Economics

The Trillion-Dollar Stimulus

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The Wall Street Journal has a gruesome article today that pushes the stimulus price tag into 10-figure la-la land and lists in depressing detail the Lobbyists Gone Wild on Capitol Hill this week.

The magnitude of the spending bill, and its urgency, drew a swarm of lobbyists seeking money and tax breaks. The concrete and asphalt industries battled over how the government should spend billions proposed for road and bridge repairs, while dairy and beef cattle producers butted heads over talk that the government might buy up dairy cattle for slaughter to drive up depressed milk prices. Unions backed infrastructure spending. States sought budget bailouts. […]

"I would love to not have to spend this money," Mr. Obama said, according to individuals familiar with the president's meetings with Republicans.

Hmmm. The reluctant interventionist. Where have we heard that one before?

Meanwhile, the Volokh Conspiracy's Ilya Somin asks a relevant question for those dwindling few who care about recent legislative history and spending tax money wisely: Whatever happened to the last big infrastructure bill?

These days, we are repeatedly told that we have to pass a massive new infrastructure spending bill in order to fix our "crumbling" roads and bridges. Everyone seems to have forgotten that just three years ago, in August 2005, Congress enacted the biggest federal public works program in American history, spending a massive $286.4 billion on the 2005 highway bill. At that time, President Bush and congressional leaders from both parties told us that the new highway bill would fix our infrastructure problems.

Finally, over at the Reason Foundation's Out of Control blog, number-cruncher Anthony Randazzo breaks down the (many) costs and (few) benefits of a stimulus he currently estimates at $1.1 trillion.

NEXT: How Stimulus Spending Puts the "Con" Back in Congress

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  1. It’s Stimulus Wednesday!

  2. “dairy and beef cattle producers butted heads over talk that the government might buy up dairy cattle for slaughter to drive up depressed milk prices.”

    That’s a interesting way to stimulate the economy. Make milk products more expensive so poor people can’t afford to buy them anymore.

  3. Lobbyists? Special Interests? Weren’t we voters led to believe these guys would be absent in the new regime? While cynical libertarians should not be surprised, what about those who – in good faith – plumped for
    change? Perhaps they were cynical all along too – several colleagues at work, big-time Obama supporters – have now admitted “I never believed half of what he was saying” or “How naive you are to think things would change” or
    “The economic crisis changed everything, once the votes were counted.”

  4. The forced dumping of 300,000 dairy cattle would wreck the beef market, so everything would balance out.

    Let your babies eat steak!

  5. But I thought it was a crisis. Surely Congress wouldn’t pass a massive pork bill during a crisis.

    Even if you agree with the idea of government spending us out of a recession, surely it matters where the money goes.

    This is a God-awful Congress, and Obama’s going to go down with it if he doesn’t learn the word no in a hurry.

  6. I love how some of the Republicans are saying they want to vote against this latest stimulus. They have no right to say anything; they have just as much pork on their hands as the Dems do.

  7. Let’s bring the free market to Reason!

    A simple comment rating system would eliminate most of the trolls (or at least consign them to posting below the radar of most of us) and make this a great place for libertarians to hang out again.

    These kinds of rating systems are used at Slashdot, Urban Dictionary, DKos, etc and aren’t hard to implement.

    Bring reasoned discourse back to Reason!

  8. He told them to remove 200 million in contraceptives for poor women and std research from the stimulus package. It’s a start. Hopefully he will keep them in check. Now time to remove the Chula Vista, CA dog park and Austin, TX frisbee golf course. (I wish I were kidding.)

    Is the new reason game to drink every time you include Hope of Change in a comment about Obama? Am I late to this party? I don’t mind trying to catch up.

  9. Now time to remove the Chula Vista, CA dog park and Austin, TX frisbee golf course.

    NOOOOOOOOO! Look, let’s be reasonable here. If I get my dog parks and frisbee golf courses, surely there’s a..uhh..uhh.. riverfront boardwalk or $30 million tourism building that we can afford you, huh? Maybe a nice bike-trail system? hmm?

  10. Of the various articles that I’ve seen they describe Obama meeting with business leaders and CEOs about his plans for the stimulus.

    What absurd naivity his supporters have. When Bush is talking with CEOs, it’s because he’s going to give them what they want. When Obama is talking with CEOs, it’s a responsible measure to reach across the isle and not allow his ideology to get in the way of responsible decision making…

  11. These days, we are repeatedly told that we have to pass a massive new infrastructure spending bill in order to fix our “crumbling” roads and bridges. Everyone seems to have forgotten that just three years ago, in August 2005, Congress enacted the biggest federal public works program in American history, spending a massive $286.4 billion on the 2005 highway bill.

