The Facts About Stimulus Spending

Separating economic myths from economic truths

Editor’s Note: Reason columnist and Mercatus Center economist Veronique de Rugy appears weekly on Bloomberg TV to separate economic fact from economic myth.

Myth 1: Stimulus spending can jump start the economy and fix unemployment.

Fact 1: Recent experience suggests stimulus spending won’t help.

There’s no question President Barack Obama inherited a lousy economy. Yet even many prominent Democrats, including Senate Majority Whip Dick Durbin and Democratic National Committee chair Debbie Wasserman Schultz, now acknowledge that after two and a half years in office, the president owns the economy. Unfortunately for him, things still aren’t looking so so good. That’s why the president called on Congress last week to pass a series of spending measures that he said would boost the economy, including additional infrastructure spending and an extension of the payroll tax cut for another year.

With this in mind, I thought it would be interesting to update my chart on the level of stimulus spending and unemployment rates since 2009.

The chart is based on the most recent data from the Bureau of Labor Statistics and the Center for Data Analysis. As you can see, the administration’s promise that the American Recovery and Reinvestment Act (ARRA) would keep unemployment rates from reaching 8.8 percent and would create some 3 million jobs—90 percent of them in the private sector—did not materialize.

The unemployment rate started at 7.6 percent when President Obama took office and peaked at 10.2 percent in October 2009. Since the enactment of the stimulus bill in February 2009, the unemployment rate has not approached pre-ARRA levels, even though $382 billion has been made available by government departments and agencies (on top of tax credits and other tax-related items). In fact, unemployment recently edged up, from 9 percent in April to 9.1 percent in May.

Based on this data, it is hard to make the case that doing more of the same will help. Yet that is precisely what New York Times columnist Paul Krugman think we should do. In his view, these dire results are due to a stimulus that was too small. It’s difficult to imagine what level of stimulus spending would be large enough for Krugman. What I do know is that we have spent $666 billion to date, yet unemployment remains above 9 percent. And under even the rosiest of assumptions, which claim 2.4 million jobs created, each of those jobs cost $278,000 (see here).

Myth 2: Additional infrastructure spending is an effective way to stimulate the economy and create jobs.

Fact 2: In theory, infrastructure spending injects more money into the economy than other types of government spending. In reality, however, politicians rarely include infrastructure spending in stimulus bills. Instead, they spend money on items like transfers and tax cuts. Only 3 percent of the last stimulus went to infrastructure.

Economists on both sides of the aisles argue that one reason why the stimulus failed is that it wasn’t designed properly. Stanford University’s John Taylor, for instance, has argued that although much money was spent, very little stimulus money was spent in the form of actual government purchase. In a paper with he co-authored with John Cogan, Taylor finds that, out of the total $682 billion package, federal infrastructure spending was just $0.9 billion in 2009 and $1.5 billion through the first half of 2010—or less than four-tenths of 1 percent.

Taylor and Cogan also noted that most of the money generated by tax cuts was saved, not spent, and that the money that went to state governments was spent to reduce the states’ reliance on borrowing and on other “non-purchase” items, such as transfer payments, subsidies, and interest payments. In other words, the additional money that went to states and taxpayers didn’t change a thing. Taylor claims that a better-designed stimulus would have probably been more effective.

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  • Tony||

    So de Rugy appears to confirm the justifications behind stimulus spending, but says that the most effective forms of spending are not politically viable, so therefore it's all a bust and we should instead... well she doesn't get that far, of course.

    There are only two jobs programs offered here that I'm aware of:

    1) Let it all burn
    2) It'll trickle down, really I promise!

    But who gives a shit, really, we're all here united for one purpose: getting the socialist out of the white house, and hey if millions of people out of work helps the cause, fine, we're employed, and we even have a little shop full of misleading-chart gnomes to contribute to the cause.

  • Republicans||

    1) Let it all burn
    2) It'll trickle down, really I promise!

    That is the usual order of things after you fellate us. It clears up in no time, I swear.

  • ||

    Yes, Tony. The tough libertarian medicine is that the Government should do nothing. Swallow it. You know you want to.

  • Achtung Coma Baby||

    He can't swallow anything without first being told that we love him.

  • Tony||

    But it won't be doing nothing. Your position is simply to crystallize all existing policies. Sounds pretty arbitrary to me.

  • ||

    It's not arbitrary at all. I'd rather see all policies related to shaping the economy be scrapped. Probably not going to happen. But it doesn't matter what the baseline is for the economy. Whatever it is, going forward, if government tweaks based solely on architecting the economy no longer occur, then the economy will improve.

  • Tony||

    I fail to see how consumer demand, therefore employment demand, will pick up all on its own when currently a lack of both are feeding each other. Government = bad is not economic policy.

  • ||

    Interesting how the business cycle becomes the business death spiral. Tell me more.

  • Jordan||

    So you think people have suddenly stopped demanding goods and services?

  • Tony||

    Um I think that their lack of having money is what causes it.

  • Seguin||

    I guess the government should quit taking it away then.

  • Tony||

    Yes, that is part of stimulus--lower taxes. If the GOP really wanted austerity to solve the debt they'd insist on raising taxes. But they won't because they are lying about what they want.

