Invisible jobs

Three Million Imaginary Jobs - The White House says the stimulus worked beyond even its hopes. Seriously.

Excerpt:

It may be that the last people in America who believe that the $862 billion economic stimulus of February 2009 created millions of net new jobs are Vice President Joe Biden and the staff economists in the White House. Yesterday, President Obama's chief economist announced that the plan had "created or saved" between 2.5 million and 3.6 million jobs and raised GDP by 2.7% to 3.2% through June 30. Don't you feel better already?

Christina Romer went so far as to claim that the 3.5 million new jobs that she promised while the stimulus was being debated in Congress will arrive "two quarters earlier than anticipated." Yup, the official White House line is that the plan is working better than even they had hoped.

We almost feel sorry for Ms. Romer having to make this argument given that since February 2009 the U.S. economy has lost a net 2.35 million jobs. Using the White House "created or saved" measure means that even if there were only three million Americans left with jobs today, the White House could claim that every one was saved by the stimulus.

The White House also naturally insists that things would be much worse without the stimulus billions spent on the likes of Medicaid payments, high speed rail projects, unemployment benefits and windmills. Mr. Obama said recently in Racine, Wisconsin that the economy "would have been a lot worse" and the unemployment rate would have gone to "12 or 13, or 15 [percent]" if government hadn't spent all of that money.

This is called a counterfactual: a what would have happened scenario that can't be refuted. What we do know is what White House economists at the time said would happen if the stimulus didn't pass. They said the unemployment rate would peak at 9% without the stimulus (there's your counterfactual) and that with the stimulus the rate would stay at 8% or below. (See the nearby chart.) In other words, today there are 700,000 fewer jobs than Ms. Romer predicted we would have if we had done nothing at all. If this is a job creation success, what does failure look like?

All of these White House jobs estimates are based on the increasingly discredited Keynesian spending "multiplier," which according to White House economist Larry Summers means that every $1 of government spending will yield roughly $1.50 in higher GDP. Ms. Romer thus plugs her spending data into the Keynesian computer models and, presto, out come 2.5 million to 3.6 million jobs, even if the real economy has lost jobs. To adapt Groucho Marx: Who are you going to believe, the White House computer models, or your own eyes?

Comment: Word of the day - counterfactual

White House Overstates Job Growth

CBS: White House Overstates Job Growth - Number of Jobs Created or Saved Because of Stimulus Program Exaggerated, Review Finds

Excerpt:

An early progress report on President Barack Obama's economic recovery plan overstates by thousands the number of jobs created or saved through the stimulus program, a mistake that White House officials promise will be corrected in future reports.

The government's first accounting of jobs tied to the $787 billion stimulus program claimed more than 30,000 positions paid for with recovery money. But that figure is overstated by least 5,000 jobs, according to an Associated Press review of a sample of stimulus contracts.

The AP review found some counts were more than 10 times as high as the actual number of jobs; some jobs credited to the stimulus program were counted two and sometimes more than four times; and other jobs were credited to stimulus spending when none was produced.

Comment: We can't trust this White House

Stimulus dollars hard at work!

Response to Drudge Item on Recovery Act Funding - Statement from Agriculture Secretary Tom Vilsack

Excerpt:

"Through the Recovery Act, the U.S. Department of Agriculture has made $100 million available to the states for The Emergency Food Assistance Program (TEFAP), which acquires food that is distributed to local organizations that assist the needy – including food banks, food pantries, and soup kitchens.

The Recovery Act funds referenced in press reports allowed states to purchase ham, cheese and dairy products for these food banks, soup kitchens and food pantries that provide assistance to people who otherwise do not have access to food. This program will help reduce hunger of those hardest hit by the current economic recession.

The references to "2 pound frozen ham sliced" are to the sizes of the packaging. Press reports suggesting that the Recovery Act spent $1.191 million to buy "2 pounds of ham" are wrong. In fact, the contract in question purchased 760,000 pounds of ham for $1.191m, at a cost of approximately $1.50 per pound. In terms of the dairy purchase referenced, USDA's Farm Service Agency (FSA) purchased 837,936 pounds of mozzarella cheese and 4,039,200 pounds of processed cheese.

