Stimulus Is Bankrupt Antidote to Failed Stimulus: Kevin Hassett - Bloomberg.com
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July 13 (Bloomberg) -- The Obama administration began to prepare the ground for another stimulus package last week, amid countless signs that the first one isn’t working.
While the president’s favorite partisan economists held hands and chanted in unison from the Keynesian prayer book, Warren Buffett captured the mood of the American people when he said that the first stimulus package “was sort of like taking half a tablet of Viagra and then having also a bunch of candy mixed in.”
The simple arithmetic of the February stimulus suggests that Buffett got it wrong. It wasn’t half a tablet of Viagra with candy; it was a tiny dose of a mysterious herbal remedy, with a stick of sugarless gum.
The so-called American Recovery and Reinvestment Act allotted $787 billion, divided into two main parts. The lion’s share, about $499 billion, was devoted to Keynesian-style government spending measures. The remaining $288 billion took the form of tax relief.
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one of the major issues is the "tax relief" was actually a refund, not any sort of tax relief. it reflected rebates, aka welfare to non tax paying americans.
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According to the latest data on the spending side, $174 billion has been “made available” and about $60 billion has been “spent.”
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that is of 787b. or 174/787=22% or 60/787=7.6%
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Of the $60 billion, roughly $13 billion was simply mailed to seniors by the Social Security Administration as a one-time payment. That money should really be thought of as being similar to tax relief, which we will discuss in a moment. Another $40.5 billion went to the Department of Health and Human Services, which mainly provides grants to state governments, which themselves have trouble spending money in a timely fashion.
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my math then says 7b for "emergency" stimulus...
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Keynesians hope that such payments will stimulate consumption. Critics dating back to Milton Friedman argue that individuals will save rather than consume much of the money. The data are now in, and a clear spike in savings occurred just as the stimulus checks began arriving. The spike is larger than even the most pessimistic economist might have expected.
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weve seen this, our savings rate is positive for the first time in a long time. (a good thing) but not for "stimulus"
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Putting it all together, the stimulus raised total personal income by about $22 billion from March through May.
Over this same period, the BEA estimates personal saving increased by $1.94 billion in March, $12.18 billion in April, and $13.36 billion in May, for a total of about $27 billion. In other words, the spike in savings was bigger than the stimulus.
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like i initially stated on my views on this. guys like friedman seemed to have nailed this...
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So the stimulus bill had two parts, and neither has succeeded. The government-spending part has yet to occur, and the individual-tax part appears to have been saved. That’s a big reason why the economy still stinks.
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as the repubs stated prior to this, this plan=fail
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Fixing the economy may well be necessary and may well require policy changes. But another stimulus plan like the last one would be a recipe only for a bigger deficit. Given how little of the medicine has made it to the patient, it is appalling that anyone might have the temerity to call for more of the same.
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as ive stated before this bill has a "cost" that is about 150b greater than what is assumed of the 787b cost. when you toss in "tax cuts" for things like captain morgan moving, etc... the plan was a failboat, and it continues to be a failboat, if the econ recovers it will be inspite of such aciton, im throughtly waiting for "jobless recovery" circa 1993... they surely wasted the massive amount of "stimulus" on nothing more than junk. while the obama admin has blamed this on their "misreadings" of the bush admin and has gone as far and blamed it on the "bush numbers" even though they had been in office for a multiple months...
07-11-2009, 11:21 AM
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