Will an economic stimulus package help us during recession?

[PenguinsFan]

Hi everyone–it’s me Whatevergirl:wave: --my husband wanted me to post this for him using his username, since he cannot access the forum very often at work.

He was curious of the opinions of his question–will an economic stimulus package help to revive our economy in the event we have a recession? (which looks pretty evident that we might soon)
If you were the President–what measures would you take to build this package?

He said that the Democrats are talking about this as a strong option–but, he is curious as to what ‘his’ republican friends think about it. He will be back later tonight to chat about it.

He looks forward to your replies.

On behalf of PF and myself–God bless!

 

[SoCalRC]

From an economics standpoint the only real stimulous that would seem to have any immediate effect woudl be to temporarily lower payroll taxes, which most everyone pays.

Consumer spending and productivity gains have pretty much driven all economic growth the last 6 years. And it is the best way to ‘shallow’ a recession.

There is no doubt in my mind that we are headed for a recession (arguably, we could already be in one). And it is going to be long.

We have been pursuing pro-inflation policies, which puts the Fed in a bind. It can now only slash interest rates so much without spuring runaway inflation. Private capitol is in terrible shape because of the sub-prime ponzi scheme.

So there aren’t going to be quick fixes. But we can try dampening the bottom.

Unfortunately, even cutting payroll taxes could be very hard. We are at war, two actually, at a direct cost of over $2B a week. The combination of slashing income taxes on top earners and fighting wars has nearly doubled our national debt in just 6 years. Combine this with a very weak dollar, and we can see that even the national credit card has a limit.

So the only two choices I can see are - stop the wars (as in, just walk away), or roll back about $270B in tax cuts and corporate handouts and reshape it to about $150B in tax cuts focussed on the middle and lower classes ($180B of the Bush tax cuts go to Americans above the 90th percentile in income).

Personally, I’d accept a rollback to the rates I paid in the 90’s over compromising our national interest and the moral obligations we have created abroad, but from the whining I’ve been hearing at business lunches, etc., I’d say I’m in the minority.

 

[whatevergirl]

Hi everyone;

In speaking with one the regional heads this morning, he said that we are in for a 18-24 month recession. We are seeing it in our line of work, where we are losing clients due to bankruptcies and mergers, that downsize a company or wipe them out completely. I am in sales and marketing, and with everyone afraid like this, it is hard to even set up new intro meetings. :crying: I work for a global insurance broker, and people just are too scared to make any changes…even if we know we can shave their costs on premiums. I wonder also how many of you are feeling it, already–a pre-recession if you will–and if it is affecting your business?

 

[vern_humphrey]

Permanently lowering taxes would be even better – since it would signal the government is serious about the economy.

That should be followed up by a Line Item Veto Amendment, so future presidents can veto the pork that lards so many bills that have to pass.

We might even consider a Balanced Budget Amendment.

 

[puzzleannie]

there is only one economic stimulus that makes sense, or has ever worked, and that is cutting taxes, esp. on individuals, investment income and small businesses.

 

[vern_humphrey]

there is only one economic stimulus that makes sense, or has ever worked, and that is cutting taxes, esp. on individuals, investment income and small businesses.

Amen!

As a wise man once said, “We cannot tax ourselves into prosperity, but we can certainly tax ourselves into poverty.”

 

[steveandersen]

Economic stimulus packages are often zero sum games

Where does the money come from to pay for the stimulus?

It is either decreased spending somewhere else; increased debt; or printing money.

If taxes are cut which aircraft carrier should be beached; which national park should be sold for development; whose grandmother shouldn’t get her SS check?

If you limit the choices to non-defense and non-entitlement programs then you’re dealing with an increasingly smaller segment of the budget and you’re still left with the problem that the money has to come from somewhere.

 

[SoCalRC]

there is only one economic stimulus that makes sense, or has ever worked, and that is cutting taxes, esp. on individuals, investment income and small businesses.

Uh, we just did this. It is principally why we are now 9 trillion in debt and looking at a deep long recession. We shouldn’t be surprised, slashing taxes and trickle down policies have historically never worked.

We already have a structural deficit. So more tax breaks, or even keeping the ones we have, is going to require massive cuts. We can’t cut our debt, so the 1/3 or so we are spending servicing it is beyond our control. That pretty much leaves slashing defense or medicare and social security.

How on earth suddenly making middle America suddenly pick up the massive costs for their elders (which are soaring at about 15% inflation now) while they are living on stagnant wages and working two jobs to keep their heads afloat now could possibly help a recession is beyond me.

