Economics

Biden: We're Spending As Fast As We Can

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It turns out the federal government is not even efficient at wasting our money. The New York Times reports that less than 6 percent of the $787 billion stimulus package approved by Congress in February has been spent so far. The Obama administration has said it wants to spend 70 percent by the summer of 2010, so it will have to pick up the pace. Not to worry, says Vice President Biden:

I think that what you're going to see happen here is the velocity of this will increase not just arithmetically, but geometrically here. At least, we've got to make that happen.

They'd better hurry, before the economy recovers on its own. Both Federal Reserve Chairman Ben Bernanke and Christina Romer, chairwoman of the president's Council of Economic Advisers, say it looks like the recession will end later this year. (Barclays Capital strategist Barry Knapp says it may have ended last month, which he predicts is where the National Bureau of Economic Research ultimately will locate the bottom of the downturn.) Yet the Congressional Budget Office estimates that only 25 percent of the stimulus money will be spent by the end of the year. That's one-quarter of a sum that stimulus enthusiasts such as New York Times columnist Paul Krugman said was woefully inadequate.

President Obama can still say the stimulus spending accelerated or strengthened the recovery, a claim that cannot be definitively proved or disproved. But that was not the case he made back in February, when he warned that if Congress did not immediately approve the American Recovery and Reinvestment Act, "our nation will sink deeper into a crisis that, at some point, we may not be able to reverse." He said "a failure to act will only deepen this crisis" and "could turn a crisis into a catastrophe." Pausing to debate the package, he said, "will only bring deepening disaster."

There's no question that the stimulus money is "creating jobs" in the sense that people are being hired with it. The White House says the spending will "save or create" 3.5 million jobs, equivalent to 6.8 million additional job-years, by 2012. Leaving aside the question of whether that prediction is accurate (or even falsifiable), it means the government is spending something like $115,000 a year per employee. That seems like a pretty extravagant use of borrowed money, unless the work is worth doing on its own terms. If it were, there would be no need to cite economic stimulus as a justification. In any case, there is a conflict between spending the money well and spending it quickly. "We're trying to get the money out as quickly as we can," says Biden, "but not too quickly, so we don't end up really screwing up here….In 85 days we've gotten tens of billions of dollars out the door, and so far—knock on wood—no real big problems, no real big glitches."

In February, Nick Gillespie noted that stimulus spending always seems to come after the recession is over. Yesterday Veronique de Rugy and Eileen Norcross wondered if we'll ever know exactly where the current batch of magically multiplying money went.

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  1. I think that what you’re going to see happen here is the velocity of this will increase not just arithmetically, but geometrically here. At least, we’ve got to make that happen.

    Is that something like ridiculous speed? I think whomever Biden is quoting without attribution meant exponential increases, something akin to ludicrous speed.

  2. a crisis that, at some point, we may not be able to reverse

    This is a mindbogglingly (astonishingly!) stupid statement.

    “We’ll be living in caves, and foraging for grubs in rotting logs, IF WE DON”T THROW BILLIONS OF DOLLARS IN THIS HOLE, RIGHT AWAY!!!11”

  3. Test your loyalty to the cult. Read this:

    IN THESE TIMES

    This article is permanently archived at: http://www.inthesetimes.com/main/article/4361/

    The Meltdown Goes Global
    It is time to rethink capitalism.
    By David Moberg April 15, 2009

    Only a year ago, the United States seemed likely to be the main victim of its own bursting housing bubble and financial crisis. Now the American collapse has deepened–and spread worldwide.

    Economic activity is shrinking in nearly every country, with Japan facing the steepest drop among the Group of Seven rich countries. Even in red-hot China, unemployment has become a major problem. This year, for the first time in 60 years, the world economy will contract.

    It’s a global crisis–and a crisis of globalization. But is there a global cure?

    In the ominous shadow of the failed 1933 economic summit in London, Group of 20 (G20), made up of the richest countries and big emerging economies, like China and India, met in London on April 2, as In These Times went to press. With many details still missing, G20 members pledged $1.1 trillion in new resources for the International Monetary Fund (IMF) and other international financial institutions. They also agreed to new coordinated and global financial regulation, including action on hedge funds, tax havens, credit rating agencies and executive compensation. And they committed themselves to free trade and sustainable development.

    The problems were never going to be resolved in one meeting. Two major, intertwined crises exist. First, jobs, income, credit and economic activity are spiraling into a self-reinforcing, deepening collapse. Second, the model of capitalism that dominates the global economy is failing and must be radically reformed.

