From the "But Who's Counting?" File…

How much stimulus can one poor battered ol' economy take? $850 billion for starters, saith House Democrats, who have, with admirable tough-mindedness, "negotiated" Obama's plan up from the $725-775 billion range.

Just yesterday, I blogged about economist Arnold Kling wondering at what point mega government spending projects turn us from a Keynesian multiplier joyland to Zimbabwe.

Comments

[TofuSushi]

The economy needs much more. Around $4trillions about.

[joe]

Make sure you get your confident predictions of a years-long depression written down now.

[TofuSushi]

I agree with you joe that we have been in a depression for a long time but will be coming out of it soon after Tuesday.

[Warren]

Why are they farting around. Just send a check for $1,000,000.00 to every citizen. Then we'll all be rich.

[Another joe]

Good lord, is it time to buy gold?

[TofuSushi]

Warren with the stupid Rightwing Noisemachine Ann Coulter-Limbaugh exageration.

[joe]

Did I ever tell you my theory that God hates libertarians?

I believe that libertarian economic philosophy is unerring true, root and branch.

However, because you so mock Him, with your atheist books and Christopher Hitchens holiday songs, He intervenes in human history to make you look bad.

How else can you explain the productivity gains of modern info-tech hitting immediately after The Largest Tax Increase in American History? We were TOTALLY going to have sour lines!

So, when the stimulus package works, and the economoy is humming along nicely in 2011 and 2012, don't worry: you aren't wrong.

God just hates you.

[TofuSushi]

Good lord, is it time to buy gold?

If we were free of wage slavery then you would not be worring about that.

[TofuSushi]

So, when the stimulus package works, and the economoy is humming along nicely in 2011 and 2012, don't worry: you aren't wrong.

Right on joe!

[Tyler]

The money pit is "shovel ready"

[joe]

Good lord, is it time to buy gold?

The lady on the ads I see on CNN tells me that the price of gold has been increasing almost 20%annually for years now, and is at record highs.

So...I say go for it!

[Ska]

I can't stop thinking about sea kittens. The very thought of them makes my dick hard.

[J sub D]

Make sure you get your confident predictions of a years-long depression written down now.

I predict that the misery index (inflation plus unemployment) will be higher on Jan 20, 2011 than on Jan 20, 2009.

Written down and posted for H&R posterity and for you, joe.

Would you like to disagree? For posterity. Or is that too ballsy for you?

[J sub D]

And the deficit.
And the debt.

In total numbers and as a percentage of GDP.

[TofuSushi]

J sub D, I disagree too. We will have no unemployment and be on our way to a wageless society.

[Brian Doherty]

While I am not in game of economic predictions, if I had to make a bet on the short term, I'd be the standard economic indicators of 2012 will be far better than they will be in 2009. But I wouldn't make a very big bet on it one way or the other.

Question for Joe, the House Democrats, and the president, though I guess only Joe is likely to answer: is there any amount--even within a range--of deficit spending now that you think could/might/will (pick your level of confidence) cause any economic harm in the short/medium/long term?

[joe]

J sub D,

I don't think the economy has bottomed out yet, and don't know how bad it will get over the next year. If it's bad enough, a higher misery index on 1/20/11 than on 1/20/09 could represent a solid, ongoing recovery.

[robc]

joe,

Make sure you follow me rule of thumb, the first 18 months of any administration belongs to the previous one anyway.

[joe]

Brian Doherty,

Running a deficit of $3.50 next year would cause us severe harm in the short, medium, and long term. 😉

/smartass

Yes, there is a limit to how much of a deficit we can run before it does more harm than good. In any case, having a large deficit will cause us some harm in the long run. The question is whether it represents a NET harm, accounting for the benefit provided by shortening the recession and allowing more growth between now and then.

[Elemenope]

We were TOTALLY going to have sour lines!

RC'z Law for the win!

[Pro Libertate]

Now's the time to invest in an asteroid and use it to threaten the Earth. I figure that's worth $100 trillion in blackmail payments. However, don't accept cash--ask for assets and land.

[robc]

having a large deficit will cause us some harm in the long run. The question is whether it represents a NET harm, accounting for the benefit provided by shortening the recession and allowing more growth between now and then.

Considering the long run lasts a lot longer than the short and medium runs, harming in the long run always wins out over any short/medium benefits.

Or, to put it more directly - Fuck the short and medium terms.

Its also why a deep recession and/or depression doesnt bother me (in thoery, personally I dont like it) - I think they are good for the long term health of the economy.