While the principal purpose of these expenditures is to provide food to those hardest hit by these tough times, the purchases also provide a modest economic benefit of benefiting Americans working at food retailers, manufacturers and transportation companies as well as the farmers and ranchers who produce our food supply."

Comment: so much for volume pricing! We send $$ to Washington ... they buy ham for $ 1.50 per lb. A better way ... tax us less ... give us our $$ back ... and we can buy it for .79 per lb.!

Obama "lowers expectations retroactively"

The President Moves the Economic Goalposts

Excerpt:

So what's a president to do when the promises he made about his economic stimulus program fail to materialize? If you're Barack Obama, you redefine your goals and act as if America won't remember what you said originally. That's a neat trick if you can get away with it, but Mr. Obama won't. His words are a matter of public record and he will be held to them.

When it came to the stimulus package, the president and his administration promised, in the words of National Economic Director Larry Summers, "You'll see the effects begin almost immediately." Now it's clear that those promised jobs and growth haven't materialized.

So Mr. Obama is attempting to lower expectations retroactively, saying in an op-ed in Sunday's Washington Post that his stimulus "was, from the start, a two-year program." That is misleading. Mr. Obama never said if his stimulus were passed things might still get significantly worse in the following year.

In February, Mr. Obama said this about the goals of his stimulus package: "I think my initial measure of success is creating or saving four million jobs." He later explained the stimulus's $787 billion would "go directly to . . . generating three to four million new jobs." And his Council of Economic Advisors issued an official analysis showing that the unemployment rate would top out in the third quarter of this year at just over 8%.

That quarter began on July 1, and unemployment is now 9.5%, up from 7.6% when Mr. Obama took office. There are 2.6 million fewer Americans working than there were on the day Mr. Obama was sworn in. The president says now that unemployment will exceed 10% this year, and his advisers say it will remain high through much of next year.

Earlier this year, Mr. Obama assured us that most of the stimulus money "will go out the door immediately." But it hasn't. Only about 7.7% of the stimulus has been spent in the six months since its passage, and more of it will be spent in the program's last eight years than in its first year. So now the president claims he said something different. "We also knew that it would take some time for the money to get out the door," Mr. Obama said in his weekly radio address on Saturday.

Comment: No surprises. Meanwhile the debt clock keeps ticking!

The Obama Stimulus: Predictions vs. Reality

'Catastrophe' language - President imitating Dr Evil

Obama a Mike Myers Fan

I have been wondering where Barack Obama and Nancy Pelosi got this stimulus idea from. I thought where could they find a plan like this, so laughable, so ridiculous. Now, I think I have found the source of the Democrats’ inspiration. Not FDR. Not LBJ. No, this plan is so much more Dr. Evil, complete with disaster rhetoric and the demand for ungodly amounts of money. I can see the prensident’s next slogan on his Stimulus Tour:

” We will never recover from this disastrous economy, that is unless of course you pay me one trillion dollars! Muhahahaha! ” - President Obama

USA Today: Obama: 'Catastrophe' if Congress delays stimulus

Excerpt:

President Obama said Wednesday the recession will turn into "a catastrophe" if the federal economic stimulus is not passed quickly, lobbying anew for the plan as its price tag climbed above $900 billion and drew more criticism.

Comment: hyperbole alert!!!

Updated - more from the Wall Street Journal: Obama's Rhetoric Is the Real 'Catastrophe'

Excerpt:

... every gloomy statistic on the economy becomes a harbinger of doom. As he tells it, today's economy is the worst since the Great Depression. Without his Recovery and Reinvestment Act, he says, the economy will fall back into that abyss and may never recover.

This fearmongering may be good politics, but it is bad history and bad economics. It is bad history because our current economic woes don't come close to those of the 1930s. At worst, a comparison to the 1981-82 recession might be appropriate. Consider the job losses that Mr. Obama always cites. In the last year, the U.S. economy shed 3.4 million jobs. That's a grim statistic for sure, but represents just 2.2% of the labor force. From November 1981 to October 1982, 2.4 million jobs were lost -- fewer in number than today, but the labor force was smaller. So 1981-82 job losses totaled 2.2% of the labor force, the same as now.

...