    The initial challenge for world leaders is to stop the downward spiral and re-start the world economy. During recent financial crises–such as the bursting of Japan’s real estate bubble in the ’90s, or the 1997 Asian currency crisis–growth was strong enough throughout the rest of the world to help the stricken countries eventually recover.

    But the spread of financial derivatives from U.S. institutions–combined with similar financial deregulation elsewhere (particularly Iceland, Ireland and much of Eastern Europe)–exposed banks and investors to risks from their collapse.

    Worldwide, according to the Asian Development Bank, the value of financial assets fell by roughly $50 trillion in 2008, equal to world output (GDP) for a year. With less wealth and a frozen credit market, business and consumer spending contracted. People lost jobs and income. Governments lost tax revenues.

    With each new contraction, the vise tightens. Although Asian banks had largely avoided America’s inscrutable new financial devices–such as credit default swaps–their countries’ economies relied heavily on exports to the United States. Central banks in China, Japan and elsewhere financed the debt-driven consumption by buying and holding huge dollar-denominated reserves, partly as protection against a recurrence of the ’90s currency crisis, partly to support their export-oriented development strategy. But with their American market shrinking, industrial output dropped precipitously, down in Japan by half in February from a year earlier.

    Go to the link above for more, but only if you’re sure your faith can take it.

  4. Biden, you idiot, you have to use the schwartz first!

  5. PB,

    a crisis that, at some point, we may not be able to reverse

    Um, I think your Obama to normal translator is on the fritz again.

    He does not want the crisis reversed, He wants constant crisis and not being able to reverse it is the goal. Examine the actions.

  6. Shut the fuck up, Moredwifti.

  7. Test your loyalty to the cult.

    One of the overnight threads had SugarFree elected as cult leader until sunrise.

  8. the velocity of this will increase not just arithmetically, but geometrically here

    WTF?!? HEB also addressed this, but shouldn’t this say “increase not just linearly, but exponentially or logarithmically”? How can people not call Biden out for the stupidity of this? Geometrically? Spending will increase in multiple dimensions?

    “He’s an asshole too, sir. Major Asshole.”

    That quote easily applies to Biden.

  9. Is it wrong to want to beat Joe Biden about the head and shoulders with a sock full of quarters every time he opens his mouth? If it is, on second thought, i don’t want to be right.

  10. “The Obama administration has said it wants to spend 70 percent by the summer of 2010, so it will have to pick up the pace.”

    Just in time to fuel a surge in inflation! Now would be a good time to take on a lot of debt, as the dollar’s value will soon be falling.

  11. Dude, geometric growth is exponential growth that is quantized in a discrete domain. The values of the function given a discrete input domain taken on the form of a geometric sequence. If you’re calculating the spending at discrete intervals, the growth would technically be geometric (a special case of exponential growth).

  12. This happened before. I can’t seem to place my finger on the historic event, or events.

  13. (Barclays Capital strategist Barry Knapp says it may have ended last month, which he predicts is where the National Bureau of Economic Research ultimately will locate the bottom of the downturn.)

    Mental note: make sure nobody from Barclay’s Capital ever touches a nickel of my assets.

    There’s no question that the stimulus money is “creating jobs” in the sense that people are being hired with it.

    Oh, but there is such a question, given the inherent opportunity costs of taking money from the private sector (where it would have created jobs), and having the public sector use it to create (fewer) jobs.

    I believe I heard today that unemployment is higher than Obama said it would be if we didn’t pass the stimulus. Coincidence?

  14. Dude, geometric growth is exponential growth that is quantized in a discrete domain. The values of the function given a discrete input domain taken on the form of a geometric sequence. If you’re calculating the spending at discrete intervals, the growth would technically be geometric (a special case of exponential growth).

    I see your schwartz is as big as mine. Now let’s see how you handle it.

  15. Dude, geometric growth is exponential growth that is quantized in a discrete domain.

    I’m sure the full transcript will show Biden explaining it just this way.

  16. Now would be a good time to take on a lot of debt, as the dollar’s value will soon be falling.

    Debt is risk. I, personally, think now would be a bad time to raise your risk profile.

  17. Now would be a good time to take on a lot of debt

    This one is right in there with “You can write it off!” in my book.

