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[Balta1701]

Wrong path again.

Considering that no matter what he proposed, it'd die in Congress, why not at least propose something with better balance between old and new infrastructure?

[NorthSideSox72]

Considering that no matter what he proposed, it'd die in Congress, why not at least propose something with better balance between old and new infrastructure?

Better to call the GOP's bluff. They have complained this stimulus spending does nothing to grow private business, well, give them one that does that. Make them stick to their guns.

 

[southsider2k5]

Better to call the GOP's bluff. They have complained this stimulus spending does nothing to grow private business, well, give them one that does that. Make them stick to their guns.

 

Construction spending on infrastructure was a big part of the stimulus the first time. That really has done nothing to get the private sector going.

[Balta1701]

Construction spending on infrastructure was a big part of the stimulus the first time. That really has done nothing to get the private sector going.

I'm not sure "Done nothing" is an accurate description of how the huge private sector job losses stopped...but you should already have known I'd challenge you on that

[NorthSideSox72]

Construction spending on infrastructure was a big part of the stimulus the first time. That really has done nothing to get the private sector going.

That was my point.

 

[NorthSideSox72]

I'm not sure "Done nothing" is an accurate description of how the huge private sector job losses stopped...but you should already have known I'd challenge you on that

Well that's true, Done Nothing is a bit much. Just having more people employed, even in temporary jobs, will stimulate the private sector to an extent in the short run. But it does very, very little in the long run.

 

[Balta1701]

Well that's true, Done Nothing is a bit much. Just having more people employed, even in temporary jobs, will stimulate the private sector to an extent in the short run. But it does very, very little in the long run.

In the long run we're all dead.

 

More serious point...there's actually a big long-term set of points worth noting. First...interest rates on government bonds are at historic lows right now. Which means...it's far, far cheaper to do infrastructure work right now than it has been at any point since probably the 30's.

 

Secondly, if, as I've argued...the right move is to be counter-cyclical...then by having people employed right now by the government, you're filling the very large output gap between what the economy could produce and what it is producing, and as such you're giving those businesses reluctant to invest funds because of lack of customers in the short term exactly what they need...customers in the short term.

[Balta1701]

Construction spending on infrastructure was a big part of the stimulus the first time. That really has done nothing to get the private sector going.

worth noting...the amount from the first stimulus package for comparable road construction spending was on the order of $28 billion (depending on how you count a few line items like defense department renovations).

 

So yeah...it wasn't going to give you a major stimulative jolt...because it was only $28 billion.

[NorthSideSox72]

In the long run we're all dead.

 

More serious point...there's actually a big long-term set of points worth noting. First...interest rates on government bonds are at historic lows right now. Which means...it's far, far cheaper to do infrastructure work right now than it has been at any point since probably the 30's.

 

Secondly, if, as I've argued...the right move is to be counter-cyclical...then by having people employed right now by the government, you're filling the very large output gap between what the economy could produce and what it is producing, and as such you're giving those businesses reluctant to invest funds because of lack of customers in the short term exactly what they need...customers in the short term.

And as I said, short run, that helps, to a limited and linear extent. There is no multiplier, and there is no growth foundation put in place. And businesses are waiting on the sideline, in part, because they KNOW that the stimulus money is temporary and unsustainable in the long run. They will therefore only expand or increase their investment to match that temporary and small bump.

 

Basically, its less bang for the buck than if they did something more pointed towards future growth.

 

 

[Balta1701]

And as I said, short run, that helps, to a limited and linear extent. There is no multiplier, and there is no growth foundation put in place. And businesses are waiting on the sideline, in part, because they KNOW that the stimulus money is temporary and unsustainable in the long run. They will therefore only expand or increase their investment to match that temporary and small bump.

 

Basically, its less bang for the buck than if they did something more pointed towards future growth.

There is no multiplier? That's going to be news to everyone except the Republican party. I could go and easily grab the CBO estimates of the impact of the stimulus package on GDP as a response. Their numbers say it has been well above the original $800 billion price tag.

 

I'll agree that it's less bang for the buck than the ideal case of things like investment in a smart grid, but it's also better than the $500 billion or so in tax cuts that simply got stuck back into T-bill purchases.

 

The other way to look at it long term is...this is work that needs to be done. Due in no small part to the "Small government!" revolution, we're 30 years behind on upkeep of a lot of infrastructure, and I think everyone can admit that it's causing growing numbers of problems. It's going to be vastly cheaper and much more effective to get caught up on it now.

[jasonxctf]

There is no multiplier? That's going to be news to everyone except the Republican party. I could go and easily grab the CBO estimates of the impact of the stimulus package on GDP as a response. Their numbers say it has been well above the original $800 billion price tag.

 

I'll agree that it's less bang for the buck than the ideal case of things like investment in a smart grid, but it's also better than the $500 billion or so in tax cuts that simply got stuck back into T-bill purchases.

