Thread: Re-visiting stimulus

So according to Wikipedia (not a great source, but good enough for this thread) 20% of Obama's stimulus plan had been spent as of August 2009. We now find out that 2 months after the recession ended, we still had 80% of a very debated plan still had to be spent. So my question is:

What is the goal of stimulus?

Is it to get us out of a recession or prevent a depression?

Is it to reach certain milestones in unemployment numbers, foreclosures, etc.... and if it is this one, what are those magic numbers we are trying to reach?

What is the ultimate objective here?

I mean there are other stimulus proposals out there. I don't necessarily not support them, but since we are being told that things are so great why would anyone support more debt? Before I spend more money on something, I would like to know what my goal is.

Originally Posted by metheron

So according to Wikipedia (not a great source, but good enough for this thread) 20% of Obama's stimulus plan had been spent as of August 2009. We now find out that 2 months after the recession ended, we still had 80% of a very debated plan still had to be spent. So my question is:

What is the goal of stimulus?

Is it to get us out of a recession or prevent a depression?

Is it to reach certain milestones in unemployment numbers, foreclosures, etc.... and if it is this one, what are those magic numbers we are trying to reach?

What is the ultimate objective here?

I mean there are other stimulus proposals out there. I don't necessarily not support them, but since we are being told that things are so great why would anyone support more debt? Before I spend more money on something, I would like to know what my goal is.

That's a very good question. I questioned why they passed another teacher and firefighter bailout if we still had money left over from this. Questions that could be answered but won't

Originally Posted by scottie

That's a very good question. I questioned why they passed another teacher and firefighter bailout if we still had money left over from this. Questions that could be answered but won't

I think they are fair questions. I am willing to help, but not endlessly. And don't keep telling me things are better, but.......I want to hear what Washington's ultimate goal is. If our recovery right now is 100% based on Government dollars (which I tend to think) then come out and say it. Quit blowing smoke up my ass with all this good news and then say we need to do more without telling me where the end point is.

Originally Posted by metheron

I think they are fair questions. I am willing to help, but not endlessly. And don't keep telling me things are better, but.......I want to hear what Washington's ultimate goal is. If our recovery right now is 100% based on Government dollars (which I tend to think) then come out and say it. Quit blowing smoke up my ass with all this good news and then say we need to do more without telling me where the end point is.

They don't want us to know. They know we wouldn't approve.

We should be reminded about this, from the CBO about the long-term effects of the stimulus (bold emphasis added):

http://cboblog.cbo.gov/?p=205

In contrast to its positive near-term macroeconomic effects, the Senate legislation would reduce output slightly in the long run, CBO estimates, as would other similar proposals. The principal channel for this effect is that the legislation would result in an increase in government debt. To the extent that people hold their wealth in the form of government bonds rather than in a form that can be used to finance private investment, the increased government debt would tend to “crowd out” private investment—thus reducing the stock of private capital and the long-term potential output of the economy.

The negative effect of crowding out could be offset somewhat by a positive long-term effect on the economy of some provsions—such as funding for infrastructure spending, education programs, and investment incentives, which might increase economic output in the long run. CBO estimated that such provisions account for roughly one-quarter of the legislation’s budgetary cost. Including the effects of both crowding out of private investment (which would reduce output in the long run) and possibly productive government investment (which could increase output), CBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net.

Originally Posted by Christopher

We should be reminded about this, from the CBO about the long-term effects of the stimulus (bold emphasis added):

http://cboblog.cbo.gov/?p=205

What is the significance of this on the goal of stimulus? Or do you believe that one of the goals of stimulus is to reduce the gdp?

Originally Posted by metheron

What is the significance of this on the goal of stimulus? Or do you believe that one of the goals of stimulus is to reduce the gdp?

For me the real goal of the stimulus bill was to fulfill political purposes. It is short term and cannot be sustained. Politicians are concerned about seeming to take action to "save" the economy. I think that in the long run we would be better off without the stimulus. The CBO clearly thought it would "crowd-out" private investment, and reduce the GDP.

Originally Posted by Christopher

For me the real goal of the stimulus bill was to fulfill political purposes. It is short term and cannot be sustained. Politicians are concerned about seeming to take action to "save" the economy. I think that in the long run we would be better off without the stimulus. The CBO clearly thought it would "crowd-out" private investment, and reduce the GDP.

Well that is definitely debatable. I tend to agree thoug. Had you fell and hit a real bottom all recovery would have been real. Now we have a shaky recovery that is made up of government money that no one is sure what would happen if they didn't keep pumping in more stimulus dollars.

Nobody on the left wants to touch this? I understand your hesitation but would really like to hear your point of view. What is the goal we are aiming for?