US Budget BasicsFollow

And that's ignoring that even the drops mentioned in those articles (typically about 1-2% GDP), would not account for as much debt as it cost us to pay for the stimulus bill. It's almost certain that we'd have less debt today if we'd not spent that money. Even with the worst estimates of GDP losses (2%?) the lost revenue from that reduced GDP would not have come close to the amount we spent on the stimulus bill. How that would affect the economy as a whole is hard to estimate, of course. The net effect of GDP is not just government revenue. It's also people's ability to pay their rent, put food on their tables, and other kind of important stuff.

I think when people assess that "it could have been much worse!", they're just doing some subtraction and drawing conclusions based on that. But I think they ignore the positive effect that *not* having such huge government spending creates. One of the big criticisms in 2009, 2010, and still today is that many businesses had plenty of funds with which to expand business and hire more people. This factor is, in fact, largely blamed for the current unemployment rate, from which all those negative effects I spoke about earlier derive. But the reason employers haven't been hiring is because of the uncertainty in the market. And that uncertainty hasn't been because of the stability of the market itself since TARP was passed. It's been almost entirely about not knowing what the Democrats were going to do next.

While we can mathematically look at the dollars spent by the stimulus bill (and others), and talk about the direct effect they had, it's important to note the indirect effect they had as well. By doing that, they created a "anything could happen next" atmosphere in the market. What business is going to spend money expanding its operation if it's not sure what taxes might go up next year, or whether the government will create or remove some subsidy, or whether the government will provide some new incentive or penalty for various economic actions? The indirect effect of those government actions were to freeze business in its tracks. They're waiting for the government to stop moving the spaces around on the game board so they can plan their next move.


And IMO, that's had a far far more negative effect than any positives during that time. Had the stimulus been half the size and more directly targeted, maybe not. Had the bills the Dems passed in general been more aimed at immediate need and less at longer term policy setting, maybe not as well. But the sheer amount of money, and the broad scope of the things spent on effectively prevented recovery from happening. Hopefully, now that the GOP has some say in things, business wont be as afraid about what's going to happen next, and we'll start seeing them spend money and hire people. That's how we recover from this. No amount of spending by the government will do it.

He is on the right track, but he forgot to finish the equation. (doubt he will get it right though)



Didn't bush sign in some silly 800Billion dollar bailout package that had large sums of money mysteriously disappear into wall street?




Edited, Feb 7th 2011 5:42pm by rdmcandie

It didn't mysteriously disappear. It was lent to various financial institutions, and every single dollar has been paid back, with interest. The only money we actually lost on TARP was the bulk of the money the Dems added to the pot which was allocated to bailing out the car companies and (inexplicably) to fund education. So the cost for bailing out Wall Street wasn't in most lost bailing out Wall Street, but rather in the money we gave to the automobile and teachers unions in order to buy the political support to bail out Wall Street.

Funny, huh?

You mean the ones that have also paid back the money lent. With interest. So what you really are against is funding education? Not really surprised really.

So you're saying you just had no idea what an "appeal to authority" was but decided it sounded good and threw it out there anyway? Why does this not surprise me?

PROTIP: Christina Romer & Jared Bernstein are completely different people than Alan Blinder and Mark Zandi. Is this seriously what you've degraded yourself to? Just yelling "Experts! HAH!!!" like a homeless guy or something? You can't even bother to take half a second to know who you're mocking because you're just so sure that anyone who has a degree and disagrees with you must be in some liberal cabal?

I guess if so many qualified people disagreed with my amateur analysis and I was so invested in insisting that a government effort was a failure, I'd stomp my feet, throw some quotes around the word 'experts' and call that a win as well :D

Except that they didn't. The government spent additional money buying equity in the companies, which was then used to pay back the much smaller loan amounts. For example, GM got 52 Billion dollars from the government, but only "borrowed" about 7B. So when it paid back that 7B, it made a big deal about having paid back all the money lent to it. Which I suppose on paper is true, but the taxpayer is still out the other 45B, so it's kinda meaningless, isn't it?