Boom and bust cycles good. Slow steady growth bad.

[Paul]

It's going to get worse before it gets better. Or so I heard on NPR. So, as expected, the Billions they've handed out so far aren't enough. We need more Billions. George Bush didn't go far enough.

Or something.

[Jerry]

How about another prediction, how long before Chavez is ousted in Venezuela? My bet, February 2010.

[robc]

Mathematical example of my 4:38 post, assuming two hypotheticals. First, Im going to call short term from 0 to 1 year, medium term 1 to 4 years, and long term 4+ years.

In the do nothing example, we have short term "growth" of -5%, followed by medium term growth of 0% and then long term growth of 3%.

In the do something example, we have short term growth of 0% (stem the tide of badness), medium term booming growth of 5%, and then long term growth of 2.5%.

Assuming an economy of 100, what is the result? Off to do some math.

[Paul]

how long before Chavez is ousted in Venezuela?

Democracy. You mean "voted out peacefully".

[J sub D]

I don't think the economy has bottomed out yet, and don't know how bad it will get over the next year. If it's bad enough, a higher misery index on 1/20/11 than on 1/20/09 could represent a solid, ongoing recovery.

After two years of Obamaism, a higher unemployment rate with higher inflation will count as an economic success. Setting the bar fairly low for the golden one, aren't you?

[robc]

In my example, do nothing takes the lead for good in 2053.

[peetsa]

Knowing that the fish sticks in the school cafeteria are really made out of tortured sea kittens makes most kids want to lose their lunch!

[robc]

I have no plans on being dead 44 years from now. Old, but not dead.

Keynes was wrong about that too.

[Paul]

He said "in the end" robc. So he was right.

[Peter the Printing Press]

Yes I Can!

[robc]

Paul,

The quote is "In the long run", not "In the end".

[robc]

Before someone says otherwise, I dont believe any stimulus package can cause the "do something" numbers. They are just used to show the proof that the long run always wins out in the end.

[Guy Montag]

Was joe at 4:17pm an imposter?

Ska, LOL, those PETA folk are funny ones eh? I wonder what sea kitten tastes like. Pork?

I wonder if the sea kittens are playing nice with those passengers of the plane that hit a flock of seagulls this afternoon? That guy must still have leathal hair.

Oh, for my prediction: Obama and the new Congress will be the first bunch of politicians to set the record for economy wrecking since FDR. Yes, of course, I am including the Carter years too.

[Citizen Nothing]

joe, the economy WILL be humming along nicely in 2011 or 2012, just not as nicely as it would have been otherwise. But no one will ever be able to prove that, so you're cool.

Or in other words, what robc said.

[Guy Montag]

Are the sea kittens chased by running dogs or do they just paddle?

[Paul]

The quote is "In the long run", not "In the end".

Same thing.

[Ska]

Something tells me there are more than a few PETArds out there who are more worried about the sky puppies than the flight's passengers.

[joe]

Elemenope,

Don't laugh. But for the internetz, Bill Clinton's economic policies would have left millions dependent upon government pickles.

robc,

Considering the long run lasts a lot longer than the short and medium runs, harming in the long run always wins out over any short/medium benefits.

No, because this bit of illogic fails to consider the length and severity of the long-run harm. Someone who get surgery to fix a collapsed lung will suffer the long-run cost of having a scar, but it's still probably a net benefit.

Boom and bust cycles good. Slow steady growth bad. Oh, don't you worry; the boom and bust cycle isn't going anywhere.

Assuming an economy of 100 Wait a second, you get to assume that the economy is going to never go into recession again? Um, why?

Paul,

George Bush didn't go far enough. Serious question: do you honestly not understand the different between the type of spending one does to stimulate the economy, and what the TARP was supposed to accomplish? Do you just look at any dollar figure attached to anything the government does and throw it all in the same pile?

[robc]

Paul,

Same thing.

Not even close. The long run starts 4 years from now (I defined it up above) and runs until the end. The end doesnt even start until after the long run is over.

[Paul]

Bill Clinton's economic policies would have left millions dependent upon government pickles.

Didn't they? Or do economic policies only occur within the time-frame of the sitting president?

[robc]

Wait a second, you get to assume that the economy is going to never go into recession again? Um, why?

Sigh.

I didnt assume that. I assumed that we cant predict exactly what will happen from 4+ on but that it will average out to 3.0 or 2.5, depending on which case. The exact details of the years after that are murky.

I could redo it with a sine wave pattern with an average growth of either 3.0 or 2.5, but that seemed like work.

