Obama had one shot at a stimulus package when the economy was reeling from the near economic collapse of 2008.  Some members of his team argued it needed to be bigger (it did), but for whatever reasons they did not prevail.  What was needed then — as now — was to put money to work in such a way as to get the best bang for the buck and put as many people to work as possible.  It’s been my long-held contention that infrastructure would have been an ideal use of stimulus funds.  Consider (much more data at the link):

With 45 percent of roads in less than good condition and 12 percent of bridges structurally deficient, the U.S. faces severe infrastructure needs that significantly impact the nation’s economy.

  • More than 150,000 miles—or 45 percent—of federal highways and major roads in the U.S. are not in good condition, according to the Federal Highway Administration.
  • More than 71,000 of the nation’s bridges—12 percent—are rated as structurally deficient. More than 78,000 are rated as functionally obsolete.
  • More than 20 states this year will likely reduce transportation investments because of federal inaction on a new surface transportation authorization bill.
  • So, perhaps we could have used some money to give our highways and streets some needed attention.  Other areas that come to my mind as good candidates for construction are:  Public Safety, Sewage & Waste Disposal, Water Supply, and Educational.  Sadly, it seems as though not much money went to these necessities.  Thanks to some data sets recently picked up by FRED, we can take a look at all of these areas.  First up, Highway & Street and Educational construction spending.  What I’d really like to see here is a spike — a big one — which would indicate stimulus funds had been allocated to these crucial areas.  Do you see a meaningful spike?  Neither do I, and what’s worse is that both series are now on the decline.

    (NOTE:  These expenditures all have to do solely with construction spending)

    Let’s look at the other areas I mentioned (I broke the data into multiple charts to keep similar dollar expenditure levels together and thereby render greater detail).

    No signs of a meaningful spike here, either.

    One last look, this time at Transportation (like, say, the high speed rail I’ve always hoped Obama would embrace):

    So, nothing significant has really been done on any of these files, and now Obama’s out of bullets.  The beauty of construction spending is that you wind up with things — roads, bridges, tunnels, rails, schools, sewage treatment plants, power plants, airports, dams — that last for decades and get passed from one generation to the next.  Now that opportunity has been squandered — DC is in full-on austerity mode, and the states and municipalities are having their own issues.

    I wrote in June 2010“And, for the record,  I’ll state here that I think Obama and his team badly misallocated the stimulus in ways that did little to create jobs, unarguably its most important objective.  And that will cost him dearly (as evidenced by yesterday’s third defeat of an unemployment benefits extension?).” Nothing that has happened in the past 14 months has caused me to waver from that position.

    Final note:  As I was wrapping up this post, I received an alert that the Philly Fed’s Leading Index series had been updated, so of course I took a gander.  The contours of our two “soft patches” are clear.  The difference is that last year at this time The Bernank was announcing QE2.  It remains to be seen whether or not Ben has another rabbit to pull out of another hat.

    UPDATING, Aug 3, 10:24AM:  In his daily today, David Rosenberg makes the same point regarding the stimulus:

    The overhang of excessive debt burdens is still with us today and the problem with the government stimulus programs that were put into place is that they were not designed properly; the multiplier impacts never did kick in.  So we can’t “grow” our way out.

    Category: Current Affairs, Data Analysis, Economy, Research

    Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

    71 Responses to “Not Too Stimulative”

    1. I never had more hope for our country than when Obama was elected.

      But ‘Yes we can’ has turned into ‘We won’t even make the attempt.’

      I am bitterly disappointed

    2. philipat says:

      Agreed that the stimulus could have been more productive. However, the bottom line is that the only solution to too much debt is to eat it. Eating it can be rapid or slow but it has to be eaten. With the economy growing at less than 2% and Government spending growing at 7%, reducing the growth of Government spending (“Cuts” in Washington speak but actually a reduction in the rate of increase in the real world) still resul;ts in ever ballooning decefits to over $20 Trillion by the end of the decade, equivalent by then to over 150% of GDP. Aka kicking the can down the road again towards Greece. What we need to debate is a long-term plan to REDUCE the defecit, which seems to be lacking.

    3. Andy T says:

      Real Shocker there Invictus.

      535 congressman and Senators, all with their own little pet ideas/projects, can figure out “really good” ways to Stimulate the economy by going further into Debt.

      I’m really surprised.

      What we really need to do is SPEND EVEN MORE. It’ll definitely work better this next time around.

    4. santamonica says:

      Big market move and BR not traveling = inflection point?

    5. ilsm says:

      I thought a “cynic” was an “auditor”:

      “A cynic is a man who knows the price of everything, and the value of nothing.” —Oscar Wilde

      “Auditor” was in the place of “cynic” in a quote from the general when the auditors came in and said our weapon acquisition was over budget.

    6. ilsm says:

      The DoD budget will continue to stimulate war profits.

      The $350B reduction, as with the reductions to other “discretionary” spending are summed on the “then year” fully inflation adjusted fictitous budgets the CBO has used.

      These continue with DoD spending nearly 20% of US G outlays.

      So the real money reduced in just a curtailment of growth.

      DoD continues to be a growth industry at the expense of US output.

      Deficit ceiling conning the US public.