Perhaps a first step would be to acknowledge that a failure in regulation and oversight killed the money supply, focusing every policy on rewarding business created inflation, and slashing taxes massively on the absolute wealthiest while fighting two wars as expensively, corruption, and ineffectively as possible created staggering debt.

 

[LCMS_No_More]

Uh, we just did this. It is principally why we are now 9 trillion in debt and looking at a deep long recession. We shouldn’t be surprised, slashing taxes and trickle down policies have historically never worked.

Remember, the worst possible evil to a Republican is a tax. They always want to cut taxes, no matter how low they go.

We already have a structural deficit. So more tax breaks, or even keeping the ones we have, is going to require massive cuts. We can’t cut our debt, so the 1/3 or so we are spending servicing it is beyond our control. That pretty much leaves slashing defense or medicare and social security.

Since Republicans believe that the government has no place providing services to the People, guess where they’d cut.

How on earth suddenly making middle America suddenly pick up the massive costs for their elders (which are soaring at about 15% inflation now) while they are living on stagnant wages and working two jobs to keep their heads afloat now could possibly help a recession is beyond me.

Republican response: Who cares? They’re just people. Corporations are all that matters.

Perhaps a first step would be to acknowledge that a failure in regulation and oversight killed the money supply, focusing every policy on rewarding business created inflation, and slashing taxes massively on the absolute wealthiest while fighting two wars as expensively, corruption, and ineffectively as possible created staggering debt.

Actually, it’s lack of regulation and no oversight. It’s amazing what happens when corporations no longer have supervision, isn’t it?

I’m simply amazed at Republican Catholics who talk about the principle of subsidiarity when it comes to government while supporting ever increasing corporate power. I would think that the principle of subsidiarity works BOTH ways.

Seems to me that if you support smaller government on the basis of subsidiarity, you should also support breaking up the corporations on the same basis…unless it’s more about an ideology than the Catholic faith…

 

[puzzleannie]

Uh, we just did this. It is principally why we are now 9 trillion in debt and looking at a deep long recession. We shouldn’t be surprised, slashing taxes and trickle down policies have historically never worked.
.

that is one solid opinion

another opinion is that we are in debt because we overspend on things that are not priorities, and do not have adequate accounting controls in place to direct spending on priorities, and that a huge amount of that debt is from waste and outright theft.

 

[SoCalRC]

that is one solid opinion

another opinion is that we are in debt because we overspend on things that are not priorities, and do not have adequate accounting controls in place to direct spending on priorities, and that a huge amount of that debt is from waste and outright theft.

But we have to look at math. That is, any theory must match what we actually can measure in the economy.

Look at the Fed Chairman’s testimony before Congress:

msnbc.msn.com/id/22705103/

Right now, the math is clear, which is why a Fed chairman I think of as a worthless partisan hack is saying very close to what I said in my first post above.

 

[vern_humphrey]

that is one solid opinion

another opinion is that we are in debt because we overspend on things that are not priorities, and do not have adequate accounting controls in place to direct spending on priorities, and that a huge amount of that debt is from waste and outright theft.

If we go into recession, tax revenues will fall. Then we raise taxes to offset the reduced revenue, and the recession gets worse. So tax revenues fall even more. Then we raise taxes to offset the reduced revenue, and the recession gets even worse. So tax revenues fall even more . . . and on and on and on.

Much better to stimulate the economy.

Note that no one wants to discuss the Line Item Veto or a Balanced Budget Amendment.

 

[SoCalRC]

Note that no one wants to discuss the Line Item Veto or a Balanced Budget Amendment.

I support the line item veto, but would not hold my breath. A GOP congress and president outspent LBJ.

I do not support a balanced budget amendment because it is reasonable for governments to use debt under certain circumstances (like defense or infrastructure investment), much like it is not unreasonable for a private family to have a mortgage, or use debt to handle a crisis beyond their control.

But for folks who do favor such a step, it would have made more sense to push for it at the beginning of the Bush presidency, when we actually had a surplus. It is harder quick fix the structural deficit we have now, particularly since the national debt has nearly doubled (a spectacular feat of government economic mismanagement that I would have not believed possible just 6 years ago).

Wasn’t it you who quoted that old infantry axiom, if something works, it isn’t stupid? Well the reciprical strikes me as true as well. If something demonstrably does not work, it is stupid, no matter how much we want it to be otherwise…

 

[vern_humphrey]

I support the line item veto, but would not hold my breath. A GOP congress and president outspent LBJ.

