From the Washington Post, "Obama Team Develops Stimulus," about what's now being spitballed as costing $850 billion:
The potential for massive new spending has touched off a frenzy among interest groups eager to claim their share of the expanding stimulus pie. The profusion of requests from governors, transportation groups, environmental activists and business organizations is spawning fears that the package could be loaded with provisions that satisfy important Democratic constituencies but fail to provide the jolt needed to pull the nation out of a deepening recession.
"It's everybody's wish list, everybody's favorite program. And I think that's a big mistake," said Alice Rivlin, a Brookings Institute economist and former budget director for President Bill Clinton who has been advising Democrats. "I agree with the Obama team that we need a big increase in public investment, but it should be done very, very wisely," rather than through a rushed process that risks being "seen as scattering money to the wind.
An Obama adviser involved in crafting the stimulus package said the transition team was keenly aware of the potential pitfalls and was focused on funding ideas that would quickly pump money into the sagging economy, fulfilling Obama's promise to create or preserve 2.5 million jobs by 2011. Because many ideas probably won't meet that standard, the adviser said, the team is developing a screen to keep them out.
So, let me see if I have this straight ... Experienced Democratic expert Alice Rivlin is worried that the Obama Administration will spend the money too fast and the Obama adviser responds that they are devising a system to make sure they don't spend the money too slow.
Maybe I'm just not showing a positive mental attitude, but this does seem like a fundamental conundrum -- you have to spend it fast to make it a stimulus, but then you are probably just going to waste it -- that somebody ought to ask Obama about before Congress hands him $850 billion.
And why all the huffing and puffing over "infrastructure," which obviously takes more time to get going than just hiring, say, some social workers. Is it because "infrastructure" sounds manly and complex? Is it because the unions have been demanding more spending on infrastructure since 1982? (I recall identical authoritative sounding predictions during the 1981-82 recession from the AFL-CIO that America was about to collapse in a heap unless Congress voted a giant increase in infrastructure spending.) Is it to keep illegal immigrant construction workers from going home to Mexico before they can be "put on the path to citizenship" (and voting Democratic)? Is it because that's what they do in Chicago and Obama mostly knows the Chicago Way?
And shouldn't we start thinking about how to export more? The most obvious government policy to cut the trade deficit by selling more abroad is the for the government to cut back on environmental restrictions on mining.
My published articles are archived at iSteve.com -- Steve Sailer
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13 comments:
STIMULUS = DEBT
you can't solve the problem by applying a remedy that is the same as what caused the problem in the first place
the compound interest fractional reserve debt slave system has reached maximum indebtedness and now the only 'solution' is a reset
this cycle has played out many times before in history
read von mises: once you get to this point in the cycle there is no acceptable 'solution' there is only a playing out of the financial laws of thermodynamics
In the early 1980s, the Reagan Administration diverted a part of the gasoline tax away from highway building to help limit the deficit, so the major media dutifully echoed the highway lobby's complaint about "crumbing infrastructure." In the 1990s, with deficits shrinking, the tax was restored to transportation spending under a Republican Congress, so the major media began to complain about "pork barrel spending."
2 points:
1) Funny you should mention mining. South Africa's only chance of becoming say 2nd world is to make use of the mining boom, er having made use of it pre-crisis. Anyway, the regime there managed to chase away hordes of investors even during the metals peak by insisting that blacks get a cut of everything. Investors of course knew what this meant and instead headed off to Chile, Canada and Oz.
2) Infrastructure spending does make sense in a well connected economy. I work for a large German contractor and bosses here are already speculating on which units will get more work and which will go dry. But I doubt it will get millions off the street. Maybe a few thousand at best. The start-up times are fairly long except for projects where the planning restrictions have been resolved. But then you can only get some money into the economy if the industry is rationalised and productive.
"the financial laws of
thermodynamics"
That's a good one. I learnt about thermodynamics, so where can I read about this new theory?
Sure, there is good reason to wonder whether politicians in practice will spend money on Bridges to Nowhere as opposed to useful projects (see also, Amtrak and Japan).
But in principle, infrastructure enables the efficient movement of labor, capital, goods and services to market. What's wrong with that?
They doubted the value of canals and macadamized roads, too, back in the Whigs' day.
For background, let us refer to The Economist, that bastion of big-budget socialism:
Infrastructure in China
http://www.economist.com/world/asia/displaystory.cfm?story_id=10697210
in India
http://www.economist.com/specialreports/displaystory.cfm?story_id=12749787
in the U.S.
http://www.economist.com/world/unitedstates/displayStory.cfm?source=hptextfeature&story_id=11636517
http://www.economist.com/displayStory.cfm?story_id=12775494
and in Africa:
http://www.economist.com/displayStory.cfm?Story_ID=1487583
Someone should tell Obama that once you get into a hole through wasteful spending you should stop digging.
The most obvious government policy to cut the trade deficit by selling more abroad is the for the government to cut back on environmental restrictions on mining.
Too true, we have plenty of hard assets if the greenies would let us get at them.
It will have to come down to that anyway when our Chinese debt masters come looking for payment. Future conversation:
Uncle Sam: How about some greenbacks, hot off the presses?
Chinese: nah.
Uncle Sam: Carbon Credits?
Chinese: Absolutely not.
Uncle Sam: A couple million barrels of oil and a fine assortment of some rare earth elements?
Chinese: Now we're talkin'!
Mining? Why mining in particular?
If I had to guess, I would guess that the fastest way to boost exports would be to repeal US law making it a domestic crime to bribe a foreigner (regardless of accepted practice in the recipient's country).
The policy to adopt, if USG is going to dispense money without limit, is at least get something for it in exchange.
The Feds could begin ordering massive numbers of new cars and light trucks to start replacing federal, state and local vehicle fleets.
Ditto for all kinds of construction equipment to replace aged and worn equipment inventories in DoD. Ditto again for semi-tractor trailers and other commercial trucks used by DoD for logistics operations.
The most obvious government policy to cut the trade deficit by selling more abroad is the for the government to cut back on environmental restrictions on mining
If either party cared about the trade deficit we wouldn't be in such a hole economically. If they had that kind of mentality they would be looking out for what's best for America, and probably fencing the southern border.
"The most obvious government policy to cut the trade deficit by selling more abroad is the for the government to cut back on environmental restrictions on mining."
1) minor typo there: "is the for the". not a big deal.
2) honest question. how is this the obvious federal policy? i'm not sure how this would significantly increase exports. exports of what? coal?
The other night Jim Carey on Jay Leno's show grabbed his crotch and yelled, "Here's my stimulus package".
Pretty funny but all too true. Obama's team seem to be thinking with the little head not the big one.
The stimulus package as its being fashioned is going to be a trainwreck, EVERY city and county is coming up with their wish list of projects that haven't been worth funding already on their own merits. Check out the US Conference of Mayors tentative list--- their numbers are WAY low because they only surveyed a limited number of city and no county governments.
http://www.cnn.com/2008/POLITICS/12/18/mayors.pork/
A better way is a payroll tax holiday (whether FICA and income tax withholdings, or just FICA). $100 billion in income taxes and $67 billion of FICA taxes are withheld every month.
Instead of an $850 billion stimulus package that will take months to get rolling (with a lot of "bridge to nowhere" projects funded), just stop collecting FICA for all of 2009. Price tag is $800 billion.
A tax holiday could start immediately (no time lag as with tax rebate checks), doesn't require any lobbyists or new government bureuacracy and it can be phased out (or continued) depending on how the econonmy does. If the economy recovers next summer, its not like they're going to stop construction on a bridge that's only halfway to nowhere.
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