    7. Joe Friday says:

      The biggest problem with the stimulus was that about half of it was tax cuts, because the administration was trying to get Republicans to vote for it. Except they weren’t about to vote for it anyway and tax cuts are not stimulative (at least non-incentivized tax cuts are not stimulative). A complete waste.

      There was some spending on infrastructure (Bernstein had some detail up previously @ the whitehouse.gov blog, but a fair amount was used to prevent the massive layoff of policemen, firemen, teachers, and others by state and local governments, which did save a lot of jobs. We’ve seen in recent months since that money has run out, that the private-sector was creating jobs but it was offset by the layoffs from local and state governments.

      It was too small, should have had no tax cuts, and concentrated on infrastructure and some on keeping the local and state governments for laying off too many workers.

    8. Joe Friday says:

      philipat,

      What we need to debate is a long-term plan to REDUCE the defecit

      Great.

      The only way to do that is to create jobs and economic growth. Cutting spending does neither.

      End of debate.

    9. hammerandtong2001 says:

      A flea on the elephant.

      Paving roads and driving rivits into bridge supports employs some folks, perhaps a lot.

      Is that enough to pick up the slack?

      No way.

      Legal work is is being outsourced to Bangalore, for crying out loud. If you want to watch an industry continue a decade long implosion, talk to the new CEO at Young & Rubicam. (Remember that business? You know it as “Mad Man.”) 75% headcount reductions in absolute terms across the past 5 years.

      So where are the jobs? Paving Roads?

      C’mon. You’ve got to be kidding me.

      .

    10. Lyle says:

      Given that the infrastructure projects were supposed to be shovel ready that means basically putting a new layer of asphalt on the roads, and possibly a few left and right turn lanes (not much engineering needed). Perhaps more traffic lights as well. No projects needing new land need apply. A lot of the deficiency in infrastructure relates to capacity of highways and bridges. For a bridge you need to engineer it, look at the efforts required to fix the bridge over the 405 in LA, having to close the a major freeway for a weekend. If the thought had been that the economic problem was going to last 4 years then you might have gotten some serious projects.

    11. philipat says:

      @Joe Friday

      Suggest you tell that to the US MNC’s who pay no taxes and shift manufacturing jobs overseas to maximise margins, which are indeed at record levels. The US has a decade of slow growth, PIMCO’s “New normal”. If you don’t cut, you go broke.

      End of debate.

    12. bolderbob says:

      A leader Obama is not. He has not been able to put much on the table that set any sort of agenda in this country despite his obvious gifts of speech. He can still CHANGE if he is willing to put himself second and the country first. As someone once told me…”you get what you resist”. The President does not want to loose but he will unless he steps out smartly and leads with vigor! If infrastructure and education are high priorities then he should cut something he knows is not really necessary like an entire government department. That would get some real attention and show he is willing to redirect the considerable assets we have toward long lasting investments that will pay for years. In the 30s we built many of the nations most famous landmarks like the Hover Dam, Golden Gate Bridge etc. So far with a $1,000,000,000,000 spent what did we get for it. Does anyone have an answer other than we put off what we are about to get?

    13. PDS says:

      BR….please….we are now beyond the “coulda, sloulda, woulda” phase of this cluster$&@?….

    14. Sechel says:

      You are on to something.
      He had the chance and blew it.
      On the one hand he’s not getting a fair shot here as the money went to stabilize local governments but the flip side is that money wasn’t spent as advertised on infrastructure and in more than a few cases went to fund initiatives favored by newly empowered politicians.
      The High School I went to was built with depression era money. America needed to see concrete examples of things built with stimulus, like roads, schools and power grids. It’s more than understandable that the American public doesn’t understand what we did with the first stimulus.

    15. holulu says:

      When George W. Bush was president, I thought that this country could never have a worse president. But I was wrong, Obama is much worse. Obama is American Trojan Hourse. Very sad, very sad.

      People in the street have no representation in Washington D.C. Washington is bought and paid by BIG MONEY.

    16. Invictus,

      try this One, as ex. .. http://search.yippy.com/search?query=The+Big+Dig&tb=sitesearch-all&v%3Aproject=clusty

      or, http://search.yippy.com/search?input-form=clusty-simple&v%3Asources=webplus&v%3Aproject=clusty&query=delays+on+Manhattan%27s+Second+Avenue+Subway+Line

      then, see some of.. “In 1998, the American Society of Civil Engineers developed and published its first report card on the infrastructure of America…”
      http://search.yippy.com/search?input-form=clusty-simple&v%3Asources=webplus&v%3Aproject=clusty&query=ASCE+Infrastructure+Report+Card

      so, really, you’re telling us that “Infrastructure Spending” is .. 1) a ‘novel’ Idea, and 2) The ‘Panacea’ ??

      btw, from a recent Thread, Would you care to Answer my Question?

      ~”The much heralded ‘Social Security “Trust Fund”‘ has been looted, yes?”

      just, trying to put into perspective, exactly, how ~”Textbook”-sodden your POV, actually, is..

      Invictus: I’m not saying that infrastructure spending is either “novel” or a “panacea,” just that I’d have preferred to see much more of it in the areas I highlighted.

      As to the Social Security Trust Fund and whether it’s been “looted,” that too far afield from what I perceive to be my area of expertise, so I’ll simply keep my mouth shut.

    17. louis says:

      First things First, let’s keep those banks going, once they turn around it will be better for all of us.

