Michael Steele
 

So the new head of the republican party said in an interview with George Stephanopoulos that the stimulas package won't create jobs, it will only create WORK. WTF? What a moron.

You have to remember that there is a difference between the two, once you reach a certain level.

pffft. people are losing their jobs, they need work. So what is the difference? Well, according to Steele, it's that the "work" created by the stimulus will be under contract, meaning one day it will run out. Are you fucking kidding me? Most government contract work lasts for years.

If you don't know the difference, you really are naive.
A JOB is where you hire on at $ 40K with a company that NEEDS you to help provide a marketable product. IF you do a good job, you become an asset to the company and get annual raises for many years and eventually rise to management.

Government WORK is where a friend or relative of someone in government is given $500K per year to do some make-work study for two years and gets an allowance of $80K per year to hire a couple of drones to push paper for two years. NO actual purpose, no possibility of advancement, and no future. Total $1,160,000 spent, results - zip, but not expensive enough to be investigated.

What Steele is probably talking about is productivity.

In order for the economy to right itself, we need an increase in GNP. Put another way, we need the government to buy more stuff so that companies hire more folk to make more stuff. The resulting economic activity has a stimulating effect on the economy.

If, on the other hand, the government hires people to pick up trash, the stimulating effect on the economy per dollar shelled out is substantially less.

That is a major point of contention between the two sides on how to spend the money the government is prepared to spend to best serve the country. Directly to those in need which doesn't provide much of a boost - just delaying recognition of the problem or for the government to assume the role of a mega-consumer buying massive amounts of stuff to make up for the consumption drop off. Consumption via spending is very effective for the economy but only indirectly helpful to the unemployed.

Take your pick or figure out a way to allocate some funds to each idea. But the debate is meaningful and important.

It's Steel's Fault! :eek:

Very good post Beestie - Any thoughts on the plan as it is now?

hardly.

ummm, giving money to those in need, for example, in the form of food stamps, gives the MOST bang for the buck, according to Moody's and other economists.

The government also contracts work out to private industry, which in the case of the stimulus, that's what most of those jobs would be. The government doesn't actually hire people to build roads or fix infrastructure, they hire corporations to do the work, and the corporations in turn hire people to do the work. Hence, jobs created.

Case in point, Caterpillar annouced recently they were laying off about 40,000 people worldwide. They made a statement yesterday that if the stimulus passed, they would be able to hire back a lot of those people. States are having to lay people off due to severe budget deficits. Money going to states will help stop some of those layoffs. Many republican mayors and governors are in favor of the stimulus.

The Chamber of Commerce is even in favor of the stimulus, and they are hardly a liberal organization. Republicans in Congress are just playing politics and power games, at the expense of the American people.

And tax cuts, according to most economists, is the least likely way to stimulate the economy or create jobs. But the package has a balance of all those things, money for food stamps and medicaid etc (direct spending), money for infrastructure and states (but the state money was cut pretty badly), and tax cuts.

Then I guess I disagree with Moody's and "other economists" whoever they might be.

You said yourself that job creation is the number one priority in the recovery action plan. Then you go on to provide a reasonable scenario which would lead to that result - an increase in consumption by the Federal Government. We are on the same page in that regard.

Increasing the amount given to the needy doesn't accomplish much of anything since their consumption levels are pretty much fixed to begin with. In theory, if you are needy then the social program you are already on fills the gap such that you are no longer needy. If that is NOT correct then the social program needs to be restructured. However, that has nothing to do with government intervention in the economy in order to stimulate it.

So basically we can compare the economic effect of one stimulus dollar given to needy Joe and one stimulus dollar spent on a crumbling bridge.

Needy Joe takes his extra dollar and goes to Walmart and buys something he either needs or wants. Chances are the product he buys is imported so $0.10 stays in the economy and the other $0.90 exits the economy.

Bridges-R-Us takes the dollar, hires Needy Joe and improves a bridge. So what does that do for us? First it takes Needy Joe off of food stamps which frees up dollars for other needy folk. It also creates taxable income which creates tax revenue for the state and fed - a return on investment if you will. It improves local infrastructure which makes everyone who uses the bridge more productive and maybe even makes nearby property values increase since the area is now more accesible and attractive. It also reduces maintenance costs for the bridge which allows the municipality to allocate more of its funds to more important things.

All that vs a dime for Walmart coupled with an increase in the trade imbalance with our foreign import/export partner countries.

I think you would have to look pretty hard to find an economist who can construct a scenario whereby a dollar given directly to Needy Joe does more for the economy than a dollar allocated to an increase in government consumption. I would be even more surprised to learn that Moody's hired one.

Give a person a fish versus teaching them to fish.
There is NO WAY that simply giving money to an individual is better than providing said individual with employment and creating personal independence. :headshake

I think the point made by the Moody economist in his macroeconomic model is that income support (extended unemployment insurance, food stamps, etc) are the best short term means of infusing money into the economy. Those on the margin will spend it quickly on food, essential house hold goods, etc.

Increased income support has been part of the federal response to most recessions, and for good reason: It is the most efficient way to prime the economy's pump. Simulations of the Moody’s Economy.com macroeconomic model show that every dollar spent on UI benefits generates an estimated $1.63 in near-term GDP.x Boosting food stamp payments by $1 increases GDP by $1.73 (see Table 2). People who receive these benefits are hard pressed and will spend any financial aid they receive very quickly.

Infrastructure spending brings the next biggest bang for the bucks

The boost to GDP from every dollar spent on public infrastructure is large—an estimated $1.59—and there is little doubt that the nation has underinvested in infrastructure for some time, to the increasing detriment of the nation's long-term growth prospects

Tax cuts are the least stimulative.

http://www.economy.com/mark-zandi/do...lan_012109.pdf

more: http://www.economy.com/mark-zandi/de...onomy_homepage

It is just one economic model among many, but one that, for the most part, I agree with.

But If I was the economic czar, I would have recommended more $$$ into infrastructure funding and far less in tax relief, particularly for the top taxpayers.

Tax cuts stimulate the economy only in theory. They can stimulate the economy but they can also have almost no effect. There is no way to know until after the tax cut is given. Clearly more direct and predictable measures are called for.

Proposing tax cuts to rescue the economy in the state its in is like telling a guy dying of a heart attack to join a gym and stop eating Bacon.

This is just sad. Michael Steele was the bassist for the Bangles.

Really? Man I had it bad for Suzanna Hoffs back in the day.