To be fair, some of the bank bailouts worked in a similar fashion (no where near that ratio though), and we got equity shares in said financial corps instead of cash. However, given the historical economic data, it's far far more likely we'll see a return on those equity shares in financial corps over time than we will from GM or Chrysler.




I'm not against funding education. I'm against funding it dishonestly. What on earth does education spending have to do with troubled asset relief? Short answer: Nothing. It was an opportunity for a politically powerful union to take advantage of a crisis to skim some cash off the top for themselves. That's it. And that's dishonest.

Yeah, that must be it. We just didn't understand the deltas! :D


So if you're just generally vague enough you can single-handedly discredit anyone whose work doesn't jive with your ideology? Got it. Amusingly enough, beyond the authors of the study, the CBO's analysis and a sampling of economists by the Wall Street Journal agreed 36 to 6 that it helped prevent a deeper downturn. All tools of the vast liberal economic cabal of liars! Well, except those six. They're the only ones who know what they're doing.


Sure. Too bad you need to just do more than say "Nuh-UH!" to convince anyone. Well, except yourself. You've got that down.

Edited, Feb 7th 2011 7:37pm by Jophiel

They're the only ones being honest, yes. The rest are saying what is politically necessary for them to say.


No amount of a list of experts telling me that you can create something out of nothing will make me believe them. And rattling off more of the same isn't going to change anything either. There's a huge disconnect between the theory of economics and the practice of economics. It's great that so many people in the field think that taking money from one bucket and moving it to another will increase the total amount of money, but they are still wrong. And no amount of degrees on their walls changes that.



Anyone who's looking at the real world instead of blindly accepting what some economist tells them can see that I'm right. And anyone who applies common sense and logic to the issue can see why. All you have to do is listen to these economists explain their thinking to see that they are wrong. They ignore the cost of the money they have to borrow/take in order to spend it on their stimulus when calculating the positive effect of the spending. It's right there in their own arguments. You don't need a degree in economics to see it either. Anyone who understands basic math concepts can see it and realize that the so-called "expert" in front of them is BS-ing us and hoping that we're not smart enough to realize it.

Hey guys I think we might be getting in over our heads

the thread is clearly labelled budget BASICS guys i don't want us to stray off the topic by overcomplicatin

That would be terrible.

Nah, just the need to scream "Big Brother! The 'Experts' are all wrong! I never read the study but it disagrees with my ideology so it's ALL WRONG! Six guys I can't name and know nothing about agreed with my ideology so they're the only ones telling the truth! Where's the birth certificate!!"


It's not really a funny quip so much as an acknowledgment of who you are. It's hilarious that you recently got all huffy and offended when I said that you're much more emotionally invested in rhetoric and here you are today insisting that some guys you've never heard of are all deluded fools because their study (and the positions of the CBO and other economists) are all part of a great plan to trick the country. Not that you've actually read the study to say where it's wrong, it just doesn't agree with what your ideology tells you to be true. And six guys you can't name and never heard of are the only beacons of truth because their opinion agrees with your ideology. You think. Actually you have no idea what their answers were other than "disagree" but that's enough for you!


Just so we're very clear, you don't even know what you're arguing against. You've never read the study in question. You've never read the CBO report. You can't point to specific flaws with it. you just know that you don't like the answers so they must be all wrong. And that since the guys who wrote them are extremely well qualified, they couldn't have gotten it "wrong" on accident so it must be a conspiracy.

But you're not emotionally invested in the rhetoric at all! :D

Edited, Feb 7th 2011 11:15pm by Jophiel

Lol. Srsly? This only deserves the corresponding comment..."if the shoe fits".

I'm suddenly reminded of the thread re: embryonic stem cell research where Gbaji said that induced pluripotent stem cells could replace any need for ESC's. When pointed out that the physician who devised the means of creating said induced cells was repeatedly saying "These need a lot more work and are not a substitution for real ESCs", Gbaji called the guy a liar and said this so called "expert" was only saying that so he and his fellow "experts" could keep getting that sweet, sweet research money.