I do not support a balanced budget amendment because it is reasonable for governments to use debt under certain circumstances (like defense or infrastructure investment), much like it is not unreasonable for a private family to have a mortgage, or use debt to handle a crisis beyond their control.

And we can make provisions for that in the amendment.

But for folks who do favor such a step, it would have made more sense to push for it at the beginning of the Bush presidency, when we actually had a surplus. It is harder quick fix the structural deficit we have now, particularly since the national debt has nearly doubled (a spectacular feat of government economic mismanagement that I would have not believed possible just 6 years ago).

The “surplus” was a myth – it was arrived at by not counting the money “borrowed” from Social Security.

Wasn’t it you who quoted that old infantry axiom, if something works, it isn’t stupid? Well the reciprical strikes me as true as well. If something demonstrably does not work, it is stupid, no matter how much we want it to be otherwise…

And cutting taxes to spur the economy works. It worked for Kennedy, it worked for Reagan, and it worked to pull us out of the slide of 2000 (even when it was exaccerbated by 9/11.)

 

[stinkcat_14]

I do not support a balanced budget amendment because it is reasonable for governments to use debt under certain circumstances (like defense or infrastructure investment), much like it is not unreasonable for a private family to have a mortgage, or use debt to handle a crisis beyond their control.

Of course part of the problem is that the federal government needs a different budgeting process, a capital budget and an operating budget. It is certainly reasonable to borrow for capital expenditures that are going to provide benefits for years to come. It is also fair to expect those who are going to benefit from such expenditures to pay for them.

 

[vern_humphrey]

Of course part of the problem is that the federal government needs a different budgeting process, a capital budget and an operating budget. It is certainly reasonable to borrow for capital expenditures that are going to provide benefits for years to come. It is also fair to expect those who are going to benefit from such expenditures to pay for them.

Oh, man, do they need a different budgeting process!!

Aside from capital expenditures versus operating budget, the current system is designed to be managed by clerks with green eye-shades and steel-nibbed pens.

It works like this – you have a building that needs a new roof. So you pass that up the line in the budget-planning process. It gets rolled up into “roofs” which at a higher level gets rolled up into “Building Maiintenance” and then at a higher level becomes “Operating and Maintenance” and so on.

When Congress examines the budget proposal, they have no idea how many buildings, roofs, and so on are in there. Nor do they have any idea what damage will result if they do not fund your roof repairs.

So after the wheeling and dealing, they know they have broken something – but they don’t know what. So they pass authority to high-level government managers to do a little finagling with the money.

Now, these guys don’t know what’s broken, either, so they hold back some for “emergencies” and pass the rest down to lower managers, with authority for them to do a little finagling.

Now, these guys don’t know what’s broken, either, so they hold back some for “emergencies” and pass the rest down to still lower managers, with authority for them to do a little finagling.

Then comes the crunch date – the date beyond which no contracts can be let. There is a sudden rush to let contracts to commit the “emergency money.” But the contracting offices can only deal with a tiny fraction of those “year end funds.”

So now there’s a frantic search to find some way to spend the money without a contract. Which explains why so many government departments have a thousand year supply of toilet paper, closets full of obsolete computers still in their unopened boxes, and why there are so many gazebos around public buildings.

 

[gmarie21]

Oh, man, do they need a different budgeting process!!

Aside from capital expenditures versus operating budget, the current system is designed to be managed by clerks with green eye-shades and steel-nibbed pens.

It works like this – you have a building that needs a new roof. So you pass that up the line in the budget-planning process. It gets rolled up into “roofs” which at a higher level gets rolled up into “Building Maiintenance” and then at a higher level becomes “Operating and Maintenance” and so on.

When Congress examines the budget proposal, they have no idea how many buildings, roofs, and so on are in there. Nor do they have any idea what damage will result if they do not fund your roof repairs.

So after the wheeling and dealing, they know they have broken something – but they don’t know what. So they pass authority to high-level government managers to do a little finagling with the money.

Now, these guys don’t know what’s broken, either, so they hold back some for “emergencies” and pass the rest down to lower managers, with authority for them to do a little finagling.

Now, these guys don’t know what’s broken, either, so they hold back some for “emergencies” and pass the rest down to still lower managers, with authority for them to do a little finagling.