 

The other way to look at it long term is...this is work that needs to be done. Due in no small part to the "Small government!" revolution, we're 30 years behind on upkeep of a lot of infrastructure, and I think everyone can admit that it's causing growing numbers of problems. It's going to be vastly cheaper and much more effective to get caught up on it now.

 

i was thinking about road construction/stimulus stuff while sitting at a railroad crossing this weekend. And a thought occurred.

 

Where I live, there are some major roads that cross tracks. One or two of the major roads are fortunate enough to have had bridges built over the tracks. Others have not.

 

I know that building a bridge over tracks is very costly, and time consuming. However, to me, that would be a worth while stimulus effort in construction.

 

(1) You are hiring both construction workers and architects/engineers

(2) You are using tax payer money to eliminate tax payer annoyances

(3) You are helping people get places faster and reducing some effects of road congestion.

(4) You are in a very small way, helping to increase fuel efficiency with cars. (no more sitting in neutral burning gas at the tracks)

(5) See #4, you are also reducing gas/oil dependency.

 

And if people believe that #4 is minimal, own a car with an onboard mpg calculator and see what happens when you are sitting in neutral for 3 minutes waiting for a train to pass. (or how much you lose by turning off and turning back on again)

 

To take it a step further, I'm a big proponent of increasing fuel economy and reducing oil usage. (thus the 2 clean diesel cars my wife and I have). Some places just need to reconfigure traffic lights and patterns. I can't tell you how many times I'm stuck at red lights for minutes with no cars passing in the other directions.

[Balta1701]

Today's stuff I want to post. NSFW on the language if you follow through to the link.

We have very low capacity utilization (75%) and very high unemployment (10%).

 

That is, we have factories sitting idle for lack of workers – low capacity utilization. At the same time we have workers sitting idle for lack of factories – high unemployment.

 

There are machines waiting to be worked and people waiting to work them but they are not getting together. The labor market is failing to clear.

 

This is a f***ing disaster.

 

Excuse my language, but you have to get that this is a big deal. This is not a big deal like the GOP doesn’t appreciate public goods. Or, Democrats don’t understand incentives. Or some other such second order debate that could reasonably concern us in different times.

 

This is a failure of our basic institutions of production. The job of the market is to bring together willing buyers with willing sellers in order to produce value. This is not happening and as a result literally trillions of dollars in value are not being produced.

 

Let me say that again because I think it fails to sink in – literally trillions of dollars in value are not being produced. Not misallocated. Not spent on programs you don’t approve of or distributed in tax cuts you don’t like. Trillions of dollars in value are not produced at all. Gone from the world entirely. Never to be had, by anyone, anywhere, at any time. Pure unadulterated loss.

 

Time and time again I see people speak about recessions as if they are a bad harvest – an unfortunate event wherein we have to figure out how to go with less. Some say we should all sacrifice – some say the sacrifice should be based on X or Y. Some say each family should take their lumps as they come.

 

However, they are all getting the basic idea wrong. This is not a bad harvest. The problem isn’t that there is less to go around. The problem is that we are creating less, building less, making less.

 

We have people who would be working but are instead watching Judge Judy. We have machines that could be spinning but are literally rusting for lack of use. This is a coordination disaster.

 

The question is how do we end this thing as quickly as possible. How do we stop wasting our basic resources (men and machines), day-after-day, month-after-month, year-after-year.

 

So when I hear this debate drift oft into how Republicans don’t appreciate the value of infrastructure – I suffer infinite eye roll. This is the time for this? You would watch the core economy grind down while you argue over the need to fix a pothole!

 

When I hear the GOP running some nonsense about how Obamacare is scaring small business I find myself beating back the desire for autodefenestration. Can we let this go already! There are real issues that need to be dealt with.

 

Now maybe some people want to explain to me how what appears to be a massive market failure is actually something else: a skill mismatch, a great recalculation, etc. I am willing to have that debate.

 

Of those that agree that this is the result of insufficient aggregate demand we can debate the fastest means of spurring such demand: aggressive monetary policy, payroll tax cuts, something else we haven’t thought of – I am all ears.

 

However, these are the limits of rational disagreement.

 

Side arguments that are basically proxy battles for your general theory of government are sadistic tribalistic grandstanding. You chatter and dawdle while Rome burns.

[StrangeSox]

"That is, we have factories sitting idle for lack of workers – low capacity utilization. At the same time we have workers sitting idle for lack of factories – high unemployment."

 

That's always struck me as odd. We have people who want to work and people who would consume the goods or services produced if they could also work, but they all just sit at home.

[Balta1701]

"That is, we have factories sitting idle for lack of workers – low capacity utilization. At the same time we have workers sitting idle for lack of factories – high unemployment."

 

That's always struck me as odd. We have people who want to work and people who would consume the goods or services produced if they could also work, but they all just sit at home.

It makes sense though if you're recovering from a large shock/deleveraging that temporarily killed off demand for goods and services. Due to the bubble popping, balance sheets were suddenly $10 trillion or so worse off, so people cut back on expenditures. The factories making the products that were being sold cut back on making stuff because they were selling less, they cut back on people working, this eroded balance sheets further, and people cut back on spending further.