  18. Wait, does this mean that Obama can’t claim credit for recent signs of recovery ?

  19. When we officially enter the recovery at the end of the year, it’s going to be obvious that the recovery had nothing to do with Bush/Obama/Congress. Nothing. Naturally, neither the media nor the government will credit the economy itself and admit that all the hand-wringing, legislation, and rule by fiat was totally unnecessary.

  20. Let’s not forget that even if in the next month or so, the economy shows any sign of recovery, the minimum wage will be increased to $7.25/hr in July. This will hit small businesses hard unless they increase their prices, which in turn decreases their competitiveness. It’s a proven fact that increases in minimum wage bring about increased unemployment. If that’s not bad enough, it’s also been reported that Obama wants to increase the minimum wage even further to something like $9/hr.

    O what a tangled web we weave…

  21. I’m sure the full transcript will show Biden explaining it just this way.

    I’m sure that if you gave Biden enough time, he would eventually randomly spout the correct string of words. He’s the oral equivalent of at least 10,000 typewriter-hammering monkeys.

  22. Sometimes it amazes me how people can make an argument one day, and argue the opposite the next.

    If you owned a company, and you thought you or your customers were going to get a bunch of stimulus-related work six months from now, would it affect your behavior today?

    Of course it would. For example, you might lay off fewer people, holding them at a loss now because you believe you will need them in a few months. Or you might start building inventories. Or you might even start interviewing people so that they are in place and ready to go when the rush comes. I know several people who are looking for jobs who have interviewed for positions that ultimately are being opened by the stimulus money.

    Oh, but there is such a question, given the inherent opportunity costs of taking money from the private sector (where it would have created jobs), and having the public sector use it to create (fewer) jobs.

    In times of full employment, that is largely true, and therefore government stimulus is largely zero sum. But right now, just about anyone the government hires results in one less person collecting unemployment. So not only is the government paying less for many of the things it is buying (many construction job contracts are going for 20% less than what they were a couple years ago), they are also gaining taxable income from the people they hire AND getting them off the dole. Add those all up and we are barely paying anything for most of the stuff we are buying with the stimulus money.

  23. The White House says the spending will “save or create” 3.5 million jobs, equivalent to 6.8 million additional job-years, by 2012.

    The White House had no comment on the 5.5 million jobs that will disappear in the future when the money borrowed to finance the stimulus comes due in the form of dramatic increases in taxes. There was also no comment on the dramatic drop in future standard of living brought about by the stimulus.

    And to go Godwin, somebody get busy digging up and re-animating Hjalmar Schact, he will know what to do.

  24. Of course the bailout package is causing this impressively rapid recovery! The meat of the bailout isn’t the money, it’s the hope. Hope that the gov’t is here to protect us and we’re safe to spend and invest even now.

    It’s like Dumbo’s “magic” feather… the feather ($$) isn’t what lets him fly, it just embiggens him to use his big floppy ears (hope).

  25. This sounds exactly like the plot of Brewster’s Millions.

  26. just about anyone the government hires results in one less person collecting unemployment.

    Unemployment is cheaper than government make-work jobs, you dumb fuck. And people get off unemployment; once they go to work for the government, they never leave. When they finally retire, they’re still at the public trough.

  27. we are barely paying anything for most of the stuff we are buying with the stimulus money.

    *outright, prolonged laughter*

  28. So not only is the government paying less for many of the things it is buying (many construction job contracts are going for 20% less than what they were a couple years ago)

    [citation needed]

  29. Is Biden a stupid human or an incredibly intelligent chimpanzee? I think saying the latter is more polite. After all, he is our vice president.

  30. Fuck you market fundimentalist idiots. Talking to you morons is like talkign too a brick wall. I’m done with you fools. This is my last post.

  31. Fuck you, Morris.

    I think saying the latter is more polite. After all, he is our vice president.

    It’s settled then. He’s a stupid human.

  32. This is my last post.

    Hooray!

    And from that little snippet of the article you posted it is painfully obvius that no one at that magazine has ever studied economics or even questioned whatever drivel their greivance studies humanities teachers shoved down their throats freshman year of college.

  33. It’s like Dumbo’s “magic” feather… the feather ($$) isn’t what lets him fly, it just embiggens him to use his big floppy ears (hope).

    Just like a noble spirit embiggens the smallest man.

  34. Morris,

    So your point is that financial crisis is happening in many other countries, including quite a few that are less capitalistic and more social democratic than the US (and some even fairly socialistic), and this is supposed to indict capitalism more?

    If the root problem is the housing bubble, you might note that housing bubbles appeared worldwide anywhere where housing supply is restricted, and were relatively rare in places in the US (Texas, NC) where the housing supply is allowed to expand naturally. Read for example Ed Glaeser on this.