    Wait, wait. Are you saying there’s an upper limit on how much we can usefully spend on infrastructure?

    I stumbled across an apropos Ayn Rand essay last night, which begins:

    Since “economic growth” is today’s great problem, and our present Administration is promising to “stimulate” it — to achieve general prosperity by ever wider government controls, while spending an unproduced wealth…

    As relevant today as when it was published in the LA Times in 1962.

  12. That’s not me!

    I propose we keep the comments just as they are.

  13. Kirsten Gillibrand was my representative and now she’s my Senator. I’m going to email her once her Senate office has a website and tell her I’d like her to vote NO on any stimulus package that includes any pork whatsoever unless my area gets a full refund in the amount of all federal income taxes paid. In that case, I would request she vote YES.

  14. “I would love to not have to spend this money,” Mr. Obama said

    Easily done, Mr. President. Easily done.

    Unless, of course, you’re just lying to us. I believe it was your very own chief of staff who said it would be shame to waste a good crisis.

  15. Let your babies eat steak!

    You’re assuming the slaughtered cattle will be sold for beef, and not simply burned or buried. Mighty big assumption, my friend.

    Yo, fuck Washington DC.

  16. What absurd naivity his supporters have.

    I swear to God that when I read that I saw “worshippers” and not “supporters.” Too weird.

  17. Nick –
    KG voted against the TARP both times. Hopefully she’s smart enough to vote against this bailout stimulus too and won’t do the party thing.

  18. Chief, clearly what this blog needs is the Cone of Silence.

  19. This sucks.

    Producers of goods and owners of over-priced assests have been raking in the cash for the last decade.

    Now that prices are coming down a bit, which makes things easier for the rest of us, we have to fucking pay to make things more expensive?!?

    And we’re talking about food and housing, two basic fucking needs. Fuck!

  20. LOL, must be nice having barrels of cash lying around.

    RT
    http://www.total-privacy.us.tc

  21. What absurd naivity his supporters have. When Bush is talking with CEOs, it’s because he’s going to give them what they want. When Obama is talking with CEOs, it’s a responsible measure to reach across the isle and not allow his ideology to get in the way of responsible decision making…

    Utterly classic in-group-out-group thinking. The common term is hyprocrisy. It’s really depressing how people can be governed purely by their affiliations.

    I say that knowing I’m only marginally better, if that much.

  22. I second Taktix?’s “Fuck!” and raise him a “Jesus H. Christ On A Pony Shit.”

  23. LOL, must be nice having barrels of other people’s cash lying around.

  24. Did you notice that troll’s name is “John Hamas?”

  25. Oh goody, they’re sending $4 billion ACORN’s way too.

    I guess the top priority is recruiting more socialists.

  26. Reinmoose, I hope so. She’s been better than expected on a few issues.

  27. Now time to remove the Chula Vista, CA dog park and Austin, TX frisbee golf course.

    What? Typical regional bigotry. Austin, TX desperately needs frisbee gold courses. Frisbee golf keeps slacker preoccupied so they don’t choke the street corners with performance art, err, performances. I tell you its hell! We can’t possible afford to build it ourselves because were a state capital and the seat of a major university giving us a crushing parasitic class to carry.

    Have some mercy!

  28. didn’t people starve the last time they slaughtered animals/burned fields to prop up prices?

  29. I demand a rating system so group-think can tell me which posts are worth reading and which contain bad ideas. We can be just like KOS! While were at it lets add buddy and ignore lists like demUnderground. Also, I want to be able to set posts to disappear if they have too many negatives, just like youtube. That would be awesome and I’d probably renew my subscription to Reason.

  30. Dairy cattle do not make particularly good eating; better than nothing, but not exactly an awesome gourmet feast. If you then consider the rational decision to cull the oldest, and lowest-producing beasts from the herd, you get….

    cat food.

    Which is actually good, because I can really get behind a government program to drive down the costs of cat food. Play on!

  31. Adrian, shhh! The important thing is that they are doing something. We’re not looking for a history lesson over here.

  32. Oh goody, they’re sending $4 billion ACORN’s way too.

    Pork is one thing, but if you don’t make your pay-offs you’ll never get anywhere in politics.

  33. Dairy cattle do not make particularly good eating

    We do allright with ’em.

  34. Apparently among the things that needs to be stimulated is the grass on the National Mall, which was trampled by the hordes of Obamaphiles, to the tune of hundreds of millions of dollars.