    18. MayorQuimby says:

      Joe Friday, how do you create a sustained economic recovery with deficit spending when we already pay $400 billion in interest on debt?

    19. MayorQuimby says:

      And to those who complain gvmt isn’t spending enough there’s also this:

      http://www.ritholtz.com/blog/2011/07/government-spending-as-a-percentage-of-gdp-2/

    20. Thor says:

      MQ – Be that as it may. Are you not willing to concede that withdrawing trillions in government spending is going to have a negative drag on the economy? I’m not sure there’s anyone arguing that we shouldn’t get our financial house in order. The point I think many of us are making, is that right now is not the best time to cut. Why people on the right, who argue out of one side of their mouths that “you can’t raise taxes in a recession”, while the other side is arguing that we should cut spending right this instance.

    21. Thor says:

      instant. My my, that whole last sentence was a real piece of work :-/

    22. philipat says:

      @Thor

      Agreed, that;s why in my original post I called for a LONGTERM plan (But with triggers etc). Without this, Congress will just adopt the position they always have: Yes, we need cuts but now is not the right time. Easy for a Pol!!

    23. arbitrage789 says:

      I would bet that, if Obama were willing to repeal the Obamacare legislation, the Republicans would be happy to give him $500B or so to spend on infrastructure.

      Of course, Obama wouldn’t take the deal if it were offered. Then again, if unemployment is at 9% on election day (2012), Obama will go down, and Obamacare will go down with him.

    24. overanout says:

      Several road projects in Sonoma county thanks to Obama/stimulus but the issue with road projects is that few folks are put to work as most work is done with machines of various types so most of the labor dollars go to a few machine operators. If you want to create lots of jobs then its, teachers (reducing class size) forest rangers of all types, firefighters, teachers aids, endless environment clean up ops from road side trash to beaches, these jobs are not machine operators so the stimulus dollars go directly towards labor rather then upgrading road machinery. While our roads ,bridges always need sprucing up this activity produces little employment.

    25. Thor says:

      Philipat – Can’t argue with that :-/

    26. Thor says:

      Overnaout – Rather than adding more teachers aides, forest rangers, or other civil servants. Why don’t we hire more construction workers to fix all the shit that’s breaking. We need things like street repair, mass transit build-out, bridge replacement, and other infrastructure projects every bit as much as we need teachers. What we don’t need is another air craft carrier or jet fighter squadron.

      Am I the only one that’s bothered by the fact that this nation spends so much of our tax dollars on things meant to kill people? Is that really what this country is about?

    27. Concerned Neighbour says:

      I agree. The U.S. has a huge infrastructure deficit and a lot of unemployed construction workers. An infrastructure build out just made good sense all the way around. Instead your estimable leaders handed out more candy so that you could buy more trinkets you don’t need, most of which are built elsewhere.

      There is a lot of stupid to talk about with regard to this clusterf&ck, but what takes the cake is attacking the most vulnerable rather than eliminating the “temporary” Bush tax cuts (do you remember when they were temporary?). If we must insist on no net increase in tax revenues, why not eliminate the Bush tax cuts and use that money to cut middle class tax rates, where the extra money in people’s pockets will do so much more good for the economy?

      This crisis is entirely manufactured. The U.S. pays dramatically lower taxes than the rest of the developed world, and modest tax increases (or just fix the damn tax code already) would put the country on a more sustainability footing. Unfortunately a significant part of your country appears to be batsh!t crazy. Scary crazy, actually. Let’s have grandma eat catfood so that the Wall Street crooks can continue enjoying historically low income tax rates on their massive bonuses craxy. You can’t make this kind of crap up.

      If Obama had any stones to implement them, there are a number of straighforward solutions available to right the ship. 1. Eliminate Bush tax cuts. 2. Cut national security spending by 10%, or $130M annually. 3. Target all future stimulus spending towards domestic programs, such as infrastructure, where most of the money/assets stay in the country. 4. Throw some bankers in jail and restructure the banking system to prove that the economy isn’t corrupt to its core. None of the root causes of this crisis have been fixed, and in many cases, they are worse now.

      End rant.

    28. Joe Friday says:

      philipat,

      Lemme know when you put down that goalpost you’re carrying around.

    29. b_thunder says:

      Dear Invictus,
      I agree that there’s a need for more stimulus. But what we do need even more than stimulus is to reduce consumption of energy. We should try to drive less, and telecommute more. Instead of building roads I think we ought to invest in broadband, wireless access, and, as the last resort, railroads.

    30. Joe Friday says:

      Quimby,

      how do you create a sustained economic recovery with deficit spending when we already pay $400 billion in interest on debt?

      Same manner that FDR did in 1933.

      And to those who complain gvmt isn’t spending enough there’s also this:

      You mean you’re another one that missed the numerator and denominator discussion ?

    31. Transor Z says:

      http://www.rollingstone.com/politics/blogs/taibblog/debt-ceiling-deal-the-democrats-take-a-dive-20110801

      Barry linked to this earlier. Taibbi writes:

      The Democrats aren’t failing to stand up to Republicans and failing to enact sensible reforms that benefit the middle class because they genuinely believe there’s political hay to be made moving to the right. They’re doing it because they do not represent any actual voters. I know I’ve said this before, but they are not a progressive political party, not even secretly, deep inside. They just play one on television.