Repeated warnings from the White House about a coming economic apocalypse aren't likely to raise consumer and investor expectations for the future. In fact, they have contributed to the continuing decline in consumer confidence that is restraining a spending pickup.

Vote without reading

Excerpt:

GOP Leader Boehner Floor Speech Opposing Democrats' Trillion-Dollar Spending Bill

Comment: 1000+ pages ... just recently posted on House website. Democratic Senator Predicts None of His Colleagues 'Will Have the Chance' to Read Final Stimulus Bill Before Vote

Let's get it right ... not do what we "feel"

Obama warns of need for stimulus bill right away

The Action Americans Need

Direct Excerpts:

What Americans expect from Washington is action that matches the urgency they feel in their daily lives -- action that's swift, bold and wise enough for us to climb out of this crisis.

Because each day we wait to begin the work of turning our economy around, more people lose their jobs, their savings and their homes. And if nothing is done, this recession might linger for years. Our economy will lose 5 million more jobs. Unemployment will approach double digits. Our nation will sink deeper into a crisis that, at some point, we may not be able to reverse.

...

I reject these theories, and so did the American people when they went to the polls in November and voted resoundingly for change. They know that we have tried it those ways for too long. And because we have, our health-care costs still rise faster than inflation. Our dependence on foreign oil still threatens our economy and our security. Our children still study in schools that put them at a disadvantage. We've seen the tragic consequences when our bridges crumble and our levees fail.

...

So we have a choice to make. We can once again let Washington's bad habits stand in the way of progress. Or we can pull together and say that in America, our destiny isn't written for us but by us. We can place good ideas ahead of old ideological battles, and a sense of purpose above the same narrow partisanship. We can act boldly to turn crisis into opportunity and, together, write the next great chapter in our history and meet the test of our time.

Comments:

1. I personally buy the need for an economic stimulus. I may be wrong and you may dispute this, but I start my comments with this basis.
   
2. No stimulus package is going to be perfect ... hey it's Washington ... need I say more.
   
3. I sometimes spend money imprecisely - eg tomorrow I am having work done on a furnace vent. I have an imprecise estimate. Kathee will be there and sign off. It may be $ 253 ... or $ 312. I'm OK with either or between. Government spending, organizational spending, and probably your wife's spending is the same way.
   
4. But before we spend A TRILLIION ... let's get it right.
   
5. Bush (blame it on intelligence (not his own ... the CIA, etc) did not get WMD right! We may have gone to war anyway, but 5 more months or even a year would have been nice to "get it right"!
   
6. Obama's editorial is fear mongering. Example: "if nothing is done, this recession might linger for years. Our economy will lose 5 million more jobs. Unemployment will approach double digits. Our nation will sink deeper into a crisis that, at some point, we may not be able to reverse". Truth be told, if Washington did nothing ... in due time the economy would correct itself.
   
7. On his comment, "voted resoundingly for change". President Obama, we elected a President not a dictator. I didn't vote for you but I support you. I pray for you and I want to see you succeed! On the "change we can believe in" ... let's face it it's more of the partisan same! Lobbyists and tax scofflaws have been nominated by you to cabinet positions. That's not change!
   
8. This may not be the best way, but the absolute fastest way to give money back to the people (it is the peoples' money!) is for tax cuts. The stimulus bill as it stands is like Campbell's bean with bacon soup. Not much bean ... even less bacon and a lot of water! The proposed stimulus is like that ... a lot of fluff and not much stimulus.
   
9. The Republican minority can be your best friend, President Obama. Listen to them and negotiate with them. Don't expect them to roll over just because because people "voted resoundingly for change".
   
10. And my final point: Let's get it right. This is not chump change we are talking about ... this is A TRILLION DOLLARS. Washington has a long history of waste. How much of that Trillion will be wasted? If the generations after us have to pay for this, let's make sure that they are getting what they will be paying for.
    
11. I'm working on a small (large to me but small in light of the above) project. We've been working this since late November. It should have been completed. It is still in quality assurance. We haven't gotten it right to pass on to our customers. This stimulus package still isn't right!
    