  • Mr. FIFY||

    Team Blue lies about what it wants...

  • ||

    Leggo his ears man, let him drive,

  • ||

    so.. now that your policy has been shown to be ineffective, you're saying we should go through with it anyway? Seriously?

  • Red Rocks Rockin||

    He promises it'll work this time.

  • ||

    Definition of insanity.

  • Seguin||

    What's more trickle-down than stimulus from on high?

  • ||

    Unfortunately De Rugy is a mainstream economist and therefore cannot see out of her box, or possibly fears the disney economists of the world might mock her. She needs to stop fearing.

    The data clearly shows that any stimulus cannot help unemployment except in the short term. The crowding out is inevitable and all you do is replace sustainable industry with unsustainable. In short order you get higher unemployment. EG The great depression. It doesn't matter if it's infrastructure or not, although it might not be as bad if you guess correctly where the resources might be needed. But you don't need to guess, you just need to leave them alone and they will go where they are most needed.

    Disney economics firmly embraces the cargo cult fallacy. We can build an ediface that was the result of prosperity in the past and somehow prosperity will come. Unfortunately if that ever worked we could do away with entrepreneurs, because all they do, and mostly fail at, (which failing is necessary to a healthy economy) is try to predict what the most desired use of resources will be. The difference is they use their own resources to do this and when they fail do not impose a cost on others.

    When government builds cargo cult airstrips (or bridge or highway or whatever) their failure results in ever greater imposition of costs on others.

    Now when some secondary business takes advantage of the cargo cult airstrip and opens up a secondary business we see disney economists claim "See! Look there's a multiplier!" Except what there really is is a business that will cease to exist once the cargo cult airstrip can no longer be maintained because it inevitably costs more to maintain.. because there's no market incentive for the cargo cult airstrip to be efficient.

    Essentially modern recessions are the failure of cargo cult airstrips to be able to be maintained and the adaptations of the market to artificial deformations have to be abandoned, and resources are lost.

    In the case of the mortgage meltdown the artificial airstrip was home ownership. Home ownership increases with prosperity, thus if we increase home ownership we will have more prosperity! The artificially low price of risk and negative regulation (encouraging increased risk) put more resources in this market. Enterprise adapted to the cargo cult airstrip and resources shifted to housing, credit, construction, etc. In short order this of course could not be maintained and we see the resources allocated were wasted. All that adaptation to artificial environment has to clear. We're still not letting it do so.

  • ||

    There’s no question President Barack Obama inherited a lousy economy.

    But, with diligent meddling, he has managed to turn a lousy economy into a crappy one.

  • Reality||

    How many times must the idiotic logic accompanying the first figure be debunked. Yes, the administration was wrong that the stimulus would limit the unemployment to 8.8%. No, that does not mean the stimulus did not work. Jesus effin' Christ, the chutzpah to make this kind of 3rd-grade logical fallacy and present it in a "fact/myth" dichotomy is truly astounding.

  • Bill||

    Right on man! 90% of those unemployment checks that the Feds helped the states pay were actually new jobs in the private sector. Your team won!

  • ||

    listen up, you need more tax cuts for businesses that's the only way to get the economy working. The economy grew huge when bush jr did the tax cuts for the rich cause they make the jobs. plaina and hard truth you need to understand. The stimulus is a big waste of throwing money down the toilet.

    Look liek that lady economist says workers don't spend thie rmoney to consume they just save thier money so, giving tax breaks to middle class and poor don't stimulate the economy they just don't have the buying power to keep us a float. the upper class and comoprations invest large sums of money and THAT is what riases the stock market and creates wealth.

  • Reality||

    Nonsensical rambling.

  • Reality?||

    Lol! More like, real fucking dense.

  • ||

    Nonsense. Innovation is a major factor in economic growth in the United States, when we have significant growth. Not just advances in science and technology, but also in coming up with new and marketable goods and services or variations on existing ones.

    If the government simply took less, rather than spending what it has--or rather, doesn't have--on favored constituents or make-work projects, businesses would tend to invest that money in a number of ways, but part of that would be in innovation. Consumers would invest and spend, but a chunk of that would be on new products that result from that innovation.

    Government not only is horribly inefficient and politically biased in its spending, but if you look at what it spends money on, much of it is one-off projects or dubious concepts without much commercial or consumer interest and, therefore, without much economic merit. The real "multiplier", in other words, comes when the market keeps its money and spends it on things that participants in the market value.

    There's not a lick of proof that the stimulus did jackshit to help the economy, and the burden of proof is on the government and its supporters.

    The solution to our economic woes are fairly simple. Dramatically less government, even more dramatic cuts in government spending, and lower taxes. Our economy would do just fine without the massive government intervention we have today.

  • Tony||

    What there has never been any evidence of is the claim that keeping taxes low helps create jobs. Just look at any chart comparing the two over the 20th century and you will see no correlation whatsoever. Just look at the last two decades and you'll see it makes no sense. There's plenty of money out there in the hands of your Randian heroes known as "people with money," and they're not spending it on job creation because the demand for jobs is weak. This is a demand crisis, not a supply crisis.