      For evidence, all you have to do is look at this latest fiasco.

      The Republicans in this debt debate fought like wolves or alley thugs, biting and scratching and using blades and rocks and shards of glass and every weapon they could reach.

      The Democrats, despite sitting in the White House, the most awesome repository of political power on the planet, didn’t fight at all. They made a show of a tussle for a good long time — as fixed fights go, you don’t see many that last into the 11th and 12th rounds, like this one did — but at the final hour, they let out a whimper and took a dive.

      We probably need to start wondering why this keeps happening. Also, this: if the Democrats suck so bad at political combat, then how come they continue to be rewarded with such massive quantities of campaign contributions? When the final tally comes in for the 2012 presidential race, who among us wouldn’t bet that Barack Obama is going to beat his Republican opponent in the fundraising column very handily? At the very least, he won’t be out-funded, I can almost guarantee that.

      And what does that mean? Who spends hundreds of millions of dollars for what looks, on the outside, like rank incompetence?

      It strains the imagination to think that the country’s smartest businessmen keep paying top dollar for such lousy performance. Is it possible that by “surrendering” at the 11th hour and signing off on a deal that presages deep cuts in spending for the middle class, but avoids tax increases for the rich, Obama is doing exactly what was expected of him?

    32. Joe Friday says:

      BTW:

      The independent nonpartisan Congressional Budget Office, which is the official arbiter of the impact of all congressional legislation, released a report on the Economic Recovery & Stimulus Bill:

      THE FEDERAL STIMULUS PACKAGE SUSTAINED BETWEEN 600,000 AND 1.6 MILLION JOBS IN THE THIRD QUARTER, AND RAISED GROSS DOMESTIC PRODUCT BY 1.2 TO 3.2 PERCENTAGE POINTS HIGHER THAN IT WOULD HAVE BEEN WITHOUT THE PROGRAM.

      That was the initial snapshot, subsequent culminative reports were even stronger.

    33. overanout says:

      If your priority is higher employment then hire massive numbers of citizens who do not run machines because the money will wind up going to buy bigger,faster machines that in reality will replace labor providing owners of construction companies great tax write offs but provide little in the way of new employment. ! I have no problem with construction but we have already overbuilt just about everything and many of these projects require extensive lead time for engineering, environmental review etc which takes time but while we are waiting for these big construction projects lets also hire a million folks to clean up beaches,parks,and roads, add another million teachers, teacher aids,forest rangers and say 1 million police and police aids of various kinds to do internal office work while the trained police hit the street anyway you get my point that its not about roads or bridges its getting America back to work and to do that means we have to create large public employment similar to what occurred in the 30′s but on a larger scale.

    34. Joe Friday,

      see some of this, of Tiabbi’s, posted by Transor Z, above..

      “…We probably need to start wondering why this keeps happening. Also, this: if the Democrats suck so bad at political combat, then how come they continue to be rewarded with such massive quantities of campaign contributions? When the final tally comes in for the 2012 presidential race, who among us wouldn’t bet that Barack Obama is going to beat his Republican opponent in the fundraising column very handily? At the very least, he won’t be out-funded, I can almost guarantee that.

      And what does that mean? Who spends hundreds of millions of dollars for what looks, on the outside, like rank incompetence?

      It strains the imagination to think that the country’s smartest businessmen keep paying top dollar for such lousy performance. Is it possible that by “surrendering” at the 11th hour and signing off on a deal that presages deep cuts in spending for the middle class, but avoids tax increases for the rich, Obama is doing exactly what was expected of him?…”
      ~~~

      Do you Ever wonder? Do you bother to attempt to answer the Qustions that are being raised?

      or, is it, just.. “…The independent nonpartisan Congressional Budget Office, which is the official arbiter of the impact of all congressional legislation…”

      are you Serious? the CBO is “Independent”? of Whom? the Congress? really?

      dude, you should lay off the Inkblots..

    35. Ducky62 says:

      I’d argue any stimulus would’ve been counter-productive in the long run, but with the immediate needs of the un/under-employed and return on “investment” a big infrastructure push would have at least left us with something tangible to show for it. Unfortunately the $$$ were squandered on subsidizing existing public sector bureaucracy and political patronage. It’s as if no one in the government even cracked a book to see what New Deal programs “worked” from a social democratic Keynesian perspective. “Progressive central planning” ain’t what it used to be.

    36. bolderbob says:

      The first stimulus was to increase consumption in the US. Unfortunately our consumption spurs China’s factories. The US is into “innovation” but the portion of a product that is in innovation is only 5%. We have to invest in the US (infrastructure, education) and produce more engineers and scientists so that we can bring back high and medium end manufacturing so we can make products here for our consumption and for export. There are many engineering jobs in the US that are going begging now because our kids don’t want to do the hard stuff. Our Universities are full of foreign kids getting that education and we don’t keep them here either. Changing things now will not fix 75 years of mistakes overnight but we can fix them over time if we can finally take a longer view and educate and invest for the future we want!

    37. 4whatitsworth says:

      Exactly right BR! If we are going to go into debt and experience outrageous inflation lets at lets at least have something to show for it. Let’s fix the roads, update the power grid, provide free or very low cost pervasive internet and please let’s fix the elementary education system.