The number of things Gbaji knows more about than the "experts" is legion. Essentially, anything that flies in the face of what his political ideology tells him is true.

That's not emotional rhetoric. Emotional rhetoric is when you argue in a way designed to pull on the emotions of the audience either positively for your side or negatively against the other. So getting people to support health care reform because not doing so will harm 40 million poor people is emotional rhetoric. Arguing that we should change our marriage laws because those who oppose such changes hate gay people is emotional rhetoric. When your entire political agenda rests on being able to convince people that not supporting it is equivalent to some harm to some group, it's a bit absurd for you to point to the guy who's opposing said position on the grounds of basic logic and reason and say that he's being "emotional".




No. I'm not looking at any study at all. I'm well aware of how easy it is to make any data appear to support any conclusion Joph. I'm not easily impressed by such things, doubly so when they completely fly in the face of common sense. I'm not an astrophysicist, but if you point to a study saying that stars are really just giant gummy bears floating in the sky, I'm going to disagree with it, no matter how many people insist it's true. And if there's a sensible reason why a bunch of astrophysicists would claim that stars are made out of gummy bears, I'll point to that as an explanation for why they might make such an absurd claim.

Same deal here. The math doesn't add up. You can't take money from one person and hand it to another and create more money. When Keynesian economists argue their theories about stimulus spending, they deliberately leave off the cost of the money they use. Their calculations assume that they start with money that is idle. But there is no such thing in a real economy. On paper, and in theory, they can make that assumption and do math based on it. But in practical application, there is no such thing as idle money in an economy (or not one that is useful since you can't get to it anyway).

You can do a thousand studies showing the positive effects of the monetary injection. And they'll all show a positive effect if that's all you look at. But it's a case of lying by omission. Those studies don't ask where the money came from. That's why they can make claims like a dollar worth of welfare is worth a dollar seventy five of economic stimulus effect. Any sensible person can and should immediately suspect that conclusion as a complete examination of the financial activity going on. It can't be true. If it were, then we could take all the money from everyone and then hand it back and we'd increase our total money.


Obviously, this doesn't work. But the fact that it doesn't work doesn't stop many economists for arguing for it. Not because it works, and not because they don't know that it doesn't work, but because they have a vested interest in being perceived to be right. So they argue for stimulus spending, and they often get it. And just like a clock that's right twice a day, eventually the economy will recover and when it does, they can point to the stimulus and claim that it "fixed" the economy. But they can only do that if they continue to argue for stimulus money. If they stop using the demand side tools, and then the economy recovers, it's harder to argue that their policies worked.


It's also why there was such a huge backlash against Reganomics back in the day. It worked, so it had to be attacked and viciously. They had to repeat the mantra "trickle down doesn't work" over and over and over. And guess what? Even today, there are people on this forum who will blindly repeat that phrase, likely without ever having examined the facts.




You're correct. I haven't read those reports. I don't need to. Obviously wrong answer is obviously wrong. At the end of the day, if someone tells me that they can take money from one person and simply by giving it to someone else, magically transform it into more money, unless said person can also walk on water, raise the dead, and turn water into wine, I'm going to say they are wrong. And when said person is an "expert" and should know better, I'm going to say that they are lying.


So yes, my assumption of a "conspiracy" is based on that logic. However, given the vehemence with which schools of thought in a number of disciplines fight over their little bits of turf, it's not really that far of a stretch. We're talking about adherents to an economic belief that says that you can pay a person to dig a hole and another person to fill that whole, and it'll generate economic gain. Unfortunately, the people who believe that just plain don't look at the end result of the economic activity. They only look at the money flowing around. They don't think there's value in the hole, but in the wage paid to the person digging it.

It is dogma Joph. Pure and simple. Some of us think (correctly btw) that the value isn't in the dollars or in the wages, but in the things that we do with our labors. The hole has value. The value of the labor is based on the value of the hole it digs. Everything else is smoke and mirrors.