    You know why job creation is currently getting worse? Because the stimulus spending stopped.

  • Bruce Majors||

    There has never been any evidence that you are capable of cognitive functions higher than, or even as high, as wiping your hole.

    Your an ass and a retard and always have been. Your idea that you can look at a graph or a correlation and explain things is the hallmark of an ignorant illiterate idiot. Your graphs don't have a "line" for central planning of the money supply and interest rates, which all libertarians treat as at least a big a factor as tax rates.

    Here's a correlation for you you pinhead: Clinton 5.2, Bush 5.3, Obama 9.2 So by your style of economic reasoning the fastest way to get unemployment down and grow the economy would be to send Obama to GWU for transsexual surgery.

  • Tony||

    Ok so since taxes are lowest under Obama among those three, what you're saying is you agree with me?

  • ||

    "they're not spending it on job creation because demand for jobs is weak"

    ...tell that to the people in the double digit unemployment lines. Yup, definitely no demand.

  • Tony||

    What is this serious? Those people in the lines would represent the supply.

  • Red Rocks Rockin||

    No, you dumb poz, they represent the demand--the employers provide the supply.

    And here you were with your twee bitching about forcing business owners to hire people.

  • ||

    [. There's plenty of money out there in the hands of your Randian heroes known as "people with money," and they're not spending it on job creation because the demand for jobs is weak. ]

    Wrong. They are spending it (investing) in foreign markets with lower tax rates and thus creating jobs....there.

  • Tony||

    Go capitalism!

  • Kant feel Pietzsche||

    more of what you reward and less of what you punish.....

    I refuse to believe that another human being capable of forming complete sentences is actually this dumb. It HAS to be intentional obtuseness.

  • ||

    Because it's not taxes that business predicts by, it's spending.

    If taxes are higher but spending is lower and debt is being reduced entrepreneurs know that their future burden will be less.

    The correlation between spending and unemployment is obvious in the data, and that is why.

    IOW lowered taxes won't make as much difference to employment as reduced spending. But if spending is not curbed nothing else will matter, because businesses know that so long as the burden is increasing they will pay it one way or another and they will be much less likely to incur obligations.

  • ||

    Yes, the administration was wrong that the stimulus would limit the unemployment to 8.8%. No, that does not mean the stimulus did not work.

    So, if there is no test, no measurement, no target, no standard by which the administration's claims can be measured, we must accept their claim that 'it worked'? "Dixi ergo est verum."

  • Tony||

    Did the recession end? Were jobs added or subtracted as a result? No, the economy is not great now, but that can be evidence of one of two things: 1) the stimulus failed or 2) the stimulus wasn't big enough. Since things actually did improve with the stimulus, the answer is 2). And now that the stimulus has run out, things are getting worse. But according to you, things should be getting better now that government is getting out of the way. Taxes are still historically low. So what gives?

  • ||

    "Did the recession end?"

    No.

  • Tony||

    I take it recessions are defined by however you personally feel about the economy, and not macroeconomic indicators.

  • ||

    OOOOOOOO!

    You mean those two or three quarters that the economy edged upwards before turning down again?

    Shit. There were quarters in the middle of the Great Depression that the economy improved, but that didn't mean it was over prior to the late 1930s.

  • ||

    Let's start talking real financial numbers. Like ROI.

  • Red Rocks Rockin||

    You're welcome to go down to your local unemployment office and tell everyone the recession's over. Hopefully the subsequent beatdown will be posted on Youtube.

    "Poz yells recession's over, gets ass kicked"

  • Red Rocks Rockin||

    Since things actually did improve with the stimulus, the answer is 2)

    I'd love to see some actual data on this. Politicspro tried that before he got slapped down with real figures and then whined that they weren't relevant.

  • ||

    Good one Red - I hand you stats that disproved your radical right wing nonsense and because you skewed more nonsense you characterize it as validating what you said. "I'm red rocks...I perpetuate economic myths and principles that fail, endorse them myself either under my own name or a different handle I create, then say I'm proven right.". It's right wing welfare sponges like you who are destroying the American economy.

  • ||

    Favorite of red's economic cures - go back to 2003 levels of spending cuz fox news said that's what will work. I guess it's now right wing economic engineers who get to decide that 2003 levels of debt, caused by previous administration's giveaways are ok. Because if righties like red actually want to balance the budget, they'd have to adopt Clinton economic program, something that doesn't align with their radicalized lack of thinking. Keep talking red - proving the other guy's point every time.

  • Red Rocks Rockin||

    Good one Red - I hand you stats that disproved your radical right wing nonsense and because you skewed more nonsense you characterize it as validating what you said.

    Horseshit--you handed one stat, the GDP, that was easily disproven by taking the deficit spending into account. I cited several stats--food stamps recipients, the U3 (and should have included the U6, which also went up this week), the employment to population ratio, and long-term unemployment. These were all easily verified through government sources.

    What was your reaction? "THESE STATS AREN'T RELEVANT A BLOO BLOO BLOO!!!"

    Keep pozzing, Politicspro--you make the left look sillier and less significant every time you post.