  35. Morris you should have bothered to read the comments on that stupid piece you linked. They do a pretty good job of refuting it.

    P.S. – Fuck you too.

  36. “They’d better hurry, before the economy recovers on its own”

    They are hurrying – to jam through socialized medicine, carbon cap and trade,union card check, a new college education “entitlement” program and every other left wing wish list item they can think of.

    They are using the rationalization of all of the above and more as being part of “fixing” the economy for doing it. They have hurry before they don’t have that excuse any more.

    As for the “stimulus” spending, the fact that most of it will not have been deployed before the economy recovers will not stop the administration from claiming credit for it anyway.

  37. …just start the census now. make it a hundred pages long. require it notarized. hire more police to ensure they are filled out.

    now that is stimulus: inventing a superexpensive way to count heads.

  38. “So your point is that financial crisis is happening in many other countries, including quite a few that are less capitalistic and more social democratic than the US (and some even fairly socialistic), and this is supposed to indict capitalism more?”

    God bless socialism
    It slows economic growth during the good times
    and doesn’t help you during the bad times!

  39. How the census went down in Peru:

    I was unfortunately trying to travel by bus from San Ignacio to Lima on the fateful day of the census. I made it halfway to Chiclayo where I learned that all transport had been halted to census takers could count everyone. Even the airport was shut down.

    It gets better. So I had to stay in a hotel. But there wasn’t any food being sold because all businesses were closed so people could be counted.

    Luckily, I found a liquor store and the owner let me join his family for lunch.

    When I got back to the hotel, I learned that census takers were looking for me. I fell asleep but awoke to census takers rapping on my door. “Vayanse, hijos de puta” dije yo. “Soy extranjero; no vivo el desmadre de su pais!”

  40. “Geometrically? Spending will increase in multiple dimensions?”

    In Obama, all things are possible to him that believeth.

  41. “If you owned a company, and you thought you or your customers were going to get a bunch of stimulus-related work six months from now, would it affect your behavior today?”

    I’d take a wait and see approach.

  42. “I know several people who are looking for jobs who have interviewed for positions that ultimately are being opened by the stimulus money.”

    I simply don’t believe you. Could you do us a favor and troll your BS somewhere elsed. I mean really, the shit you were pushing out on the renewables energy thread smelled as bad as any I’ve encountersd. I mean really, Chad, if you’re sick, go to the hospital.

  43. “Unemployment is cheaper than government make-work jobs, you dumb fuck. And people get off unemployment; once they go to work for the government, they never leave. When they finally retire, they’re still at the public trough.”

    Yup.

  44. “Fuck you market fundimentalist idiots. Talking to you morons is like talkign too a brick wall. I’m done with you fools. This is my last post.”

    I seem to recall that brick held up better than the straw.

  45. They’ve gone plad…….

  46. When salle-mae called and asked if I was going to pay back my student loans. I said ” I already have…you got part of my tax dollars in that life raft bail out.-

    The lady on the other line didn’t have anything to reply.

  47. This is proof that the stimulus was never about the economy, it was just politicall payoffs at everyone’s expense.

  48. If the economy is recovering on it’s own, and barely 6% of the stimulus package is spent, then why don’t they apply the rest of the stimulus package to reimbursing social security and medicaid, which are in trouble.

    Congress has made multiple withdrawals from both, and never repaid them as they were supposed too, which is why they are in the condition they are in now.

  49. I think the US should spend the money CREATING NEW BUSINESS instead of pouring it into the failing businesses.

    If some day your car’d refuse to start, an American would solve it by keeping pouring gasoline in it an keep trying to start the damn thing without fixing the engine first.

  50. So we get Hope and Change. Change in our pocket. In time that CHANGE will be Yun change.

  51. Thanks I needed that laugh!

    LOL @ Warty

  52. “Both Federal Reserve Chairman Ben Bernanke and Christina Romer, chairwoman of the president’s Council of Economic Advisers, say it looks like the recession will end later this year. ”

    Not likely. Look at the signs. It will not be long before disco is back.

  53. “If some day your car’d refuse to start, an American would solve it by keeping pouring gasoline in it an keep trying to start the damn thing without fixing the engine first.”

    No, an American politician would try to solve it by keeping pouring gasoline. A normal American would either look under the hood or bring it to a mechanic. With a few exceptions, the least intelligent people enter politics.

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