Really, was that not obvious?

[joe]

J sub D,

After two years of Obamaism... See, there's your problem: you're setting up a situation where the condition of the economy on January 21, 2009 is a result of "Obamaism," when nothing he does in his term of office can realistically be thought to have a noticeable effect for six-months to a year after he takes office.

If the economy continues to fall off a cliff for six-eight months, then turns around because of the Democrats' recovery package, we could see a year and a half of solid growth that still doesn't get us back to current levels.

[Paul]

Serious question: do you honestly not understand the different between the type of spending one does to stimulate the economy, and what the TARP was supposed to accomplish?

Yes. So far from what I've seen from Obama's plan is that he's going to be giving large amounts of money, targeted more towards homeowners. I do like his ideas on the tax cut, except, even as a libertarian, unless you dramatically cut spending at this point (something that Obama hasn't even hinted at-- quite the opposite, in fact) I don't think tax cuts at this moment in time are prudent.

Here's Krugman criticizing Obama's plan. Which... "doesn't go far enough".

[robc]

joe,

How will we know the difference between turning around due to TARP, turning around to to Dem package or turning around because thats what fucking cycles do?

Seriously, how am I supposed to distinguish?

[joe]

Really, was that not obvious?

No, it not. Especially since you're assuming that two years of deficit spending can lower growth rates by half a percentage point every single year from 2014 through the end of time, I'm not inclined to make any assumptions of your reasonableness.

[Guy Montag]

Are the government pickles stored close to the government cheese?

Is this a crypo-plea for a Vlassic bailout?

[Episiarch]

I can't stop thinking about sea kittens. The very thought of them makes my dick hard.

Thank god I'm not the only one.

[robc]

joe,

you're assuming that two years of deficit spending can lower growth rates by half a percentage point every single year from 2014 through the end of time

That was just a number. You are the one that said it may hurt in the long run. Thats what hurting in the long run means to me - lowering the long term growth rate. I just picked those numbers as examples. I dont think the stimulus package will increase rates by 5% for 4 years either.

It doesnt matter if it was 3.00 vs 2.99, eventually the bigger number wins in the long run.

[Paul]

Or do economic policies only occur within the time-frame of the sitting president?

Should have read "Or do the effects of economic policies only occur within the time-frame of the sitting president?

[joe]

Yes.

So, in other words, "Bush didn't go far enough. Or something" was complete bullshit, and an utter misrepresentation of the actual argument you read, since even you are willing to acknowledge that Bush didn't "go" into stimulus spending much at all, but rather, "went" along a completely different path to address the economy, which doesn't have anything to do with the Democrats' recovery package.

Glad we cleared that up.

Here's Krugman criticizing Obama's plan. Which... "doesn't go far enough". Yes, there's Krugman arguing that Obama - not Bush, Obama - doesn't go far enough. You might have noticed, this column doesn't have anything to do with TARP money for the financial industry, or the amount spent on it - that is, where Bush "went."

[robc]

joe,

I could have done the whole thing with just symbols, but I thought giving numbers people would plug into a spreadsheet might be beneficial to some.

[Guy Montag]

Epi and Ska,

Are you guys getting a room? Perhaps an AOL chatroom to start . . .

[The Angry Optimist]

I don't think we're headed for a depression, but I think we're headed for a 1990s-Japanese-style period of stagnation.

[joe]

robc,

You are the one that said it may hurt in the long run.

"Long run" and "permanently" are two different concepts.

I think a couple years of big deficits could cause slower growth for a few years while it is paid off, then trails off to nothing.

[joe]

I just googled Sea Kittens.

Sea kittens is good eatin'.

[Guy Montag]

At least Obama will have all of our guns locked up for our own safety so the looters will not be shot.

[Mike M.]

Thank goodness they plan to keep it under a trillion dollars, otherwise we could be talking about serious money here.

[R C Dean]

I don't think the economy has bottomed out yet, and don't know how bad it will get over the next year. If it's bad enough, a higher misery index on 1/20/11 than on 1/20/09 could represent a solid, ongoing recovery.

See, this is a sure sign of faith-based thinking: no evidence will serve to refute the beliefs of the faithful.

If the economy blows for the next couple of years, its Bush's fault.

If the economy turns around in the next couple of years, well, all hail Obama and his tax-dodging team of financial wizards!

[Ska]

Sea kittens automatically triggers thoughts of sweater kittens.

The phrase sweater kittens really doesn't need any help, but SugarFree threw down some link about cats and racks, and now I just can't help it.