  • Red Rocks Rockin||

    Because if righties like red actually want to balance the budget, they'd have to adopt Clinton economic program, something that doesn't align with their radicalized lack of thinking.

    Going back to 2003 levels of spending and keeping tax rates the same is adopting Clinton's line of thinking?

  • ||

    You also argued that the Obama payroll tax cut was implemented as part of the extension of Bush tax cuts in December '10, when in fact, they were part of the stimulus. Then again, why let facts get in the way of good argument about why -6.2 GDP shrinkage is explained away by mythological arguments from right wing think tanks. Signing out now - too hard not to pick on these poorly constructed arguments.

  • Red Rocks Rockin||

    You also argued that the Obama payroll tax cut was implemented as part of the extension of Bush tax cuts in December '10, when in fact, they were part of the stimulus.

    Uh, no, that was silly "Making Work Pay" tax credit. Perhaps this is what you're referring to:

    http://www.cnbc.com/id/4055036.....upply_Side

    President Obama’s deal keeps the lower personal income, dividend and capital gains rates enacted under President George W. Bush the same for at least the next two years. What’s new is a 2 percent reduction in social security payroll taxes for one year.

    Perhaps if you didn't get your current events from your college professors, you'd be more informed.

    Then again, why let facts get in the way of good argument about why -6.2 GDP shrinkage is explained away by mythological arguments from right wing think tanks.

    LOL at this bit of goon-speak. Since when is the BLS a right-wing think tank? Refute the stats cited or shut the fuck up.

  • ||

    The Making Work Pay Credit which, as you say, was included in the 2009 stimulus bill, was specifically a reduction in payroll withholding tax....last I checked, paychecks are incuded in income. Thanks for proving my point...much appreciated. Immediately upon passage of the stimulus bill withholding tax was reduced across a significant majority of American's paychecks. That's what we great unwashed call a "tax cut."

    Now, the fact that additional tax relief was included as part of the retention of the Bush cuts doesn't disprove the previous cuts, it simply proves that Obama reduced payroll taxes to levels below the Bush administration. Again, thanks for proving me right.

    Having said that, my son, it's not incumbent on the rest of us to carry stats to the table to disprove poorly made arguments of other posters who cherry pick pieces of tripe to support badly formed arguments.

    But let's look at a couple of stats...You have cited BLS stats as clear proof GDP growth didn't occur under Obama. Oh, wait, that's not even the case anymore. In this last post, the argument is that those BLS stats prove we didn't have -6.2 percent GDP shrinkage in Bush's last quarter as president. Read your reply...it's pure genius...And to prove it, you tell me to shut up. Good one.

    So let's take a look at that stat - that -6.2 percent GDP shrinkage (which, incidentally, came of the heels of -.3 percent GDP shrinkage the quarter prior). Sidebar: under Bush policies, the Chinese economy would overtake America's as world's sooner than projected, as we could simply shrink our way to second. It certainly is a period the right seems to remember fawningly when thay talk of policies for the future. Let's take a walk down memory lane, to polices that brought us a Dow under 7000, destruction of the bulwarks of our bankng system and decimation of the average citizen's 401k by the order of 50-75 percent. Good stuff. No wonder the right looks romantically to those "good old days" and the policies that created them as a guidepost to saving us form the vagaries of the current administration's policies. If you remeber one stat, remember this: -6.2 percent GDP shrinkage under policies of the right. I give good stat.

  • Red Rocks Rockin||

    Having said that, my son, it's not incumbent on the rest of us to carry stats to the table to disprove poorly made arguments of other posters who cherry pick pieces of tripe to support badly formed arguments.

    Actually, that's what making an argument is all about--backing up your assertions with evidence. The mere fact that you haven't touched any of the unemployment statistics once in your counter-arguments that Obama saved the economy shows just how weak your arguments are. You're "cherry-picking stats" statement is nothing more than the whine of a bitch that can't deal with actual facts and figures that don't fit into you coffeehouse narrative.

    You have cited BLS stats as clear proof GDP growth didn't occur under Obama. Oh, wait, that's not even the case anymore. In this last post, the argument is that those BLS stats prove we didn't have -6.2 percent GDP shrinkage in Bush's last quarter as president.

    And you're still refusing to do basic math. The real GDP, when taking the massive deficit spending into account, is actually -7% when accounting for the 12% in deficit spending.

    http://www.market-ticker.org/akcs-www?post=189733

    Note that Bush played these games all throughout the 2000s, and Obama's not only continuing the game, he's now baked $1.5 trillion in deficits into annual spending every single year. His big solution is to cut $4 trillion over 12 years, leaving an annual deficit of $1.1 trillion. That's not going to get the job done, unless the Fed buys up the rest of our debt from our foreign creditors and holds the interest rates at rock-bottom levels. And even then, that game will only last for so long, because compound interest always catches up to you sooner or later.

    And that, child, is called arithemtic--something you've demonstrated a clear aversion to in your contributions so far, on top of your allergy to actual government figures that belie your "Obama saved capitalism!" fantasia.

    Deal with the stats, or shut the fuck up.

  • ||

    So, using your mathmatical modeling, what was the "real" GDP in Bush's last quarter as president in view of the fact that all of the "growth" on his watch was deficit fuled, mainly as a result fo the tax custs you seem to treasure so greatly?