      Unfortunately I think it’s all aboard for QE3…

    38. Joe Friday says:

      overanout,

      I have no problem with construction but we have already overbuilt just about everything

      ???

      Have you seen the recent reports of how many bridges are completely closed and how many have drastically reduced load limits because they are unsafe ?

      How about extending the airport runways so there aren’t so many airliners running out of runway after they land ?

      Do I need to mention our crumbling water & sewer systems ?

      We have an entire SmartGrid that needs to be built to replace our current antiquated electrical grid.

      Have you driven on a road lately ?

    39. Joe Friday says:

      Ducky62,

      Unfortunately the $$$ were squandered on subsidizing existing public sector bureaucracy and political patronage.

      Interesting take that policemen, firemen, and teachers are “political patronage”.

    40. overanout says:

      Joe, yes I do drive lately and the roads are ok and have never been great but thats not that problem! Its jobs and lots of them which can only be created by a 30′s style public works program directed towards, teachers, police, fire, forest rangers and other non-construction focused employment. It could happen quickly while the necessary engineering issues are sorted out for these large construction related projects you speak about.

    41. philipat says:

      The UK provides an interesting control group. The Conservative Government (Read Republican) has had the political courage to actually CUT spending, and I don’t mean reducing the rate of increasein spending but actual cuts.

      On the upside, they are finding it is isn’t so difficult because there is so much fat and waste. Also, the AAA credit rating is secure. Even in the private sector, in times of crisis it isn’t difficult to reduce spending by 10% as many reading will be familiar with. But it requires leadership and guts.

      On the downside, growth has slowed. But then growth has slowed in the US also, even with continuing to borrow 43 cents on every dollar spent, and the 2Q US GDP revision has a very good chance of being negative.

    42. [...] US stimulus — a massive failure of infrastructure [...]

    43. dougc says:

      It might be a little early to declare the UK policy a success, it is the same thing FDR tried in 1937. It could be a success if the rest of the major economies don’t follow suit,

    44. rootless says:

      philipat,

      On the downside, growth has slowed. But then growth has slowed in the US also, even with continuing to borrow 43 cents on every dollar spent,

      Your statement implies that there is a contradiction between the large absolute amount of borrowing and slowing growth in US economy. However, there isn’t. Economic growth is not so much related to the amount of borrowing, it is rather related to the change in borrowing.

      Somewhat simplified, but the basic relationship between GDP and debt:

      GDP is a linear function of total demand.

      GDP = f(Total demand)

      Total demand = income + change of debt

      delta (GDP) = f(delta(income)) + f(delta(change of debt))

      Thus, GDP itself is related to the first derivative of the total debt, and GDP change to the second derivative (or the first derivative of borrowing).

      GDP can increase by an increase in income or by accelerating the amount of borrowing. If total income stalls and the amount of borrowing stays the same, no matter how large the amount of borrowing, then GDP growth becomes Zero. To continuously stimulate economic growth through deficit spending, the borrowing actually needs to increase over time. A linear increase in debt is not sufficient. When the amount of borrowing decreases, even if it stays positive, it already exerts a drag on the economy. That is the effect of the fading stimulus, which currently happens not just in US. So no surprise that the world economy seems to be heading to another recession coming soon.

      This is the dilemma of Keynesian deficit spending that you can’t infinitely accelerate borrowing to stimulate economic growth. Debt growth becomes unsustainable at a certain point. Austerity is not a solution either for a faltering economy, though, since it speeds up the contraction in total demand even more. The difference between the two is trying to muddle through and kicking the can down the road w/o solving the deeper problem or economic collapse now. And unlike Austrians or other libertarians (like MayorQuimby here), I don’t believe in the cleansing effect of such a collapse. They seem to believe in that you just can reset society and economy by letting it collapse, and then you start over and everything will be fine again in a free market paradise where everyone is happy (except the evil Keynesians and the government conspiracy).

      Debt is the lubricant of capitalism.

    45. rktbrkr says:

      The Tea Party ‘patriots” were able to notch out a last minute exemption from spending cuts for Afgan & Iraq wars. So what we what we might spend on our crumbing infrastucture is spent on destroying and rebuilding infrastucture a half world away.

      Some americans have their priorities so upside down they’d rather spend on an aimless high tech killing machine a half world away than see their needy fellow citizens fed and have access to medical care.

      Good editorial by Joe Nocera of NYT

      http://www.nytimes.com/2011/08/02/opinion/the-tea-partys-war-on-america.html?source=patrick.net

    46. mathman says:

      Here in PA there’s a giant road project going on to connect Rte 202 to the Turnpike, many other roads including local streets have been repaired and repaved – all with those stimulus dollars, though i too am worried about the sorry state of the bridges, the electrical grid, and the lack of interest in mass transit buildout all over the country.

      There’s an awful lot of work to be done just to keep up with entropy but instead we’re sending money overseas to blow shit up, into banks where it goes to sleep, and anywhere but in JOBS creation to do all this aforementioned work. You know you’re on your way out when reason takes a back seat to fraud and greed and the necessary becomes secondary to the expedient (getting re-elected in this case).

      Yes schools are crumbling while new prisons are built each year, we spend more on the military than we do on preventive medicine for the masses, and the growth industries will soon stop growing when there isn’t enough money to sustain them.

      (Whatever happened to all the green jobs Obummer promised during his campaign to delude us into thinking he was anything different?)