  35. As relevant today as when it was published in the LA Times in 1962.

    And did the economic world end when they passed a stimulus in 1962, over and against the sage words of Ayn Rand?

    Don’t get me wrong, I don’t think the stimulus is a good idea. But some folk around here are absolutely addicted to eschatological fervor: *all* actions taken contrary to Austrian economic doctrine *will necessarily* cause the end of the world as we know it.

  36. *will necessarily* cause the end of the world as we know it

    I blame Warren the Doomsayer (PBUH).

  37. From each according to his ability political ties, to each according to his need political ties.

  38. Elemenope,

    But some folk around here are absolutely addicted to eschatological fervor: *all* actions taken contrary to Austrian economic doctrine *will necessarily* cause the end of the world as we know it.

    I think you reading a little much into this. The quote form the L.A. Times simply showed that we’ve tried the same thing repeatedly in the past with little effect.

    The idea of stimulus is based on the concept of the economy as a simple system like a boiling pot. It assumes that since a vibrant economy has a lot motion, that that anything which creates economic motion will revive the economy. Unfortunately, the motion in a vibrant economy isn’t random, its focused and purposeful. Just getting people to randomly build things doesn’t create the purposeful motion needed for prosperity.

    There is no concrete evidence at all that government spending stimulates the economy in the short run. This is just the political class trying to exploit bad times for their own benefit. It’s not the end of the world but it is a step down the long slope to stagnation unless reversed somewhere down the road.

  39. Well, both major parties have their “Dear Leader” elements and probably always will. Indeed, that’s probably one of the major “benefits” of parties.

  40. SugarFree | January 28, 2009, 10:33am | #
    *will necessarily* cause the end of the world as we know it

    I blame Warren the Doomsayer (PBUH).

    You know, my fifth grade teacher, Mrs. DeVoise actually predicted that civilization wouldn’t be able to withstand my influence.

  41. Elemenope,

    But some folk around here are absolutely addicted to eschatological fervor: *all* actions taken contrary to Austrian economic doctrine *will necessarily* cause the end of the world as we know it.

    The end of the world as we knew it is something which happens all the time. As for the “Austrian doctrine,” I’m not quite sure what you mean by that exactly, but if you mean the Austrian theory of the business cycle it seems like a good explanation in part for why we are where we are today. I think for a time we’ve thought that we had tamed the central banks (who were at the heart of the Great Depression) and that may not be the case.

  42. Warren,

    Sounds like a wise woman.

    My 5th grade teacher accused my of lying when I told her a could speed-read and didn’t back down even after I demonstrated it. (I got to Pluto long before anybody else and it made her very angry for some reason.)

  43. (I got to Pluto long before anybody else and it made her very angry for some reason.)

    At least teachers now can crush spirits by denying the planethood of Pluto. To tools they have now they could not have dreamed of then!

  44. SugarFree –
    it’s been my direct experience that teachers really hate it when you prove them wrong, even if it’s not publicly and has nothing to do with the subject they teach, although especially when it’s publicly and has something to do with the subject they teach.

    I had a statistics professor who absolutely despised me for not needing to come to her office hours, or even hand in most of the graded homework to get an A in a class that everyone else thought was hard. She told me that I was going to be disappointed when it came test time, but alas – with a weighting on homework of 10% of your grade and me only handing in 4 of 10 of them, I got an A in the class.

  45. For what we’re spending, we could establish a human colony on Pluto.

  46. Shouldn’t “10-figure la-la land” be “13-figure la-la land”?

  47. it’s been my direct experience that teachers really hate it when you prove them wrong

    Only the bad ones. Many teachers lose sight of what exactly it is they are doing.

  48. Elemenope,

    Oh, and FYI, in Feb. 1929 Hayek predicted the onset of what would become the Great Depression.

  49. That’s a interesting way to stimulate the economy. Make milk products more expensive so poor people can’t afford to buy them anymore.

    That’s where you might be wrong. We may be in the world of Giffen Goods! We could make food so expensive that it’s all they can afford to buy!

    Sure, there’s no empirical evidence for Giffen goods, but that doesn’t mean we can’t try. Besides, you don’t trust empirical evidence that contradicts your prior assumptions, do you?

    That’s what I thought. Neither do I!

  50. LMNOP
    I was speaking specifically about when they’re wrong about you, but yes, sometimes even wrt the actual material. That’s a little harder to prove, though, since I imagine a lot of students who differ in opinion with their teachers/professors think they’ve proven them wrong. I’m referencing mostly predictions about the students.

