone who didn't have a stock portfolio or a hair-metal band.

Please see the following chart - Dow Jones Industrial Average historical chart

scan around as you like, but pay particular attention to the portion from on or around Jan 2 1980, near where Ronald Reagan took office, to Jan 2 1989, when Reagan left office. The DJIA rose steadily, out of the Carter recession, almost 200%.

Now, take a look at 'The Last 8 Years' as you're so fond of speaking ominously of them. The fact that we didn't enter a massive recession/depression after 9/11, and in fact, nearly doubled the DJIA from a low in July of '02 to a high in July of '07 speaks volumes to the effectiveness of the Bush Tax Cuts.

patsbrother said...

Give a little, take a little. Note the figure listed for Reagan's terms.

"In its fact sheet issued after the January [2007] employment numbers were released, the White House reported that "real after-tax income per person has risen by 9.8 percent" since 2000. Two facts should be kept in mind. First, the average annual rate of increase (1.6 percent) is less than the average annual rate during the Carter administration (1.9 percent), the Reagan administration (2.5 percent) and the Clinton administration (1.8 percent). Second, the national debt has increased by more than $3 trillion (i.e., more than $500 billion per year) since Mr. Bush entered office, presaging large tax increases in the future. (The national debt actually declined by more than $100 billion in 2000.)"

http://www.washingtontimes.com/news/2007/feb/24/20070224-101332-7083r/

Dante said...

"But I don't like calling it "pork" when it ain't..."

And I don't like people calling it "stimulus" when it ain't, but what are you gonna do?

"Color me stupid, but, isn't that what we have a FEDERAL BUDGET FOR?"

I think that has a lot to do with the current attitude towards this bill. These thing are so important that we did absolutely nothing about them until now. How is this not waste when it wasn't worth the cost before now?

Cousin Pat from Georgia said...

"Color me stupid, but, isn't that what we have a FEDERAL BUDGET FOR?"

"And I don't like people calling it "stimulus" when it ain't, but what are you gonna do?"

"Again, and I don't know how many times I can say it: I don't like this bill, and have constantly enumerated what I would rather have seen and how I would rather have seen this presented."

I guess we'll just have to be happy driving the ship around in circles on this one.

The only possible explanations I can think of include: perhaps Congress didn't want to negotiate with the Bush White House last year over a budget, so they kept things going with continuing resolutions to see how the election turned out. The GOP was cheered last time they played hardball on a budget.

Or: the Dems overestimated how much a stimulus was desired by Americans. Kind of like how the GOP always puts extra non-military spending nuggets in "pay for the troops" bills, the Dems thought they could do it with this because of the need for a stimulus.

Or: the Dems wanted to kick-start major budget changes with items in the stimulus.

Or: Congressional Dems can't think beyond the current pending legislation. My opinions of Reid, Pelosi, Waxman, Rangel & Frank are well known.

But there's probably some other reason for it.

Cousin Pat from Georgia said...

SAWB: The things that really strike me about the chart you link to are

1. that the years with the least extreme wavelenths appear to be 1943 - 1963 and 1990 - 2000,

2. the economy appears to have constantly risen except for during the years between 1963 and 1983,

3. I'd sure like to see an expansion of this chart so that the higher 1000's of the DJIA aren't compressed, that 7000+ jump during the Clinton administration sure would look nice.

Cousin Pat from Georgia said...

And then, of course, there's this selection of quotes that bend the mind.