    47. rktbrkr says:

      For lack of a nail…

      Obama giving in to Repub blackmail of unemployed a few months ago not only contributed to the magnitude of this default crisis it also was a roadmap to this second and much larger blackmailing of the country’s economic health.

      The economy is already at stall speed and heaping on austerity is going to push it into the double-dip and I think eventual recognition of a second great depression with unemployment over 10% going into the next presidential campaign season. Obama will probably face withering attacks in a primary which will provide fodder to his Repub opponent if he survives the primaries.

      Obama lacks the courage of his convictions. He was elected to end the wars and instead we got Bush term 3 on that with even a “surge” in Afgan. The continuation of these open ended wars (the “long” war desired by the Pentagon) also added to the debt crisis. His continuation of Bush economic policies (and appointments Bernanke, gates Paulson jr (Timmy) with some “stimulus” sprinkled on top was a half assed approach that failed to achieve it’s objective. And now the teapotty zealots have added austerity to his self inflicted wounds

    48. HEHEHE says:

      They sent close to a trillion $ to Dem fundraisers and components of the Dem political machine so they could stimulate themselves.

    49. Petey Wheatstraw says:

      If we really want to put money to productive use, we should get to work cleaning up the mess we’ve made of our environment (a real-world cost of doing business that has always been off balance sheet). Some of the pollution related problems we’re beginning to see will dwarf our current economic predicament.

      As with the law of supply and demand, there is a biological/behavioral law that says, basically, that an organism will not do anything it does not NEED to do (e.g: we don’t scratch if nothing itches). If you mask the itch, there’s no need to scratch.

      We continue allowing costs of our economic/industrial activities to be hidden and/or ignored — the itch being masked by the analgesic of moral hazard (that is, no one will act on this, because there is nothing compelling them to do so) — while the disease becomes systemic and untreatable. Despite the growingly obvious evidence that we will face an increasingly bleak future if we don’t drag this filth and toxicity out into the light of day and deal with it, we are concerned with perpetuating the machine that spews it out as a byproduct of making money.

      Mark Hoffer recently posted some studies on toxicity of municipal water supplies with pharmaceutical and household chemicals. If I read his comment correctly, the presence of these chemicals is already ubiquitous. We have let industry shit in our common well.

      How much would it cost us to remedy this situation, how many jobs would it create, and who would pay for it all?

      This is where we should begin reallocating wealth.

    50. DeDude says:

      You have to remember the political situation in which this was constructed and passed. The GOP opposition had decided on a strategy based on that, if the country fails then most people are ignorant enough to blame the president. But the democrats needed to get 3 GOP senators to vote for the stimulus to get it passed. So the size and composition of the whole bill was strongly influenced by what those 3 senators would accept. As it has been since Obama got into office we ended up with a bill that was full of flaws, but better than nothing.

      State and local governments tend to worsen the cycles because they cannot conduct deficit spending. So when the economy goes down they lose revenue and stop infrastructure investments. Clearly the federal government has to try countering that, but it is probably a stretch to call it stimulus when money is given to local governments to prevent them from cutting (you expect it to prevent further reduction not to induce new growth). The reason you are not seeing more bumps in your infrastructure stimulus parameters is that those items were grossly undersized in the bill so they mainly just filled in the holes left by state and local government cuts.

      In the early phases of a severe recession precipitated by a credit crisis stimulus has to be 100% public infrastructure building. Both individuals and businesses are scared so any money you give them will be saved or used to pay down debt, so you cannot stimulate with tax cuts. The only tax cuts that may work at that stage are incentive programs where government give people a brake if they use savings or take on debt to do something that stimulate the economy. The car incentives were a successful example of that and the housing incentives were a failed example. The incentives pull forward demand on a relatively short timescale so it should only be used if there is an urgent need to pull demand forward from a within the next year. The car industry desperately needed time to downsize and restructure, whereas the fall in house prices already provided plenty of incentives for buyers who had the resources to buy.

      After the fall has stopped and things are beginning to turn around stimulus can begin to use tax cuts as a tool. It still needs substantial infrastructure investments as long as unemployment is highly elevated, but at a time when people are no longer scared that they are drowning in debt or will lose their jobs the consumer class can become more active if they get tax brakes. Also incentives for hiring may work if businesses actually start having more costumers.

    51. Petey Wheatstraw says:

      rootless Says:

      “Debt is the lubricant of capitalism.”

      “Lubricant” is a very loose term. You talkin’ motor oil or K-Y jelly?

    52. Joel826 says:


      bolderbob Says:
      In the 30s we built many of the nations most famous landmarks like the Hover Dam, Golden Gate Bridge etc. So far with a $1,000,000,000,000 spent what did we get for it. Does anyone have an answer other than we put off what we are about to get?

      Krugman gives a breakdown here:
      http://krugman.blogs.nytimes.com/2011/07/10/where-the-money-went/

      Somehow I missed the BEA’s very useful page tracking the Recovery Act and how it is translated into taxes and spending. (Thanks to the commenter who mentioned it). It’s especially useful for thinking about what the Obama stimulus really involved — and what it didn’t.

