Stimulus Bill Redux

[Texsox]

Why didn't we start some massive public works projects? Have the government start hiring more? Moving people off the government unemployment roll and onto the government payroll, seems like a lower cost solution.

[southsider2k5]

Why didn't we start some massive public works projects? Have the government start hiring more? Moving people off the government unemployment roll and onto the government payroll, seems like a lower cost solution.

 

We are doing exactly that right now. The government is expanding at an enormous rate right now. It isn't a lower cost solution. Government jobs cost more than the private sector counterparts.

[lostfan]

We are doing exactly that right now. The government is expanding at an enormous rate right now. It isn't a lower cost solution. Government jobs cost more than the private sector counterparts.

I make more than a government employee FWIW

[kapkomet]

I make more than a government employee FWIW

By the time you factor in all the overhead involved in government positions, you might not.

 

[lostfan]

By the time you factor in all the overhead involved in government positions, you might not.

Well, also factor in the overhead billing the government pays that doesn't go into my salary or benefits- contracting is a for-profit industry.

[kapkomet]

Well, also factor in the overhead billing the government pays that doesn't go into my salary or benefits- contracting is a for-profit industry.

Yea, but it still doesn't add up to what a government position does many times. I'm not saying every time, but the majority of the time, the cost of a government employee far exceeds that of a private sector employee, profits included.

[Cknolls]

You forgot gov't employees are more efficient than private sector workers.

[EvilJester99]

They should have put the money to housing and possibly paid off of some of peoples mortgages. That to me would have helped the economy more than helping these theiving ass bankers!

[NorthSideSox72]

They should have put the money to housing and possibly paid off of some of peoples mortgages. That to me would have helped the economy more than helping these theiving ass bankers!

We were talking stimulus bill, not TARP. And so far, it looks like TARP paid out a lot less than originally allowed (like less than half of the $780B), and of that, substantial amounts are already being paid back, with more to come. The stimulus money is not the same - it doesn't come back (directly).

 

But the general idea of helping out the housing market more directly isn't a bad one, I might be on board, depending on how it was done.

 

[bmags]

the credit to homeowners appears to have been a disaster.

[Balta1701]

the credit to homeowners appears to have been a disaster.

Which is why it'll be extended.

 

Oh wait, was extended. The things you miss while writing a 266 page thesis.

[Texsox]

We are doing exactly that right now. The government is expanding at an enormous rate right now. It isn't a lower cost solution. Government jobs cost more than the private sector counterparts.

But don't the people on public aid get like $50,000 a year, drive luxury cars, etc.?

What I was thinking is the difference between their benefits and wages is the "cost".

[NorthSideSox72]

the credit to homeowners appears to have been a disaster.

Not really. the fraud is an issue, but one which is being handled. I think its a positive thing, although it does cause an artificial bump of sorts. I would rather have seen the extension be a decrease in the amount too, that would have been a healthier transition for the market. but overall, I'd say its been successful.

 

[bmags]

the research has stated that only a very small percentage of those that received the credit would've not purchased the house w/o the credit.

 

The rest were just going to buy a house anyways and got free credit.

[iamshack]

the research has stated that only a very small percentage of those that received the credit would've not purchased the house w/o the credit.

 

The rest were just going to buy a house anyways and got free credit.

Is the research any different in the hardest-hit markets? I know that in Las Vegas, the credit has influenced a lot of people to buy who were not particularly interested before. With the rental market in the gutter here, the credit is the incentive that has caused a lot of potential buyers to become buyers in reality, as opposed to taking advantage of a large supply in the rental market.

[NorthSideSox72]

the research has stated that only a very small percentage of those that received the credit would've not purchased the house w/o the credit.

 

The rest were just going to buy a house anyways and got free credit.

Funny, I haven't seen anything like that. Do you have a source for this "research"?

 

[Balta1701]

Funny, I haven't seen anything like that. Do you have a source for this "research"?

The National Association of Realtors (NAR) estimates that 350,000 to 400,000 more homebuyers have entered the market due to the credit, but that 1.8 million to 2.0 million home purchasers will claim the credit against their tax liabilities.[4] Under these data, about four of every five homebuyers who claim the credit would have bought their homes without it. Moreover, even this figure overstates the credit’s beneficial effect — this estimate of “additional” homebuyers includes many who have simply accelerated purchases that they would have made in 2010 or 2011 if the credit had not been available.

 

Economist Ted Gayer at the Brookings Institution notes that if the NAR estimates are correct, the homebuyer credit will cost the federal government about $15 billion in lost revenue — or about $43,000 for every home purchase that would not otherwise have occurred. [5] This makes the credit an inefficient and costly subsidy. Gayer also notes that the homebuyer tax credit is doing relatively little to help absorb excess housing inventory.

CBPP

 

Alt.

[bmags]

there's the "research" NSS

[NorthSideSox72]

CBPP

 

Alt.

CBPP

 

Alt.

I'll take 350k - that's a pretty big number to add to the market.

 

I tend to like things that soften the spikes in the market. Makes for healthier economic trends. With the housing market still plummeting, I think having this credit in place is a good thing. 350k homes bought early or at all is pretty serious impact, and undoubtedly helped stabilize the market. Then there's the couple million that used it who would apparently have bought anwyay, but how do you prove the negative? Would they have waited? Who knows, but in any case, we've added liquidity to a market that needed it. So it has had a successful impact.

 

Did it have a $43k per household's worth? That's in question. One can make a pretty serious argument about whether or not that much money was worth that gain. Hard to measure that. What should the money have done instead? Spent on what? Or not spent, and simply kept the deficit further down? There is immense risk there that many more people would have had even more dire financial circumstances.

 

Based on what they were trying to accomplish, I'd call the program a success, but its certainly debateable how much of one. I think that $43k number is missing the material impact picture - it doesn't include the fact that property values, and by the way property taxes, are higher due to the bump. I'd say it was worth it.

 

 

[Balta1701]

Did it have a $43k per household's worth? That's in question. One can make a pretty serious argument about whether or not that much money was worth that gain. Hard to measure that. What should the money have done instead? Spent on what? Or not spent, and simply kept the deficit further down? There is immense risk there that many more people would have had even more dire financial circumstances.

 

Based on what they were trying to accomplish, I'd call the program a success, but its certainly debateable how much of one. I think that $43k number is missing the material impact picture - it doesn't include the fact that property values, and by the way property taxes, are higher due to the bump. I'd say it was worth it.

God no, it should not have been spent on lowering the deficit. that $43k is a very good paying job.

 

It's a success in that it was used, but the question is how stimulative it was, and frankly, that's yet to be determined. IMO, what's going to happen is that eventually this tax credit will go away, and that will pull another $8000 out of everyone's property values as demand drops again. It's blowing air into a burst balloon...it starts to re-inflate a bit, but if you stop putting in the air, it deflates the rest of the way. The only way this is effective is if the economy on its own can take off while this credit is active, such that simply delaying the full deflation of the housing market spreads out the impact until the green jobs boom overcomes it.