    Also, given the obsessive call for stats, where's the refutation on the stats about GDP shrinkage, 401k destruction and the qualitative argument around the destruction of the financial sector?

    btw, if one is truly interested in shrinking the deficit immediately, we can take a cool $300-500 billion/annum down today by simply treating the Iraq and Afghanistan wars as off the books financial transactions, as was case in previouis administration. Fits right in with those calls for a return to 2003 spending levels articulated on this on this thread.

    Interestingly, every time I address one of the bogus arguments on the thread, the next play is to change the question...typical.

    This is such child's play it's not even interesting anymore.

  • Red Rocks Rockin||

    The Making Work Pay Credit which, as you say, was included in the 2009 stimulus bill, was specifically a reduction in payroll withholding tax

    You must not have filled out a tax form the last two years, then--my 1040A, line 40 specifically provided me with the option of claiming the "Making work pay" credit.

    www.irs.gov/pub/irs-pdf/f1040a.pdf

  • ||

    Making Work Pay Questions and Answers: General Issues (Source: IRS.gov)

    Q2. How will taxpayers get this credit?

    A. For people who receive a paycheck and are subject to withholding, the credit will typically be handled by their employers through automated withholding changes to be made in early spring 2009. These changes may result in an increase in the amount of take-home pay. The amount of the credit will be reported on the 2009 income tax return. Taxpayers who do not have taxes withheld by an employer during the year can also claim the credit on their 2009 tax return filed in 2010

  • Red Rocks Rockin||

    So, using your mathmatical modeling, what was the "real" GDP in Bush's last quarter as president in view of the fact that all of the "growth" on his watch was deficit fuled, mainly as a result fo the tax custs you seem to treasure so greatly?

    Didn't you read the link? It's even got a nice chart for you. And it's telling that you focus like a laser on the last quarter and completely ignore the other 7.5 years. It doesn't change the fact that we've been living on borrowed money for the last 54 years, but it's amusing that you accuse me of "cherry-picking" when you've managed to make a whole pie for yourself.

    Also, given the obsessive call for stats, where's the refutation on the stats about GDP shrinkage, 401k destruction and the qualitative argument around the destruction of the financial sector?

    What's your point? When have I ever argued that the banks weren't completely overleveraging themselves during the last 20 years? And when are you going to deal with the stats that show Obama actually didn't save capitalism, and that happy days aren't here again?

    btw, if one is truly interested in shrinking the deficit immediately, we can take a cool $300-500 billion/annum down today by simply treating the Iraq and Afghanistan wars as off the books financial transactions, as was case in previouis administration. Fits right in with those calls for a return to 2003 spending levels articulated on this on this thread.

    Well, no, because there's this little thing called the "Debt to the Penny" series that the Treasury produces. The 2003 spending levels do count that as well, you know. If you're going to make an argument, please try to be better informed.

    Interestingly, every time I address one of the bogus arguments on the thread, the next play is to change the question...typical.

    Bullshit. You haven't addressed a damn thing. You bragged about a level of GDP produced by Obama that's been entirely fueled by deficit spending--do you seriously think $1.5 trillion in annual deficits can be sustained? You crowed about him saving capitalism when unemployment levels are in the toilet, and aren't coming back anytime soon, if ever (as many of those who lost their jobs are now basically unemployable after being out of work so long). The fact that you've stuck with arguments that have been so easily refuted shows a level of sociopathy that Ed Gein would envy.

    For people who receive a paycheck and are subject to withholding, the credit will typically be handled by their employers through automated withholding changes to be made in early spring 2009. These changes may result in an increase in the amount of take-home pay. The amount of the credit will be reported on the 2009 income tax return.

    So how does this make it a cut in the tax rate? A tax credit and a tax rate are not the same thing--the credit was paid for with bonded debt as part of the stimulus package. In other words, what you're arguing was a "tax cut" was really nothing more than a transfer payment from the selling of bonds to an increase in take-home pay, with the employer acting as the middleman. There wasn't actually a cut in the payroll rate until 2010, as the CNBC article reported--that's why it was called a "new" rate, after all.

  • ||

    lots of words, no answers. But I commend you...at least this time you didn't curse at me and try to act like a backyard bully as you did in your previous two posts. As has been the case throughout, you offer no answers, no thinking and rote repetition of the same 4-5 factoids. Now if you can actually come up with some arguments, as opposed to blustery lectures....Bye bye...I'm off to debate with people actually capabile of thought.

  • ||

    One last goodbye though...your last passage on the tax issue is a Clintonian class - Red, I must ask? Does it depend on what the meaning of "is," is? you'd make Orwell proud...

  • Red Rocks Rockin||

    lots of words, no answers.

    If you're too much of a bitch to engage the facts, at least have the guts to admit it.

    As has been the case throughout, you offer no answers, no thinking and rote repetition of the same 4-5 factoids.

    Says the dumb poz who's been citing the same statistic in all of his posts for the last week.

    Now if you can actually come up with some arguments, as opposed to blustery lectures....Bye bye...I'm off to debate with people actually capabile of thought.