  51. But some folk around here are absolutely addicted to eschatological fervor: *all* actions taken contrary to Austrian economic doctrine *will necessarily* cause the end of the world as we know it.

    Note one: Ayn Rand probably was not an Austrian.

    Note two: She didn’t say anything about the economic world ending.

  52. I’m referencing mostly predictions about the students.

    Ah, I misunderstood. Yes, I would agree that many teachers badly misjudge the relative capacities of their students.

    Ayn Rand probably was not an Austrian.

    I agree. That’s why I said “some people around here”. I’m pretty sure that Ayn Rand isn’t around here.

    She didn’t say anything about the economic world ending.

    Well, yes and no. There is a eschatological flavor to Atlas Shrugged for certain.

  53. Of course I’m here, you twit – where else would I be? Now, get on your knees and worship my intellect, you putz.

  54. Many teachers lose sight of what exactly it is they are doing.

    Word.

  55. I agree. That’s why I said “some people around here”. I’m pretty sure that Ayn Rand isn’t around here.

    You should understand that smacking down a Rand quote and then jumping off into smacking down Austrian fanbois will be misconstrued as you linking the two in belief.

    There is a eschatological flavor to Atlas Shrugged for certain.

    It’s also science fiction.

  56. “You’re assuming the slaughtered cattle will be sold for beef, and not simply burned or buried. Mighty big assumption, my friend.”

    Um no, not really.

    “The proposal would use taxpayer dollars to raise dairy prices by buying older dairy cows from farmers, taking approximately 6.5 billion gallons of milk off the market. This would result in nearly 320,000 additional head of cattle entering the beef market, which could drastically reduce the price of beef cattle.”
    Beef Today

    There are no plans to burn or bury. You know what they say about assumptions….

  57. You should understand that smacking down a Rand quote and then jumping off into smacking down Austrian fanbois will be misconstrued as you linking the two in belief.

    Only by people who have a habit of reading too deeply into the text.

    It’s also science fiction.

    Granted.

  58. There is no concrete evidence at all that government spending stimulates the economy in the short run.

    Now, this is simply not correct. It is both empirically proven and intuitively obvious that government spending stimulates the economy in ‘the short run.’ It’s the *long* run where everyone disagrees on the effects and consequences.

  59. from the late 90’s to mid oughts, houses exibited behavior much likely a Giffen good. Which is why we’re in the mess we’re in.

  60. To be sure, Beef Today is claiming that all those dairy cows are entering the beef market in support of their own lobbying campaign for price supports/subsidies.

    Grain of salt, people. Grain. Of. Salt.

  61. Ninety percent of all subsidies go to just five crops: corn, rice, cotton, wheat, and soybeans.

    You won’t find me defending any farm subsidies, but beef producers depend far more on cheap subsidized corn and trade agreements than it does outright subsidies from the USDA. The dairy industry is far more in bed with the government. They’ve got state supported cartels for god’s sake.

  62. R C Dean you said,

    To be sure, Beef Today is claiming that all those dairy cows are entering the beef market in support of their own lobbying campaign for price supports/subsidies.

    I assume you RTA and are just being sarcastic. Beef is not subsidized by the government.

    From the beef today article.

    “The cattle industry is not subsidized by the government, nor do we wish to be,” says NCBA President and Arizona rancher Andy Groseta.

    “However, we are subject to the unintended consequences of policy directed towards other sectors of agriculture, such as the dairy industry. Flooding the market with beef and driving down the price for our products will be devastating for America’s cattle producers.”

  63. The buyout proposal points out just how ignorant our political class is.

    Buyout programs have been tried before and they did not cut milk production but were very effective at visiting economic devastation on the non subsidized beef industry.

    Our Next Criminal Class: Milk Bootleggers

    Congress attempted to solve the dairy surplus problem in 1986-87 by paying dairymen over $l.3 billion to slaughter their cows.

    Under the Dairy Termination Program, 144 dairy owners got over a million dollars apiece to take a five-year vacation from dairying, and one California producer received $20 million.

    Yet, as the General Accounting Office noted, “Total milk production did not decrease because nonparticipating farmers increased their production during the program period.”[18]

    Mn March 29, 1986, the USDA announced that it would soon be sending 1.6 million dairy cows to slaughter–far more cows than anyone expected to be slaughtered under the dairy buyout program.

    That severely disrupted beef markets, costing ranchers scores of millions of dollars in losses and bankrupting some cattlemen.

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