I'm a bit flummoxed seeing columnists arguing that critics had better just shut up about the stimulus, because
most of it hasn't even been spent yet. For many of us critics, that's precisely the point. A stimulus is supposed to counteract a sharp contraction in aggregate demand when that demand is contracting, not wait until the economy is recovering, at which point its effect is much more likely to be distortionary and inflationary. The porkulus sacrificed stimulative power in order to slide Democratic legislators' pet projects past without ordinary scrutiny. Now the economy seems to be turning around without it, and we're stuck with the pork.
... because most of it hasn't even been spent yet.
And anyone who really knew about how the money does get spent could have predicted this.
The rhetoric supporting the stimulus bill's initial passage promised that it would immediately alleviate economic problems, and lots of reporters seemed to accept this line of reasoning -- but the distribution was never going to work this way. Last April, we wrote about why it wouldn't in No More Ball of Confusion: The Reality of the Grant Making Process is Really Simple..., which explains how bright ideas actually get executed. Sorry to use such a long block quote here, but I can't effectively convey the problems without doing so:
Note the date stamp on that post: April 26 2009. Earlier ones also offer variations on that theme.
We need more porkulus!
How about using the unspent porkulus for health care reform?
When you have Michelle Obama spending $373 Million for improvements on food in schools to combat obesity you know there is a problem. It might be worthy, but it does not create jobs.
Right, because trained monkeys do all the work and just use the money with which they're paid to build nests!
Two points:
1. I agree with Nutella on this one. A rare event.
2. You Americans get supplied food in schools? What's wrong with a peanut butter sandwich and apple from Mum? But this leads back to the obesity debate doesn't it?
Pork like the 230 billion in individual tax cuts? And the 37 billion in direct aid to people affected by the downturn? And the 58 billion in aid to state and local governments to, you know, keep people employed and stuff? And the 98 billion in transportation and infrastructure spending? All pork, right?
1T-230B-37B-58B-98B=577B worth of pork
My list was obviously not exhaustive, but thanks for assuming.
All pork, right?
No, just mostly pork. Certainly most of the transportation and infrastructure spending is. And the vast majority of the money that has not yet been spent, as well.
Ah, this is where the split occurs, within the definitions. I and many others don't consider spending on transportation or infrastructure to be pork since, you know, millions of Americans depend upon it every day and it doesn't specifically provide superfluous benefits to a small group of individuals. I suppose by your definition every form of public spending would be pork, save tax cuts.
Wait, so then the Bridge to Nowhere *wasn't* pork? I'm confused.
Right, the bridge to nowhere - a bridge that was never built by the way - is the only stretch of road in the country, how could I forget? Never mind the thousands of miles of highways, bridges and roads that are heavily trafficked every day by millions of Americans. Why do we need to maintain and fix those? It's all pork!
So, everything that can be classified as infrastructure cannot possibly be pork? The martha airport and the byrd bus stop cannot possibly be pork?
Would you accept, at least in theory, that it is possible to build a completely useless piece of infrastructure? And that a politician might desire to do just that in order to provide jobs for his district?
So it does create jobs.
Sure it creates jobs, but that does not mean it creates wealth. Paying people to dog holes and fill then back up creates jobs but it's still a waste of time money and labor
The vast majority of transportation and infrastructure projects are not pork and are instead quite essential. But feel free to anecdote me to death. And in a society that is so heavily dominated by the market, a job is a job is a job. During severe economic downturns, when demand drops and supply skyrockets, keeping people employed and pumping money into a hemorrhaging economy that everyone depends upon is essential, even if the jobs they take on may not be 100% purpose-driven or a viable long-term solution for employment. That's what recoveries - facilitated by appropriate responses to crises - are for.
Yeah I noticed that yesterday as well:
http://togetrichisglorious.blogspot.com/2009/10/daniel-gross-defends-stimulus.html
Also note that Daniel Gross even gets worked up over people describing the stimulus as valued at $800 billion -- it's actually $787 billion -- but even Obama has used the $800 billion figure.
Gross really is just simply a terrible journalist. His cover story for Newsweek on the recession was abysmal as well:
http://togetrichisglorious.blogspot.com/2009/07/recession-and-recovery.html
I'd like to see some updated analysis on the likely cost of the stimulus relative to the updated likely cost of the financial bailout. In the end, we might even turn a profit on the financial bailout (meaning a net gain, not a cost), since several banks have paid us back with interest. Of course we're likely to lose on AIG, and on the Treasury's guarantees of toxic mortgages. But I found one link that argues that Fannie and Freddie might actually be turned around and pay us back in a few years:
http://business.theatlantic.com/2009/09/could_the_economic_bailout_turn_a_profit.php
We have to remember that the GSEs (government sponsored entities) were a stupid idea on principle (and then we should note that the 'public option' for healthcare is similar in many ways), but still it would be nice to get our money back out of the Fannie/Freddie sink pit.
That was somewhere in your list of bullet-points about what was wrong with the stimulus, and it was shared by damn near everyone who wanted the bill at all. It wasn't shared so much with your median stimulus critic and the bill was shaped the way it was because the opposition didn't want to do *anything* other than propose laughable things like capital gains tax cuts when no one on the planet had gains anyway.
Probably the most direct way to have stemmed '09 unemployment would have been bailing out states who had to make massive job cuts in the face of the worst revenue climate in memory and that got slashed by a gaggle of posturing Senate "moderates" supposedly in the name of fiscal discipline.
Reading that kind of article is kind of frustrating to me, too. "How can critics say that the stimulus has failed? Why, the Obama administration estimates that it has increased GDP by 3%!" Oh, okay. Why would conservatives doubt their word?
I like the question that Greg Mankiw wanted asked, early on: Describe to me the set of circumstances that would cause you to admit that the Stimulus has failed.
So, other than the NEVER WRONG STOCK MARKET!!!!!!! what is the evidence that the recovery has started?
That's a great point--and, in fact, given the difficulty of spending money quickly on actual projects, I wouldn't be surprised if a lot of the various government spending has just led to a mini-bubble in stock prices (just as it led to an unsustainable mini-bubble in auto demand). But that's not much of a defense of the stimulus as planned.
I'm guessing deficit spending will still be ongoing when the mini-bubble bursts.
What is equally amazing is some people insisting that more stimulus is needed right now. How they can even talk of this with a straight face is beyond me.
I sympathize with some of the things it would be used for - like extended jobless benefits, but why not simply retarget the unspent portion of the existing stimulus package?
When I read Daniel Gross' column I just chuckled.
It is a real empty suit that tries to turn the greatest weakness of the stimulus into it's hallmark defense.
The main thrust of criticism of the stimulus at the time of passage was that it was far too slow to kick in and far too diffuse to matter much.
Now Gross and others are using the chief weakness of the package as a defense of it's lack of efficacy.
Empty suits...with a keyboard.
I think the $13 Billion that Obama is getting ready to pander to senior citizens in the form of $250 health care reform appeasement bonuses ticks $787 Billion up to $800 Billion.
This is the first time I have seen paranoid histrionics over convenient rounding of less than 1%.
Hey Gross, why don't we add cumulative interest to the total? This is what any financial analyst would do! Gross is too inept to consider that. Moronic.
That math would place the stimulus at well over $1 Trillion.
Daniel Gross is just an empty suit defending a bunch of empty suits.
Does failure taste so bad that he has to behave like a pouting baby?
It must.
rounding of less than 2%...