    Seeing an actual argument from you would be nice for a change.

  • Red Rocks Rockin||

    One last goodbye though...your last passage on the tax issue is a Clintonian class

    If you're too stupid to figure out the difference between a tax credit and a cut in the tax rate, then the last thing anyone should let you do is get near their wallet.

    Off to the coffeehouse with the rest of your SWPL faggot friends, chump.

  • ||

    You know, I'm not sure if it's funny or sad that you can't get through a single thread without name calling and personal attacks.

    As I was putting some soy in my latte, I took a moment to read your latest vitriolic personal attack and figured I might as well take a moment to dissect some of your latest half-baked cannards. I know how reassured you act when you cite charts and graphs in a selective manner as means of bolstering your arguments. Sadly, your oveall arguments are so undisciplined, that the references don't really help.

    Let's start with you erratic tax cut/tax credit monologue. You may recall - though I doubt it, as you've chosen to argue about the definition of a cut vs a credit, but at no point address the central contention - that I initially said that under Obama we have a lower tax burden than Bush. Your counter was that the credit included in the sitmulus bill was merely a credit and debt funded at that. You supported these contentions by posting a link to a 1040a. When I simply posted the IRS treatment recommendation of this as a payroll deduction, your argument was to tell me I don't know the difference between a credit and a cut. Good one. Yet, still unaddressed is any answer to the claim of whether payroll taxes are higher or lower under Obama than they were under Bush. Hint: they're lower. I wonder, as has been the case throughout, if you'll ignore this and instead resort to some tertiary debate or simple name calling. Oh, and as a sidebar, you have yet to address whether the Bush tax cuts, which helped fuel a net total of 1 million new private sector jobs in 8 years - as ringing a refuation of supply side economics and the Laffer Curve as there has ever been and which were a chief catalyst for $6 trillion in new debt - were debt financed.

    With respct to your question about why I focus on the last quarter of Bush's presidency, the answer is simple: To measure progress or lack thereof, it helps to know the baseline. What we know is that the Dow dropped to 7000 under Bush (something you agian conveniently ignore) and household wealth declined precipitously (that's a word coffee house liberals and the 90 percent of the rest of America who aren't radical reactionaries who don't want to pay their fair share use for "lots"), with 401ks declinig upwards of 50 percent in value. You airily dismiss this and move on to argue that there has been no recovery. Good one. Yes, you're right. Had we simply applied laissez faire economic policy and bet the farm that bankn wouldn't totally collapse, we'd have been better off. Tell, me, genius, is it you or some committee of the brilliant who gets to decide how much wealth is destroyed before the government steps in to unravel the carnage wroght by 30 years of supply side economics and blind faith in Arthur Laffer's failed economic claims? So yes, I do claim that Obama saved capitalism because if we have followed libertarian doctrine or more of the Republic supply side cannard, American capitalism and the Washington Consensus would have been totally destroyed. I know for the right, the doctrine of job export at any cost and a ceding of the Washington Consensus to a Beijing Consensus is preferable to paying your fair share, but to the rest of us, who care about the future of America, that's a bit too much of a risk.

    But my favorite was your defense of Bush's use of supplemental appropriations as perfectly OK because we'll catch it all with "Debt to Penny." I'm trying hard to imagine the reaction of right wing fanatics to the idea of Obama using supplental appropriations as a means of ramrodding thorugh a bogus budget. Wait, I can't imagine it, I spit latte in my eyes laughing.

    Come on bud, just admit it, you're not about balancing the budget. You're about paying no taxes - a right wing mirror image of the left wing radicals who nearly wrecked America 4 decades ago. At least if you'd admit it, you'd sound less like a hypocrite. You clearly have a decent command of certain facts - though the Internet can make anyone sound smart - but your application is so poor.

  • Gilbert Martin||

    "No, the economy is not great now, but that can be evidence of one of two things: 1) the stimulus failed or 2) the stimulus wasn't big enough. "

    It can also be evidence that the stimulus was a net negative on the economy and things would have been beter without it.

    The economic cycle turned all on it's own in the era before government started trying to "manage" the economy.

    There isn't anyone capable of proving that the probability that the stimulus was a net plus for the economy is one iota higher than the probability that it was a net negative for it.

  • Homer Simpson||

    the economy is not great now, but that can be evidence of one of two things: 1) the stimulus failed or 2) the stimulus wasn't big enough. Since things actually did improve with the stimulus, the answer is 2).

    Not a bear in sight. The Bear Patrol must be working like a charm.

  • Idiot Savant||

    haha, touche

  • Kant feel Pietzsche||

    When you have a fractured leg, morphine will make you feel better. But the leg still has to actually heal.

    And we HAVE NOT taken our medicine yet. Someone made the analogy several days ago that we still had a full bottle of Castor Oil to take. Spot on.

  • ||

    Yes, if you keep taking meth you will feel better but it will end, and you will be much worse off the longer you keep at it.

    Not that a deficit funded tax break (IE Bush plan) is a good idea, it at least has positive short term effects. We saw the economy turn around fast after the dotcom bust. So we do have an apples to apples comparison. At least the Bush style disney economics worked in the short term. Obamanomics didn't even do that, and claims that "it would have been worse" have to face the comparison with Bushonomics.