Update: Centrists in Senate Push to Cut Billions From Stimulus

The effort is being led by two centrist senators, Ben Nelson, Democrat of Nebraska, and Susan Collins, Republican of Maine, who say they would like to pare from $50 billion to $200 billion from the package. The final Senate vote on the stimulus package is expected late on Thursday.

Among the initiatives that could be cut are $50 million for the National Endowment for the Arts, $14 million for cyber security research by the Homeland Security Department, $1 billion for the National Science Foundation, $400 million for research and prevention of sexually transmitted diseases, $850 million for Amtrak and $400 million for climate change research. But so far, none of the suggestions come close to being enough to shrink the package on the scale proposed.

Pelosi: channeling the ghost of Margaret Sanger

Commentary: Ridiculous items in stimulus plan

Excerpt:

I'd settle for removing more of the ridiculous items that House Democrats slipped into the legislation to advance their sociopolitical agenda. Like $350 million for child care on military bases. Or $335 million to prevent sexually transmitted diseases.

In normal economic times, there might not be anything wrong with this. But these aren't normal times. And these politically motivated giveaways do nothing to fight the recession.

Another such item, which was removed from the bill, was a plan to spend more than $200 million on birth control funding as a way of stimulating the economy.

Who could possibly defend such a thing? House Speaker Nancy Pelosi concocted an argument that was ridiculous and offensive. In fact, the argument was so bad that it might have single-handedly led to the demise of the funding, which some conservatives considered a giveaway to Planned Parenthood.

When ABC's George Stephanopolous asked Pelosi to explain how birth control helps the economy, here's what the speaker said: "The family planning services reduce cost. They reduce cost. The states are in terrible fiscal budget crises now, and part of what we do for children's health, education and some of those elements are to help the states meet their financial needs. One of those -- one of the initiatives you mentioned, the contraception, will reduce costs to the states and to the federal government."

You know the nation's cupboard is bare when politicians propose limiting the number of births as a way of improving the economy. That's a conversation we shouldn't be having.

There is nothing more private -- that is, none of the government's business -- than the personal decision that a family makes about how many children to have. Besides, Pelosi's comments had an ugly ring to them.

For a minute, it sounded as if the House speaker was channeling the ghost of Margaret Sanger. The 20th-century birth control advocate is a hero to those who worship at the altar of reproductive freedom. She even founded the American Birth Control League, which became Planned Parenthood.

But there is more. Sanger also embraced birth control as a means of social engineering. She was a leader in the eugenics movement, which had a number of influential supporters.

Many in that school of thought considered immigrant groups like Jews, Italians and Irish to be inferior genetically, and they felt that these groups were having too many children, a trend they believed needed to be stopped -- by forced sterilization if necessary.

In an article she wrote in 1932 for Birth Control Review, a publication she founded, she spelled out her "Plan for Peace," which included having "Congress set up a special department for the study of population problems and appoint a Parliament of Population" whose main objectives would include keeping "the doors of immigration closed to the entrance of certain aliens whose condition is known to be detrimental to the stamina of the race such as ... [those] barred by the immigration laws of 1924." Those laws were mainly intended to stop the immigration of Italians, Greeks and Jews.

Nice. There are still people who believe that stuff. The only difference is that, in this century, the folks under attack are more likely to be Hispanic or African-American.

When you make the argument that contraception is a cost-saving measure for state and federal government, some might think what you're implying is that the babies who would otherwise have been born were destined to become dependent on welfare and other public services.

Comment: For decades, abortion has disproportionately targeted minority babies (Whatever the intent of the abortion industry may be, by functional standards, abortion is a racist institution. In the United States, black children are aborted at 5 times the rate as white children and Hispanic children don't fare much better)

Stimulus legislation - "an exercise in wretched excess"

Stimulus math for the GOP

Excerpts:

... congressional Democrats have turned the 647-page stimulus legislation into an excuse for something that never needs an excuse — an exercise in wretched excess.

...

The [GOP's] duty is to assert inconvenient truths, one of which is that the truth shall make you modest. There never is a moment when an open society that wants to remain such does not need the wisdom of Friedrich Hayek, the Nobel Prize-winning economist who said: "The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design." So the deference accorded this president should be proportional to his willingness to acknowledge that neither he nor anyone else can know whether the stimulus will work.

