Taking apart the Stimulus package

[TripletDaddy]

An interesting graphic representing a rough overview of the stimulus package....

Is there a way to measure the impact of certain spending as it pertains to jobs and consumer confidence? For example, if the stimulus package sets aside 20B for building roads and highways and renovating schools, that is viewed as "spending." However, implicit in that is the creation/retention of jobs, payment of wages, and subsequent consumer spending. Is there a way to estimate how much of the government spending will filter down into jobs?

Overall, way too much spending that won't directly impact the individual taxpayer. I am not sure anyone cares about new coats of paint at school right now. People need jobs.

[RobinFinderson]

That is a really really really cool and useful infographic. Thanks for posting.

[Guest]

Overall, way too much spending that won't directly impact the individual taxpayer. I am not sure anyone cares about new coats of paint at school right now. People need jobs.

The distribution of the 'stimulus' outlays is not an accident.

"You never want a serious crisis to go to waste," Rahm Emanuel, Mr. Obama's new chief of staff, told a Wall Street Journal...He ticked off some areas where he thought new doors were opening: energy, health, education, tax policy, regulatory reforms.

[Goatnapper'96]

I am not a big fan of the Obama administration, but I am less than convinced that all of the shortfall in the tax area, 22% in reality versus the 40% proposed goal, is the result of ideological differences between Democrats and Republicans. In my industry I know that Sen Rockefeller, a Democrat from rural West Virginia, wanted significantly higher tax breaks for broadband deployment. He initially proposed two thresholds of 10% for current generation of broadband, 4 mb down and 1 up, and 20% for next generation broadband, I think 40 down and 10 up. He then attached an ammendment to the senate version that significantly increased the tax incentives and even provided companies such as mine that don't realize huge net profits the option of selling the tax break on the open market. However, cable TV and some wireless phone lobbyists got it shot down under the angle that such tax incentives were only beneficial to incumbent telecom providers making the jump to FIOS, such as Verizon. I don't think that this is a huge deal with respect to the entire shortcoming, but in then end I wouldn't be surprised if 1 billion in tax incentives were negated through this. I am sure other industries have similar tales of woe and the sum of the woes probably explains the shortcoming.

Now you people know why those damned dodger dogs made me so uncomfortable!

[SCcoug]

Is there a way to measure the impact of certain spending as it pertains to jobs and consumer confidence? For example, if the stimulus package sets aside 20B for building roads and highways and renovating schools, that is viewed as "spending." However, implicit in that is the creation/retention of jobs, payment of wages, and subsequent consumer spending. Is there a way to estimate how much of the government spending will filter down into jobs?

This table is a summary from the CBO on various policy options for stimulus.http://www.cbo.gov/ftpdocs/89xx/doc8....shtml#1073241

From page 10
http://www.economy.com/mark-zandi/do...e_11_19_08.pdf gives a listing of stimulus bang for the buck.

Table 1: Fiscal Stimulus Bang for the Buck
Source: Moody's Economy.com
Tax Cuts
Non-refundable Lump-Sum Tax Rebate 1.01
Refundable Lump-Sum Tax Rebate 1.22
Temporary Tax Cuts
Payroll Tax Holiday 1.28
Across the Board Tax Cut 1.03
Accelerated Depreciation 0.25
Permanent Tax Cuts
Extend Alternative Minimum Tax Patch 0.49
Make Bush Income Tax Cuts Permanent 0.31
Make Dividend and Capital Gains Tax Cuts Permanent 0.38
Cut in Corporate Tax Rate 0.30
Spending Increases
Extending Unemployment Insurance Benefits 1.63
Temporary Increase in Food Stamps 1.73
General Aid to State Governments 1.38
Increased Infrastructure Spending 1.59
Note: The bang for the buck is estimated by the one year $ change in GDP for a given $
reduction in federal tax revenue or increase in spending

[Guest]

This table is a summary from the CBO on various policy options for stimulus.http://www.cbo.gov/ftpdocs/89xx/doc8....shtml#1073241

From page 10
http://www.economy.com/mark-zandi/do...e_11_19_08.pdf gives a listing of stimulus bang for the buck.

Thanks, SCC.

You have tablized my disappointment in the package that will be signed. If we're going to have a stimulus bill, why not focus the spending/breaks only on areas with the highest multipliers?

If we're going to spend nearly a trillion dollars, why not just make it $2T? We can spend a trillion on actually stimulating the economy and those who want to underwrite a decade of energy, health and social programs can have their trillion. It would allow the sponsors to be honest about their intentions.