      Look at the peak quarter of stimulus (pdf), which was the first quarter of 2010. I’m going to rearrange the categories a bit. Here’s how I read it: at annual rates (in other words, actual numbers in the quarter were only 1/4 as large), the total budget impact was $357 billion. Of that, we had:

      Tax cuts and refundable tax credits: $151 billion
      Aid to individuals (mainly unemployment insurance and food stamps): $70 billion
      Aid to state and local governments: $103 billion
      Everything else: $33 billion

      Note that the aid to individuals was basically safety net, and the aid to state and local was about mitigating spending cuts rather than spending expansion. Basically, this was at best an attempt to beef up automatic stabilizers.

      So much for “we tried Keynesian policies and they didn’t work.”

    53. rootless says:

      Petey Wheatstraw,

      I’ll go with motor oil.

    54. DeDude says:

      @philipat;

      Yes UK is an interesting example,
      http://www.nytimes.com/2011/04/15/business/global/15iht-pound15.html?_r=2&hp
      How is that austerity program going when we look at the data? Did anybody show you the latest gobinment deficit numbers from UK and compare how effective the spending cuts were at reducing deficits; no I thought so nobody is releasing anything about that are they? Spain is another wonderful example of how to solve the problems with austerity. That is going fabulantastic to isn’t it
      http://www.bloomberg.com/apps/quote?ticker=.SPN:IND

    55. Joe Friday says:

      philipat,

      The UK provides an interesting control group … On the downside, growth has slowed.

      I think you mean – growth has vanished, not to mention their budget deficits are rising. That’s what happens when you cut spending in an economic downturn, as you have advocated.

      Oh, just can’t wait to follow Britain down the economic Rabbit Hole.

      Pass the Fish ‘n Chips.

    56. realgm says:

      The US would have been a lot better by now if Obama has put his efforts to:
      1) Go after the criminals that created and contributed to the financial crisis
      2) Do a real stimulus by fixing the roads, building new infrastructure – it would have created a lot of construction jobs for the unemployed as most of them are probably construction workers running out of houses to build.

      Too bad Obama is just another crappy politician that is all talk the talk but no walk the walk.

      I wonder if Obama can be reelected in 2012.

    57. rj chicago says:

      BR – Love ya
      AND I suggest you dispose of your democrat leaning and come on over to the dark side – What in the world would convince you to change your mind on the topic of Govt. Spending and continuing to hope that Obama and his minions will save this ship wreck? Sheesh!!!

    58. Lukey says:

      All this pining for public works (and lots of ‘em dammit) sounds to me like “ah for the good old days of the great depression!” Please, our situation now is noting like then (except for the surfeit of socialist policy and rhetoric emanating from much of the political leadership in Washington DC). Look at it this way, if the Federal Government spending $3.5 TRILLION can’t keep the economy from stalling, I don’t think our problem is one that can be solved by more government spending. And I can’t shake the feeling that people who suggest that it can are just trying to avoid an unpleasant conversation about what our real problem is – too much government laying like a lead blanket over the private sector, smothering every last glimpse of organic growth.

    59. Petey,

      with this..”…If I read his comment correctly, the presence of these chemicals is already ubiquitous. We have let industry shit in our common well…”

      you did, indeed, read that Correctly..

      this one http://search.yippy.com/search?query=perchlorate+in+water+supplies&tb=sitesearch-all&v%3Aproject=clusty has been an issue, by itself, for Years..

      this one http://search.yippy.com/search?input-form=clusty-simple&v%3Asources=webplus&v%3Aproject=clusty&query=prescription+drugs+in+our+water+supply has been catching, growing, coverage for some time..

      add’l http://search.yippy.com/search?input-form=clusty-simple&v%3Asources=webplus&v%3Aproject=clusty&query=SuperFund+sites+leaking+into+our+water+supply

      LSS: One can front this Search term/phrase ( leaking+into+our+water+supply ) with almost anything you can imagine, and ‘it’s in there’ …

      like http://search.yippy.com/search?input-form=clusty-simple&v%3Asources=webplus&v%3Aproject=clusty&query=Birth+Control+estrogens+leaking+into+our+water+supply

      but, hey, as long as We didn’t hear it from ‘Katie’, or Charlie Rose, it must not be..

    60. Lukey says:

      @ Joe Friday
      “I think you mean – growth has vanished, not to mention their budget deficits are rising. That’s what happens when you cut spending in an economic downturn, as you have advocated.”

      Maybe you haven’t noticed but growth has evaporated here in the US of A and we’re running $1.5 trillion in “stimulus” this year. Maybe after decades of “stimulus” spending, an economy just looks at it and shrugs?

    61. rootless says:

      @Lukey:

      if the Federal Government spending $3.5 TRILLION can’t keep the economy from stalling, I don’t think our problem is one that can be solved by more government spending.

      Your $3.5 Trillion is a fantasy number. Where did you get this from? There hasn’t been such an amount of stimulus spending by the federal government. So you make just up some huge number to argue that stimulus spending was useless. How dishonest is such an argument?

      The amount of stimulus spending as of 07/22/2011 since ARRA was enacted has amounted to $259.9 Billion in Tax benefits, $217.5 Billion in Contracts, Grants, Loans, and $186.8 Billion in entitlements.[*] Thus, the total has been less than $700 Billion, spread over about eight quarters so far. Of these less than $700 were only about $400 Billion due to increased government spending, on average only $50 Billion per quarter.