Comment: Before they vote it they should have a high degree of confidence it will work! More from Newsweek:

Obama Ducks Hard Choices

Excerpts:

Among the many claims made for the "economic stimulus" package now before Congress is that it will "jump-start" a "bigger, better, smarter" electric grid, enabling Americans to use energy more efficiently. The package commits $4.5 billion to this, which (says the White House) will help finance 3,000 miles of transmission lines and 40 million "smart meters." Sounds great.

But it may be mostly hype. For starters, $4.5 billion is a pittance. An industry study in 2004— surely outdated—put the price tag of modernizing the grid at $165 billion. More important, says a report from J.P. Morgan, the "smart grid" isn't mainly a matter of building new transmission lines or installing new meters. It's more "communications and information processing technology" that allows for more efficient transportation and use of power.

....

As it turns out, President Obama didn't make the tough choices on the stimulus package. He could have either used the program mainly (a) to bolster the economy or (b) to advance a larger political agenda, from energy efficiency to school renovation. But Obama wanted both, and, superficially, the two can be portrayed as an enlightened partnership.

"This is not just a short-term program to boost employment," Obama said recently. "It's one that will invest in our most important priorities like energy and education, health care, and a new infrastructure that are necessary to keep us strong and competitive in the 21st century."

....

The $819 billion program passed by the House would only slowly provide stimulus. The Congressional Budget Office estimates that in fiscal 2009 (through this September) about 21 percent of the new spending and tax cuts would flow to the economy. For 2010, the estimate is an additional 44 percent. The total of 65 percent means that, by the CBO's estimate, about a third of the $819 billion package would be spent after fiscal 2010. That falls far short of Obama's stated goal of 75 percent in the first 18 months.

Eleven Courageous Democrats

NYTimes Interactive Graphic: House Vote on H.R.1: Making supplemental appropriations for fiscal year ending 2009


Comment: Kathee and I were discussing this morning the eleven who voted "no" on the 825 Billion Dollar Boondoggle. My guess was that they were all Blue Dog Democrats from the South. I was nearly right.

Stimulating "more government and more debt"

Obama presses his case on stimulus

Excerpt:

"The Democrat bill won't stimulate anything but more government and more debt," Representative Mike Pence of Indiana, chairman of the Republican conference, said Tuesday. "The slow and wasteful spending in the House Democrat bill is a disservice to millions of Americans who want to see this Congress take immediate action to get this economy moving again."

...

Several Republicans said they would like the tax cuts to move more swiftly, according to people in the room, but the president replied that $275 billion was the most he would be willing to negotiate.

A 40-Year Wish List - You won't believe what's in that stimulus bill

Excerpt:

"Never let a serious crisis go to waste. What I mean by that is it's an opportunity to do things you couldn't do before."

So said White House Chief of Staff Rahm Emanuel in November, and Democrats in Congress are certainly taking his advice to heart. The 647-page, $825 billion House legislation is being sold as an economic "stimulus," but now that Democrats have finally released the details we understand Rahm's point much better. This is a political wonder that manages to spend money on just about every pent-up Democratic proposal of the last 40 years.

We've looked it over, and even we can't quite believe it. There's $1 billion for Amtrak, the federal railroad that hasn't turned a profit in 40 years; $2 billion for child-care subsidies; $50 million for that great engine of job creation, the National Endowment for the Arts; $400 million for global-warming research and another $2.4 billion for carbon-capture demonstration projects. There's even $650 million on top of the billions already doled out to pay for digital TV conversion coupons.

In selling the plan, President Obama has said this bill will make "dramatic investments to revive our flagging economy." Well, you be the judge. Some $30 billion, or less than 5% of the spending in the bill, is for fixing bridges or other highway projects. There's another $40 billion for broadband and electric grid development, airports and clean water projects that are arguably worthwhile priorities.

Add the roughly $20 billion for business tax cuts, and by our estimate only $90 billion out of $825 billion, or about 12 cents of every $1, is for something that can plausibly be considered a growth stimulus.

....

Most of the rest of this project spending will go to such things as renewable energy funding ($8 billion) or mass transit ($6 billion) that have a low or negative return on investment. Most urban transit systems are so badly managed that their fares cover less than half of their costs. However, the people who operate these systems belong to public-employee unions that are campaign contributors to . . . guess which party?