[myboynoah]

I am not a big fan of the Obama administration, but I am less than convinced that all of the shortfall in the tax area, 22% in reality versus the 40% proposed goal, is the result of ideological differences between Democrats and Republicans. In my industry I know that Sen Rockefeller, a Democrat from rural West Virginia, wanted significantly higher tax breaks for broadband deployment. He initially proposed two thresholds of 10% for current generation of broadband, 4 mb down and 1 up, and 20% for next generation broadband, I think 40 down and 10 up. He then attached an ammendment to the senate version that significantly increased the tax incentives and even provided companies such as mine that don't realize huge net profits the option of selling the tax break on the open market. However, cable TV and some wireless phone lobbyists got it shot down under the angle that such tax incentives were only beneficial to incumbent telecom providers making the jump to FIOS, such as Verizon. I don't think that this is a huge deal with respect to the entire shortcoming, but in then end I wouldn't be surprised if 1 billion in tax incentives were negated through this. I am sure other industries have similar tales of woe and the sum of the woes probably explains the shortcoming.

Now you people know why those damned dodger dogs made me so uncomfortable!

Interesting. This looks like the original House bill, so that 22% may have changed after the Senate worked on it.

I suspect the one ideological difference that would have brought it closer to 40% would have been less spending versus more tax breaks.

I still don't understand how $27 billion on renewable energy is stimulative, especially in the long term. Unless of course we get a new regulatory regime that would in effect make them competitive with fossil fuels. That may actually bring the masses to the barricades.

[Goatnapper'96]

I still don't understand how $27 billion on renewable energy is stimulative, especially in the long term. Unless of course we get a new regulatory regime that would in effect make them competitive with fossil fuels. That may actually bring the masses to the barricades.

I just can't fathom the democrats doing something so dumb if they want to stay in power.

[il Padrino Ute]

I just can't fathom the democrats doing something so dumb if they want to stay in power.

Well, these are the same folks who put Kerry up against GW. It's never surprising when either side does something ridiculously stupid.

[TripletDaddy]

Interesting how much we are spending to "increase broadband access." $6B?

[Goatnapper'96]

Interesting how much we are spending to "increase broadband access." $6B?

It isn't really a drop in the bucket of what will be needed. Your RBOCs (AT&T, Pacific Bell, Verizon, SW Bell, Qwest etc.) do no investment into any smaller community where the economy of scale doesn't make it good for business. Where rural companies who collect Universal Service provide service it isn't an issue. But the big boys still have the majority of the rural access lines and exchanges. This is why I thought the tax incentives was the way to go. Let the big boys deploy fiber in all those medium-smaller communities where they provide service and get tax incentives for up to 40% of their investment especially if it is fiber optic. Fundamentally what I think the broadband aspect is missing is demanding synchronous (same upstram bandwidth as downstream) broadband. The faster speeds are great for the consumer but genuine economic development, i.e. buisnesses, are going to have more and more need for upstream bandwidth.

I still have yet to figure out all the rules of the game concerning disbursements but it is going to get real interesting.

[YOhio]

I'm not sure how the passage of this bill could get any uglier. Regardless of content, the Dems have bullied this thing through in the most savage manner possible.

[PaloAltoCougar]

I'm not sure how the passage of this bill could get any uglier. Regardless of content, the Dems have bullied this thing through in the most savage manner possible.

"Prior to the Senate vote, the three GOP Senators who eventually voted in favor of the stimulus package were brutally beaten while being forced to listen to John Tesh's 'Tribute to Yanni.'"--AP

[Babs]

I just can't fathom the democrats doing something so dumb if they want to stay in power.

Here's what I'm thinking.

The Dems have apparently already resigned themselves to the fact that Obama's a three-and-out administration, so they're wasting no time going into get-it-while-the-gettin's-good mode. And further, they realize there's nothing to be gained by playing nice, because the whole party's going to be held accountable for the highway to hell we're on, and they'll all be voted out of office regardless.

But to some extent we're simply seeing a concentrated version of the same thing we've seen over the last eight years. For each of the last eight years, we've seen Congress push through "emergency" or "supplemental" war funding legislation. These were in addition to budgetary defense funding, and each year's addition was between 75-125 billion. Just as with the current stimulus package, there was widespread assumption that each of these annual funding bills would pass. So in the same way that we see now, there was an absolute free-for-all of Congressmen trying to get whatever riders they could in the legislation, knowing that the pork would get by.

It's just the way American politics works. Every session the bill that's most likely to get passed becomes the gravy train. This session is no different, it's just that it's one hell of a train that's pulling out of the station.