    The case you can make against Bushonomics is the valid one, that debt does have consequences. But that same critique applies to Obamanomics even moreso.

  • Reality||

    Look at Table 8 of the linked PDF. There's fairly broad consensus of an effect to the tune of a couple million jobs. In fact, Veronique flat-out lied there too. The "rosiest of assumptions" have 3.6 million jobs.

  • Joe M||

    Yes, the administration was wrong that the stimulus would limit the unemployment to 8.8%. No, that does not mean the stimulus did not work.

    What were the criteria for success, and were they met?

  • ||

    Did enough voters buy the bullshit?

  • ||

    Yes!

  • AJ||

    I would say that means exactly that it didn't work. The administration relied on the fabled multiplier to produce their employment estimates and that theory was soundly proven wrong and left us deeper in debt. To that I'm sure you'll say, "but it would've been much worse without the stimulus," which is great because it is slightly ridiculous and totally impossible to prove, unless you use the same math that said that unemployment would be kept below 8.8%. It's the same shit that we tried propping up the housing market. As soon as the tax credits dried up, the housing market slowed again. When the spigot gets turned off, we're left with the same situation. We have structural problems with our economy that will not be solved with temporary government spending, it will only delay the necessary adjustments. Meddling with the economy does not work. Please write that down 100 times on your nearest chalkboard.

  • ||

    Best de Rugy still ever.

    Caption Contest!

    "BRAINS!"

  • Bruce Majors||

    So it’s true what they say …
    …. Clinton average 5.2, Bush average 5.3, Obama 9.2!

    http://bighomocon.blogspot.com.....l?spref=tw

  • ||

    Thanks for citing such a venerable source as BigHomo.

  • ||

    Rugy and Tony are both right: the stimulus didn't do much harm, and it didn't do a decisive amount of good, either.

    The truth is, this economic crisis is far beyond the influence of federal domestic discretionary spending or tax policy. It has to play itself out and the relevant markets are not going to be "cleared" of their excesses overnight. But the truth is not an acceptable political message for either party. Both must maintain the fib of their decisive economic power.

  • Middle Age Crazy||

    the stimulus didn't do much harm

    I strongly disagree, but economics being what it is, I'll never be able to prove it.

    What is clear is that about three years ago asset values fell sharply, and as a result US consumers quite sensibly put the brakes on their two-decade borrowing and spending binge.

    So the US government borrowed and spent another half-a-trillion dollars in their name.

    So now there is half-a-trillion dollars less capital available, and half-a-trillion dollars in additional taxes to be extracted from the capitalists. That means something, and it doesn't mean more jobs.

    And did the Feds at least spend the money on things that most people value, like roads and bridges? No, they used it to prop up the out-of-control regulatory class in the states, thus feeding yet another drag on the economy.

    And now the quacks want to bleed the patient some more. Unbelievable.

    /rant

  • Kant feel Pietzsche||

    Other than that pesky "spending money we don't have" thing...

  • Otto||

    Nice article Veronique, but for your next TV appearance, you might want to consider not wearing clinky jewelry when they're going to put a mike right next to it.

  • ||

    I always enjoy seeing the things Veronique de Rugy writes, but I have a really hard time keeping up with the things she says. Please hire yourself a speach therapist to get rid of your accent please? Not being quite so french would help both your communication and your credibility.
    -love

  • Gilbert Martin||

    I turned on the Kudlow report on CNBC this evening and there was Laura Tyson insisting that the stimulus had been "proven" to have worked.

    Nobody else on the show was buying it.

    And well they shouldn't.

    All the Keynesean true believers are doing in engaging in circuluar logic.

    The create models predicated on the assumption that Keynesean economic theory is valid. They plug in the spending and the model spits out some estiamte of the economic impact and jobs "created" and they call that "proof".

    Of course in the real world, no one has ever proven Keynesean theory to be valid to begin with - or that any government policy based on has ever worked anywhere at any time.

  • sevo||

    Just for the heck of it, Kruggy claims the government is shrinking:
    http://krugman.blogs.nytimes.c.....erity-usa/
    Gold in the cherry-picking event! Have a ball!

  • Tony||

    What's he cherry picking? I don't think government can ever be anything other than an ever-growing monstrosity to you people. It's not part of the factual world, it's just the bogeymonster.

  • AlmightyJB||

    So how long should we put up with 9+% unemployment under current economic policy? Oh that's right, if we made Dear Leader dictator for life he would fix everything with the power of his superior intelligence without all those pesky elected republicans in his way.

  • Tony||

    Deal.

  • Mr. FIFY||

    Advocating for one-party rule is pretty fucking treasonous.

  • Tony||

    Arguably so is threatening to destroy the country's economic standing in the world over a narrow ideological agenda.

  • ||

    Arguably so is threatening to destroy the country's economic standing in the world over a narrow ideological agenda.

    Tony is projecting again (doesn't he always?). Tony is just fine destroying the country's economy when the only other option is admitting his fanatical ideology will lead to dictatorship.