      So, if one uses the real $400 Billion, instead your made up 3.5 Trillion bogus number, yes, one could argue there hasn’t been enough stimulus spending by the government.

      [*] http://www.recovery.gov/Pages/default.aspx

      And I can’t shake the feeling that people who suggest that it can are just trying to avoid an unpleasant conversation about what our real problem is – too much government laying like a lead blanket over the private sector, smothering every last glimpse of organic growth.

      More fairy tales from the Republican or libertarian fantasy world.

    62. willid3 says:

      isn’t austerity for the government the same as trying to cut your way to consistent profit for a company? some thing that doesn’t work.
      part of the deficit problem is the great contraction took away almost 5% of GDP from revenue (might be wrong but thats about 700 – 800 billion per year) that the FEDs normal get. of course there was also the lost revenue from 2001 and 2003 tax cuts (which were not sold as increasing revenue, which they didn’t do, but returning money to those who were paying taxes).. on the spending side we had a smallish stimulus (700 billion is a 14 trillion economy isn’t much, but its about what was lost to the great contraction). the only other spending was extending unemployment (since so many jobs were lost due to down sizing, and so many had been exported (for no gain to the US at all), and it was really important to do, since otherwise we would have had 19 million people who had no reason to continue to support the economy as it was (they got no benefit from it, nor did they contribute to it).
      the real fix is getting the economy going, creating jobs again.
      any thing else will fail.
      as we can see examples today (Ireland) where austerity has failed, and continues to fail.
      with no chance of a recovery this decade. or maybe even next

    63. Joe Friday says:

      Lukey,

      Maybe you haven’t noticed but growth has evaporated here in the US of A and we’re running $1.5 trillion in ‘stimulus’ this year. Maybe after decades of ‘stimulus’ spending, an economy just looks at it and shrugs?

      It’s more likely you’re confused:

      * America had NEGATIVE GDP, which after the ‘stimulus’, turned to POSITIVE GDP.

      * Britain had POSITIVE GDP, which after their large spending cuts, turned to NEGATIVE GDP.

      There ya go.

    64. Lukey says:

      Joe,

      With all the downward revisions to our past growth stats, how can you be so sure? So we’ve spent something on the order of $5 trillion in “stimulus” since Obama took office (all deficit spending is “stimulative” if I recall my Keynesian dominated studies in Econ back in the 70′s) and yet we are poised to fall back into an official “double dip” recession after only several quarters of lackluster “recovery,” and you are pronouncing that a “success?” Do I have your position on that correct?

    65. DeDude says:

      Lukey; sure apples, bananas, elephants, roaches, seaweed, they are all food so off course they all belong in a discussion of fruit.

    66. rootless says:

      @Lukey:

      So we’ve spent something on the order of $5 trillion in “stimulus” since Obama took office (all deficit spending is “stimulative” if I recall my Keynesian dominated studies in Econ back in the 70′s)

      Oh, now it’s already $5 trillion in “stimulus”, allegedly.

      The deficit can increase, even if government spending doesn’t or latter even decreases, when tax revenues decrease even faster. Please show me the economist relying on Keynes’ theory, who claims such a kind of increase in the deficit would lead to economic growth. To get growth you need an EXPANSION in aggregate demand, i.e., demand stimulated by the government must EXCEED any contraction of the demand in the private sector. BTW: Total government expenditures decreased in Q1 and Q2 of 2011 according to BEA. So, there has been a drag on the economy from government expenditures this year, no stimulation.

      I’m sorry that you got such a crappy education in economics back then. But this is not really any excuse for making bogus refutations of an economic theory, which you base on just making up something that is not being said in this theory and than refuting what is only your own invention. There is a name for this kind of argument.

    67. rootless says:

      A small correction of the phrasing. I wrote, “i.e., demand stimulated by the government must EXCEED any contraction of the demand in the private sector.” The correct statement is, “i.e., demand expansion stimulated by the government must EXCEED any contraction of the demand in the private sector.”

    68. Lukey says:

      So deficit spending is NOT “stimulus?”

      This familiar source disagrees:

      http://www.ritholtz.com/blog/2011/04/david-levy-deficit-spending-is-helping-not-hurting-the-economy/

    69. Joe Friday says:

      Lukey,

      With all the downward revisions to our past growth stats, how can you be so sure?

      SO, you want to know how I can be sure that GDP went from negative to positive after the stimulus was enacted and then GDP diminished as the stimulus diminished ?

      Is THAT the question ?

      So we’ve spent something on the order of $5 trillion in “stimulus” since Obama took office

      Stop being silly.

      (all deficit spending is “stimulative” if I recall my Keynesian dominated studies in Econ back in the 70′s)

      Depends what you do with the money. The vast overwhelming majority of the federal deficits are from tax cuts. Tax cuts are not stimulative.

    70. rootless says:

      @Lukey:

      Ok. I just have watched the clip to see what Levy says. Nowhere in the clip the guy says that any deficit, no matter where it is coming from, even if it is from decreasing tax revenue, will stimulate economic growth. He is talking about the necessity of stimulating demand in the economy through increasing government spending to compensate the lack of demand from the private sector. Contrary to what you just have claimed your assertions are not being supported in this video clip.

    71. [...] over to The Big Picture and take a look at the graphs of the effects of the stimulus spending has been done since 2009. [...]