Here's another lu-lu: Congress wants to spend $600 million more for the federal government to buy new cars. Uncle Sam already spends $3 billion a year on its fleet of 600,000 vehicles. Congress also wants to spend $7 billion for modernizing federal buildings and facilities. The Smithsonian is targeted to receive $150 million; we love the Smithsonian, too, but this is a job creator?

Another "stimulus" secret is that some $252 billion is for income-transfer payments -- that is, not investments that arguably help everyone, but cash or benefits to individuals for doing nothing at all. There's $81 billion for Medicaid, $36 billion for expanded unemployment benefits, $20 billion for food stamps, and $83 billion for the earned income credit for people who don't pay income tax. While some of that may be justified to help poorer Americans ride out the recession, they aren't job creators.

Bill May Not Stimulate Jobs Right Away

Excerpt:

The nonpartisan Congressional Budget Office projected less than half of the $355 billion that House Democrats want to spend on highways, bridges and other job-creating investments is likely to be used before the end of fiscal 2010. The CBO said the balance would likely be spent over the next several years, after the recession is projected to end.

Republicans said the analysis shows that the package, which Democratic leaders drew up with top Obama aides to boost the ailing economy, wouldn't create the promised jobs. "Clearly, we're not talking about a stimulus bill," said Virginia Rep. Eric Cantor, the second-ranking House Republican.

Comments:

• I am praying for my friends (some of whom read this!) who are out of work. I actually fear for my own job based upon what is happening in my company and our industry. I have a son, a nephew, and a niece who have all recently lost jobs. I say this to emphasize that real economic stimulus is in my mind a high priority and that real economic stimulus should create real jobs right here at home (not in China, Mexico or the other places from which we import!)
  
• This Nancy Pelosi authored package won't do it! ("Yes, we wrote the bill. Yes, we won the election," House Speaker Nancy Pelosi said Thursday.)
  
• This bill is government waste piled high. Your children and grand children will pay for it in inflated dollars and this (along with the 10 Trillion dollars of debt (see the debt clock in the upper right!) will be the end of this nation as we know it. Perhaps and probably not in our lifetimes, but this waste will be the financial ruin of this country that I love!
  
• What would real stimulus look like? A cut in taxes - sharp, deep and short! Put money back in the hands of the American populace. A tax holiday of even a month or two would stimulate this economy.
  
• Republicans are wise to vote against it!
  

Stimulus: a "flawed notion"

Republicans Find Voice in Opposing Stimulus

Excerpt:

"I just can't tell you how shocked I am at what we're seeing. You know it's clear that they're moving on this path along the flawed notion that we can borrow and spend our way back to prosperity."

Comment: We probably can spend our way back to temporary prosperity. Emphasis on "temporary"!

More on cities' infrastructure requests

Mayors' infrastructure request full of pork

Excerpt:

The U.S. Conference of Mayors went to Capitol Hill earlier this month with a report listing 11,391 infrastructure projects proposed by 427 cities. The mayors claimed the proposal would create 847,641 jobs in 2009 and 2010.

The more than 800-page document is titled "Main Street Economic Recovery: 'Ready To Go' Jobs and Infrastructure Projects."

"Our plan calls for investments that will stimulate our economy by quickly creating jobs, fixing our aging and crumbling infrastructure, increasing our global competitiveness, and further reducing our carbon footprint," Miami, Florida, Mayor Manny Diaz said at a news conference last week. Accompanied by other big-city mayors, he held up a copy of the hefty report to stress its importance.

"To reverse the current economic crisis, we must invest wisely. We must invest where we get the greatest return. We must invest in Main Street," said Diaz, who is the president of the mayors' group.

But a close examination of the projects by CNN shows proposals that go far beyond basic infrastructure plans for roads, bridges and other traditional public works projects.

A trillion here ... a trillion there ....

Obama stimulus could reach $1 trillion: report

Excerpt:

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.

How to spend the stimulus

Excerpt:

If I had my druthers, the word ’stimulus’ would be expunged from public discussion, along with ‘bailout’ and ‘rescue.’ These words convey the idea that, because we have so mismanaged our economic and financial affairs, we are somehow able or entitled to conjure up additional funds out of thin air to fix our problems.