[J sub D]

After two years of Obamaism... See, there's your problem: you're setting up a situation where the condition of the economy on January 21, 2009 is a result of "Obamaism," when nothing he does in his term of office can realistically be thought to have a noticeable effect for six-months to a year after he takes office.

So the Hoover presidency gets a pass for everything prior to 3/30? The responsibility for the recession early this decade rests with the Clinton government?

Or does this all just mean that Obama's plan is working when you decide that it's working.

This recession, like every other recession, will end. Increased government spending (Bush or Obama, it's still giveaways) will only lengthen it.

[Guy Montag]

. . . all hail Obama and his tax-dodging team of financial wizards!

I thought paying incredibly high taxes was supposed to be patriotic? I also wonder who Joe Biden got those words from . . .

[Lesbian Until Graduation]

If we are going to have an IRS (which I am against on principle) I am glad it will at least be run by a tax dodger.

[SIV]

If the economy continues to fall off a cliff for six-eight months, then turns around because of the Democrats' recovery package,

'Cause nothing turns an economy around like a "recovery package".What would we do without the firm hand of government guiding the economy?

[P Brooks]

"You're just not hitting it hard enough!"

[Guy Montag]

LUG,

If we are going to have an IRS (which I am against on principle) I am glad it will at least be run by a tax dodger.

I am not assuming that you are young, but these folks typically do not turn out to apply their own actions to others.

[Malto Dextrin]

The next couple years are gonna be one hell of a bailout party.
I guess if you have to go out, go out in a blaze o' glory.

[joe]

robc,

We won't be able to distinguish, after the fact. I'm sure people will be arguing about it for decades.

RC Dean, being his usual brainless partisan hack:

See, this is a sure sign of faith-based thinking: no evidence will serve to refute the beliefs of the faithful.

If the economy blows for the next couple of years, its Bush's fault.

If the economy turns around in the next couple of years, well, all hail Obama and his tax-dodging team of financial wizards!

Of course, I didn't say anything remotely like that. I made the, apparently foreign to RC, observation that we'll actually have to see what happens to draw a conclusion, and he predictably blows a gasket.

[joe]

J sub D,

So the Hoover presidency gets a pass for everything prior to 3/30? Uh, no, you've got that completely backwards. The actual parallel would be Herbert Hoover "getting a pass" for the condition of the economy during 1927 - when he took office.

The responsibility for the recession early this decade rests with the Clinton government? I don't think I'd attribute the recession that followed the tech stock bubble popping on the Clinton government necessarily - I think it's more of the case of the economy going up and the economy going down on its own schedule. Regardless, George Bush certainly didn't cause there to be a recession in 2001.

Or does this all just mean that Obama's plan is working when you decide that it's working. It means we're going to have to see what happens.

Increased government spending (Bush or Obama, it's still giveaways) will only lengthen it. See, THIS is faith-based thinking. No matter what happens over the next year, two years, five years, you've already decided what you're going to think about it.

[joe]

Let's walk this through again:

J sub D: I think the misery index will be higher in two years than it is now.

Joe: I don't know. What's more, that number being at that point could mean the economy has stayed consistently lousy or gotten steadily worse, but it could also mean it got worse for a time then recovered steadily for a while.

RC Dean: ZOMG! You are teh partisan!

Idiot.

[nobody u no and big fan of joe]

Something tells me there are more than a few PETArds out there who are more worried about the sky puppies than the flight's passengers.

do you mean sea kittens? if that stupid airplane was not ever made then the sea kittens would have survived.

[nobody u no and big fan of joe]

i have to disagree with joe. we need nationalization not paycriminalsization.

[nobody u no and big fan of joe]

what about all of the birds that were murdered by the corporatecriminals from usairways?

[robc]

I think a couple years of big deficits could cause slower growth for a few years while it is paid off, then trails off to nothing.

This was the standard I was working on too. I was just assuming it would never be paid off. They havent in the past.

[R C Dean]

RC Dean: ZOMG! You are teh partisan!

Idiot.

Call me a partisan idiot when you aren't engaged in faith-based defenses of Obama by trying to set the frame in a way that, no matter what happens, if its bad its Bush's fault, and if its good its due to Obama.

C'mon, joe, tell us:

Under what circumstances would you say that Obama's economic policy has failed?

Is there any improvement in the economy that won't be due to his interventions, rather than the underlying business cycle?

If this turns out, against all expectations, to be a V-shaped recession, will you apply, consistently, your statement that changes in the economy in the first year go on Bush's ledger?