  • sevo||

    The ignoramus asks:
    "What's he cherry picking?"
    How stupid is the ignoramus? Well, pretty doggone stupid:
    "Here’s government employment (that bulge was Census hiring):"
    Showing all of a 1% reduction in hiring; nothing about current or future expenses for the current employees.
    Hey, shithead, is that enough? Oh, well, I guess you're ignorant enough to need some more:
    "And here’s government purchases of goods and services (so it doesn’t count transfer payments like unemployment insurance):"
    Conveniently ignoring the largest sectors of government expenses.
    Hey, shithead! Got it now?

  • Mr. FIFY||

    It IS nothing but an ever-growing monstrosity, no thanks to the Teams.

  • Tony||

    Stop pretending you aren't on a team. If you were truly an independent agent you wouldn't repeat the exact same insanity that Republicans say, at every turn, except by wild coincidence.

  • ||

    McDonald's serves salads, therefore they are a vegetarian restaurant.

  • AJ||

    What do Democrats stand for these days? Antiwar? Pro civil liberties? Liberal drug policies? Gay rights? Anti- Wall Street? Or are they still increasing war efforts and expanding to new countries, raiding medical marijuana distributors, not supporting gay marriage, keeping Guantanamo open and continuing indefinite detention, and appealing to Wall Street for fundraising efforts? My question to you is, if this is what a democrat is, are you still a democrat? If so, why? Is blindly following the blue team as awesome as you thought it would be?

  • Mr. FIFY||

    Fuck you, Tony, you goddamn hypocrite.

    Seriously, yes, on FISCAL issues I agree with the sensible solutions, but I am no so-con. So spare me your "you're a Republican" bullshit.

  • Tony||

    I don't care if you don't believe in baby Jesus. Cutting spending and keeping taxes low for the purpose of fiscal austerity and debt reduction is NOT part of any economic theory. It's Republican insanity, so if you buy into it, you are expressing that you are a part of their team.

    I'm sorry that libertarian economic thought is so weak that it has to latch onto everything Republicans do no matter how nonsensical and dishonest, but that's your problem.

  • ||

    It is the signature complaint of the tyro that his intellectual opponents are simply not paying attention to "the facts."

    Pravda used to lead its assertions with the clause, "It is well-known that..." as in "It is well-known that capitalism causes wars." By alleging that the facts are well-known one makes citing sources beside the point.

    So Tony. Adduce the "facts." Please. My guess is they all come from the archive of Krugman's blog.

  • Idiot Savant||

    Tax policy = an almost insignificant variable in the economic crisis equation.

    Recovery politics is simply wishful thinking, gut-feelings, anecdotes, and prognostications. We've spent, as a nation, trillions of dollars that do not even exist.

    It'll take a lot of patience for actual recovery... Until then, politicians aren't going to let the crisis go to waste.

    We could say they're spinning the truth, but that would imply that somebody actually knew what they were talking about.

    To find objective, absolute solutions would be simpler if deciphering the complexity of the economy itself was a task one person could do on his own.

    Economics is the academic version of the uncertainty principle.

    One positive thing is, there's a lot of new ideas and methodologies that can emerge from all of this.

  • Chaos Punk||

    Who here would fuck veronique?

  • AlmightyJB||

    Does she have a vagina? If so, then yes, even though that screen shot does scare me a little.

  • AlmightyJB||

    Also, I would not want her to talk at all. Before or after.

  • AJ||

    Disgusting (you, not her).

  • ||

    Since 2/3 of the stimulus "spending" was taxcuts, why is the stimulus criticized, and why is any reduction in taxcode "spending" opposed

  • ||

    Better fit with partisan arguments that aren't really interested in balancing the budget, but simply paying no taxes.

  • Revita||

    Wow, I've been reading the discussion and I spot some other myths as well.

  • ||

    Very well reasoned. One other thing that is misguided about Stimulus spending is the idea that driving consumer spending will drive GDP growth. The two are related, but in a large, open, gas-guzzling economy like that of the U.S., extra stimulus-led consumption may largely have been eaten up by higher commodity prices and more consumption of foreign goods. Consumption may go up, but the economic impact on the domestic economy is minimal.

  • Tyler||

    This article is baffling. What would you have the government do, just sit on its thumbs and not at least cut taxes for Americans that need a tax cut in such a dismal economy?

  • ||

    http://research.stlouisfed.org/fredgraph.png?g=167

    The stimulus did have an effect. Not as great as the government would have hoped, but its effect was noticable. Had the government actually spent the money right away instead of using it on tax cuts and long-term projects the effect would have been more pronounced.

    The problem right now is everyone in the country (households and financial companies especially) is trying to pay down debt. That's good for all of them, but if everyone's paying down debt at once, demand plummets and there's no income stream to pay back debt with.

    It sucks having government fill the role of demand because it will spend the money on stupid crap no one wants, but as long as people are paying down debt (which is absolutey necessary imo) the government has to provide the demand that the private sector won't.

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  • wanderlustmisfit||

    We have to move away from an economy built around the perpetual growth of consumption. I'm not sure where this leads us, but thinking we can keep consuming more is a deadly path we're on. And unsustainable. We need dramatic, and even revolutionary, changes in the way we run our society.

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