Comment: Consider What's a Billion?. Soon there will be no more trillions to throw at the nation's problems. What then?

Stimulus package: A revealing wish list

Stimulus Shouldn't Be an Excuse for Pork

Excerpt:

On Monday, the U.S. Conference of Mayors went to Capitol Hill to ask for a handout, or as they put it: "We are reporting that in 427 cities of all sizes in all regions of the country, a total of 11,391 infrastructure projects are 'ready to go.' These projects represent an infrastructure investment of $73,163,299,303 that would be capable of producing an estimated 847,641 jobs in 2009 and 2010."

A wish list that is 11,391 projects strong! What vital infrastructure projects would cash-strapped taxpayers get for their $73 billion? Here's a sampling:

• Hercules, Calif., wants $2.5 million in hard-earned taxpayer money for a "Waterfront Duck Pond Park," and another $200,000 for a dog park.
  
• Euless, Texas, wants $15 million for the Midway Park Family Life Center, which, you'll be glad to note, includes both a senior center and aquatic facility.
  
• Natchez, Miss., "needs" a new $9.5 million sports complex "which would allow our city to host major regional and national sports tournaments."
  
• Henderson, Nev., is asking for $20 million to help "develop a 60 acre multi-use sports field complex."
  
• Brigham City, Utah, wants $15 million for a sports park.
  
• Arlington, Texas, needs $4 million to expand its tennis center.
  
• Miami, Fla., needs $15 million for a "Moore Park Community Center, Tennis Center and Day Care" facility. The city is also desperate for $3.6 million to build a covered basketball court and a new tennis court at Robert King High Park. Then there's the $94 million Orange Bowl parking garage you are being asked to pay for.
  
• La Porte, Texas, wants $7.6 million for a "Life Style Center." And Oakland, Calif., needs $1 million for Fruitvale Latino Cultural and Performing Arts Center.
  

And you thought infrastructure investment meant roads, bridges and schools. It is clear that any infrastructure stimulus money given to the country's mayors will lead to thousands of tennis centers to nowhere. News alert for mayors: We are officially in a recession. American families have to get by with less, and so do American cities.

Comment: My grandchildren shouldn't have to pay for these tennis courts, water parks, and duck ponds! Republicans - this is your golden opportunity to be fiscally responsible and vote AGAINST this wasteful folderol!

Bloomberg: 'Like Booze For Alcoholics'

Bloomberg Ridicules Washington On Economy

Excerpt:

Mayor Michael Bloomberg has unleashed another flurry of jabs on Washington, ridiculing the federal government's rebate checks as being "like giving a drink to an alcoholic" on Thursday, and said the presidential candidates are looking for easy solutions to complex economic problems.

The billionaire and potential independent presidential candidate also said the nation "has a balance sheet that's starting to look more and more like a third-world country."

President Bush signed legislation Wednesday that will result in cash rebates ranging from $300 to $1,200 for more than 130 million people.

The federal checks are the centerpiece of the government's emergency effort to stimulate the economy, under the theory that most people will spend the money right away.

But Bloomberg does not believe it will do much good. And his harsh words at a news conference Thursday reflect the view among some of his associates that the country's economic woes present a unique opportunity for him to launch a third-party bid for the White House.

Comment: I doubt he launches a 3rd party bid, but if he did it would drain votes from the Democratic nominee. I happen to share his concerns about the stimulus package.

Laffer: a serious blow to the economic health of the country

That 'Stimulus' Nonsense

Excerpt:

The proposed rebate of about $600 per man, woman and child is transferred to people based upon some characteristic other than work effort. In fact, if you've worked too hard and earned too much, you won't get a rebate. So in some instances the rebate actually requires the absence of work effort. Now it's true that some of the people receiving the rebate may also be workers, but working is not the reason each person receives the rebate; it's simply because he or she is a human being. Thus rebate recipients are given command over real resources for doing something other than working.

In this world of ours, those resources going to the rebate recipients don't come from the Tooth Fairy. They have to come from workers and producers. If the resources come from workers and producers who thereby receive less for their work than they otherwise would have received, won't they in turn spend less? Of course they'll spend less, and the people who now supply them with less will also spend less, and so on down the line.