 

[NorthSideSox72]

It makes sense though if you're recovering from a large shock/deleveraging that temporarily killed off demand for goods and services. Due to the bubble popping, balance sheets were suddenly $10 trillion or so worse off, so people cut back on expenditures. The factories making the products that were being sold cut back on making stuff because they were selling less, they cut back on people working, this eroded balance sheets further, and people cut back on spending further.

The article was interesting, and I agree with much of it, but... the author also suggests no solution.

 

Anyone in here want to give it a try?

 

[Balta1701]

The article was interesting, and I agree with much of it, but... the author also suggests no solution.

 

Anyone in here want to give it a try?

Large scale, temporary, construction and infrastructure development spending program financed by the only group that can borrow cheaply in the current economy; the government. Get those factories back running on a temporary basis such that the capacity gap is mostly filled for a period, and private hiring will pick up as customers reappear.

[NorthSideSox72]

Large scale, temporary, construction and infrastructure development spending program financed by the only group that can borrow cheaply in the current economy; the government. Get those factories back running on a temporary basis such that the capacity gap is mostly filled for a period, and private hiring will pick up as customers reappear.

That works great for about a year, then doesn't do s***.

 

The people in this economy have embraced austerity (at least relatively, compared to before - Americans are still massive consumers). So give them cheap technology that saves them money. That's the businesses and infrastructure needs to address. The people will spend on those things, but also save money on a recurring basis, thus giving them more cash to spend or invest.

 

Fixing a road won't do it.

 

[NorthSideSox72]

Boehner revealed the GOP plan for economic recovery yesterday. It has two parts...

 

1. Freeze government spending at 2008 levels

 

2. Freeze all tax levels at current levels (as opposed to Obama wanting to do that same thing, except for the 250k+ set, who would go back to pre-Bush tax cuts)

 

Seriously, dude? What part of that plan does anything, at all, to help the economy recover?

 

If you want to say you are doing this to protect from out of control deficits and the consequences thereof, then have the balls to say that. To call either of those things anything whatsoever about helping the economy recover is assinine and insulting to the intelligence of the people you serve.

 

[StrangeSox]

Freezing government spending at 2008 levels and not raising taxes doesn't exactly protect from huge deficits.

 

The GOP has no real ideas. They have no "Contract with America" this time. They only have fear and polemics.

[NorthSideSox72]

Freezing government spending at 2008 levels and not raising taxes doesn't exactly protect from huge deficits.

 

The GOP has no real ideas. They have no "Contract with America" this time. They only have fear and polemics.

Exactly. They have an opportunity here to have a 1994-like take-over, but they ultimately will not have that dramatic a shift, thanks to that complete lack of actual ideas.

 

[NorthSideSox72]

In the interest of fairness, here are the three proposals that Obama is making today in Ohio...

 

• A $50 billion infrastructure investment to rebuild and repair the nation's roads, railways and runways.

 

• A permanent extension of research and development tax credits for businesses.

 

• Tax breaks to let businesses quickly write off 100 percent of their spending on new plants and equipment through 2011.

 

The first one does provide a temporary bump (which may be better than no bump), but ultimately, IMO, its the wrong way to go. The second and third ones should help more, because they promote actual business growth. Still not ideal, but better. Certainly better than nothing.

 

He plans to pay for this by not extending the Bush tax cuts for the 250k+ crowd.

 

[StrangeSox]

They toyed around with the idea of payroll tax exemptions, but felt those cut into too much SS and Medicare funding.

 

It'd be a political hand grenade at this point, but why not cut payroll taxes and raise the SS/Medicare caps to offset?

[NorthSideSox72]

They toyed around with the idea of payroll tax exemptions, but felt those cut into too much SS and Medicare funding.

 

It'd be a political hand grenade at this point, but why not cut payroll taxes and raise the SS/Medicare caps to offset?

I've always been in favor of two tax increases - the SS cap (its regressive as it stands now), and treating carried interest and trading PnL as income if primary source for non-retirees and above a certain amount. Those two things alone could solve a good chunk of the deficit, though I do not know how much.

 

[Balta1701]

I've always been in favor of two tax increases - the SS cap (its regressive as it stands now), and treating carried interest and trading PnL as income if primary source for non-retirees and above a certain amount. Those two things alone could solve a good chunk of the deficit, though I do not know how much.

Not very much now. The former, for example...currently covers something like 80% of total income. Raising the cap back to where it originally was would cover something like 90% of income.

 

(That does, however, essentially make Social Security solvent forever).

[Balta1701]

Exactly. They have an opportunity here to have a 1994-like take-over, but they ultimately will not have that dramatic a shift, thanks to that complete lack of actual ideas.

You really think there won't be a dramatic enough shift? I'm expecting it to be dramatic enough that we have a government shutdown mid next year. The Republicans have been talking about it casually for at least 6 months.