Then comes the crunch date – the date beyond which no contracts can be let. There is a sudden rush to let contracts to commit the “emergency money.” But the contracting offices can only deal with a tiny fraction of those “year end funds.”

So now there’s a frantic search to find some way to spend the money without a contract. Which explains why so many government departments have a thousand year supply of toilet paper, closets full of obsolete computers still in their unopened boxes, and why there are so many gazebos around public buildings.

Dead on perfect explaination. I was SHOCKED at the waste I saw when I worked for the US Senate. Oh, how I remember that push to use all the funds allocated to our office so that we could ask for more with the coming year’s budget. I know the same applies to corporations and their departments. It’s insane, but everyone figures “If I don’t get it, I’ll never get it and it will go to the guy who already has more money than an average person can spend.”

 

[iamrefreshed]

Economic stimulus package is just a fancy way of saying for ‘vote for my party’.

Middle class America has put us in the position we are in today. The Fed handed out easy money and we took it!

Just crank up the old ATM card from the house and buy that Hummer you always wanted. Then blow $10G in Vegas.

“It’s OK honey, the house will just keep going up in value”.

NOT!

The only solution to this will be PAIN, and a lot of it. America has forgotten how to save. Even now, after doing this to themselves, we are screaming for the government to fix it.

Poor Joe Blow lost on house-flipping. Step in Mr. Government and fix it for me.

PAIN, PAIN and more PAIN. We deserve it.

But that’ll never happen. No 'Helicopter Ben" will keep the printing presses rolling. What’s to stop him? They no longer print the M3 so no one will know!

 

[vern_humphrey]

Dead on perfect explaination. I was SHOCKED at the waste I saw when I worked for the US Senate. Oh, how I remember that push to use all the funds allocated to our office so that we could ask for more with the coming year’s budget. I know the same applies to corporations and their departments. It’s insane, but everyone figures “If I don’t get it, I’ll never get it and it will go to the guy who already has more money than an average person can spend.”

I did a contract years ago for the Army Corps of Engineers Real Property Division. We came up with a bugeting system using the Out-of-Kilter Algorythm. The system allows you to play “what if” with your budget – so you can see what will and will not be funded at various levels. By playing “what if” and fine-tuning the rules by which you prioritize, you can be sure that the money is spent efficiently at any level of funding. But of course that system is only used within the Real Property division.

When I ran for Congress in '04, I found out why the federal goverment doesn’t have such a system. They don’t want the budget to be efficient. They want to be able to ask, “Well, would you rather have us cut Defense or Medicare?”

They don’t want you to be able to put your finger on things within those programs that are wasteful and inefficent.

 

[whatevergirl]

Economic stimulus package is just a fancy way of saying for ‘vote for my party’.

Middle class America has put us in the position we are in today. The Fed handed out easy money and we took it!

Just crank up the old ATM card from the house and buy that Hummer you always wanted. Then blow $10G in Vegas.

“It’s OK honey, the house will just keep going up in value”.

NOT!

The only solution to this will be PAIN, and a lot of it. America has forgotten how to save. Even now, after doing this to themselves, we are screaming for the government to fix it.

Poor Joe Blow lost on house-flipping. Step in Mr. Government and fix it for me.

PAIN, PAIN and more PAIN. We deserve it.

But that’ll never happen. No 'Helicopter Ben" will keep the printing presses rolling. What’s to stop him? They no longer print the M3 so no one will know!

There is some truth (a lot actually) in this because so many ‘middle class’ people live way beyond their means. I watched a documentary on how millionaires spend their money, (not celebs or athletes, but self made business men and women who are now in the millionaire status) and they actually drive very modest cars, and don’t over spend on their credit cards. Many of them have zero debt, and live within their means. Not beyond. For some reason, people who make considerably less money–live off of credit cards, and future money (like the real estate plunge everyone took here in Florida a few years ago and are now reaping the horrible benefits). I am surprised, now living in Florida, what my house that we are currently renting for the time being, went for 2 years ago. The house is 3 years old, and is 2400 square feet–and the guy who owns it paid over $320k. Are you kidding? It is a very nice home, but I’m not paying that. $320k up north would buy you a 4000 sq ft home with 1/2 an acre or so-in a prime neighborhood. He wants us to buy it, and I told my husband–he is going to end up taking a loss, because I’m not paying anywhere near that, when foreclosed bigger and beautiful homes in the same neighborhood are popping up for a steal.

There is no get rich quick scheme out there, peeps.:tsktsk: But, is that really a NEW mind set?