As my former colleague and friend Milton Friedman liked to say, "There's no such thing as a free lunch," and this rebate is exactly what he meant. The net effect is that the reduction in demand from those who pay the real resources will be exactly the same size as the increase in demand from the rebate recipients. It's sad but true. Income effects always net to zero in a closed system.

To see this point from a more generic standpoint, if the price of apples rises, it is true that apple growers are better off. Their income effects go way up, and they can spend more. But apple consumers are worse off because their incomes go down by the exact same amount, and they have to spend less.

All of the stimulative effects of the rebate to the recipients will be 100% offset by the destimulative effects of the increase in liabilities of the workers and producers who have to pay for the transfer of resources to the rebate recipients. There is no stimulus from a rebate, period.

But even though the income effects net to zero, the substitution effects accumulate, and they accumulate in a most unpleasant way. This should be obvious to even a person untrained in economics. Ask yourself why not a $40,000 rebate per person, indexed for inflation of course, if a $600 rebate is so good. Heck, why don't we give rebates equal to GDP, so that everyone who doesn't work and doesn't produce receives everything, and all those who do work and do produce receive nothing?

GDP would go to zero in a New York minute if workers and producers got nothing for their work effort. And, as fate will have it, any rebate will reduce output because it reduces incentives to produce output. The larger the rebate, the greater the reduction in the incentives to work and the greater the reduction in output. It's as simple as that. This $170 billion rebate camouflaged as economic stimulus will deal a serious blow to the economic health of the country.


Comment: Arthur Laffer is "father of" the Laffer curve. Here's the problem: We all want that check! We are more concerned about our own personal finances than the fiscal health of the country. And we are more concerned with today than the Billions that will have to be repaid by our great grand children (we'll be dead by the time they are in the work force). I want that check too! (I also would like to eat M & M's for dinner every night!. Sometimes we choose to do what's best!)

Stimulus package for illegals?

Lou Dobbs alert: Illegal immigrants may get rebates

Excerpt:

In their bipartisan zeal to quickly cut a deal on an economic stimulus bill, GOP lawmakers overlooked something that will certainly inflame the conservative base _ illegal immigrants could receive a tax rebate check from the government.

The text of the House passed bill contains language making "non resident aliens" _ illegal immigrants _ ineligible for the tax rebates. But every year, hundreds of thousands of undocumented immigrants use individual taxpayer identification numbers, known as ITINs, to file income tax returns with the IRS. These ID numbers are used instead of Social Security numbers.

Wiki: Individual Taxpayer Identification Number (ITIN)

Excerpt:

An Individual Taxpayer Identification Number (or ITIN) is a United States tax processing number issued by the Internal Revenue Service. It is a nine-digit number that begins with the number 9 and has a 7 or 8 in the fourth digit, example 9xx-7x-xxxx or 9xx-8x-xxxx. The IRS issues ITINs to individuals who are required to have a taxpayer identification number but who do not have, and are not eligible to obtain, a Social Security Number.

ITINs are issued regardless of immigration status because both resident and nonresident aliens may have Federal tax return and payment responsibilities under the Internal Revenue Code. Individuals must have a filing requirement and file a valid federal income tax return to receive an ITIN, unless they meet an exception.

In 2006 1.4 million people used ITIN when filing taxes. Federal tax law prohibits the IRS from sharing data with other government agencies including the INS, ensuring illegal immigrants that the tax information will be confidential and not be used to deport them.


Comment: Call me crazy, but adjust the stimulus package to exclude illegal immigrants!

Voters angry ... give them $$

Stimulus Deal Spurred by Fears Of Voter Backlash

Excerpt:

The speed with which Washington hashed out the plan was driven mostly by the drumbeat of bad economic news. Behind the scenes, it was greased by other powerful motivations. Congressional Democrats needed to demonstrate they were capable of results after a year of gridlock. Republican lawmakers, up for re-election, wanted to show sensitivity to voters' economic woes. And the White House didn't want "recession" added to its legacy.

Comment: Consider that we are not even officially in a recession, that some economists do not believe we are are headed for a recession, and the speed of the "deal".