Stimulus Plan Stimulates the Economy

[Cutlass]

Connect what dots? Organizations bundle individual contributions. Organizations of all forms also contribute more than individuals. That's the nature of the beast. None of which in any way supports your allegations that Obama's actions have been notably to reward campaign contributors. Sure, they can buy access. The Supremes struck down the Constitution to make certain that that dominates politics. But that still leaves you throwing allegations that you have no actual support for.

 

[GoodGame]

So would you have preferred 0.7% to -2.1% growth instead of the 2.4% that is estimated?

Would you have preferred unemployment to be 0.7% to 1.8% higher?

Because the way I read it that is where we would have been without the plan.

BSmith, Amadeus's comments that you quote are directed at that statistical significance of the OP.



EDIT: Anyone seen that actual CBO report? Do they have like an R-square value that explains to what degree the stimulus plan is responsible for the growth of the GDP?

 

[GoodGame]

Then why is it the primary policy of conservatives?

That's the best /rimshot of the thread. And it's accurately reuseable too, no?

 

[Integral]

EDIT: Anyone seen that actual CBO report? Do they have like an R-square value that explains to what degree the stimulus plan is responsible for the growth of the GDP?

The actual note isn't that long, about 20 pages or so.

The key table is:


From another table further down, it looks like they essentially assigned low and high (95% confidence interval?) multipliers to the various provisions of the stimulus package, tossed them into a medium-scale model, and reported the simulation results. But don't quote me on that, I'm guessing after a brief scan of the report.

 

[Cutlass]

That's the best /rimshot of the thread. And it's accurately reuseable too, no?

Depends on the situation. Any time someone whines about deficit spending, it's pretty much a certainty that people they voted for deficit spent much less responsibly than Obama. That makes the whole argument against deficit spending now a horrible straw man: They don't oppose deficit spending, they oppose deficit spending that might benefit their political opponents rather than themselves.

If conservatism in the US actually included fiscal conservatism, I'd have more sympathy with it. But it does not, and claims that it does are blatantly untrue.

 

[Zarn]

If you knew who contributed to his campaign, you should be able to connect the dots.

 

[El_Machinae]

You should just spell it out Zarn! I'm too lazy to connect the dots.

Maybe now we can move past the debate on if it has been effective?

Stimulus plan boosted GDP by as much as 4.5%, says CBO

The CBO also upwardly raised the cost of the stimulus plan to $814 billion from $787 billion.

What proportion of the US's GDP is $800 billion?

 

[Cutlass]

US GDP $14.26 trillion (2009 est.)

 

[El_Machinae]

So, it cost more than 4.5% of GDP to grow the economy 4.5%?

 

[Cutlass]

Looks that way. So the question becomes, and I'm not clear on this from the way the studies were done, so I should find the time to read the report, is whether the economy would have contracted more without it. There was a lot of psychological problems going on in `08 and `09 in addition to the economic. And there could have been a pretty nasty feedback loop.

Did the stimulus head off a panic? Politically, something had to be done. They simply were not going to leave it alone. But, that said, Congress being Congress, they had to do a bad job of it. The current culture of Congress would neither have permitted their to be no stimulus, nor permitted it to be well designed.

 

[Mise]

@El Mac: First of all, that 4.5% was almost certainly an annualised number. Secondly, it was probably an annualised % of a single quarter's GDP. You can't compare the ~5.6% of GDP stimulus with a single quarter's annualised GDP growth.

I've taken the midpoints of the GDP growths in the 4 years shown in the table in Integral's post, and worked out the cumulative effect to be 6.1% of GDP. I haven't discounted future years' GDP, though, but that's really not gonna make a difference. So, to answer your uhh, question, they spent 5.6% of GDP to get 6.1% back...

 

[I'm Cleo!]

Regarding "we paid X for Y growth," wasn't a substantial portion of the stimulus tax cuts, which aren't as stimulative as spending?

Cleo

 

[El_Machinae]

You can't compare the ~5.6% of GDP stimulus with a single quarter's annualised GDP growth.

I can do anything I want!

Regarding "we paid X for Y growth," wasn't a substantial portion of the stimulus tax cuts, which aren't as stimulative as spending?

Cleo

Both good points, you two.
If 1/3 of the stimulus was tax-cuts, and 1/3 was just 'head above water' money transfers to the shrinking state budgets, then the overall stimulus looks more effective.

 

[Cutlass]

Regarding "we paid X for Y growth," wasn't a substantial portion of the stimulus tax cuts, which aren't as stimulative as spending?

Cleo

Yes, and generally speaking, I'm unconvinced that tax cuts have any stimulative effect, not just less. And particularly when there is so much outstanding debt that tax cuts are used to pay down debt rather than raise spending or investment.

 

[Integral]

My memory's hazy but it was something like 1/3 transfers to people, 1/3 direct increases in spending, and 1/3 transfers to the states; all phased in over two years.

@Cutlass: if you accept that this is a 'balance sheet recession' (I don't recall to what extent you do, sorry) then isn't consumers repairing their balance sheets a necessary condition for recovery, and hence stimulative in a weak sense? As in, it won't affect output or spending today (in that you're right) but will boost future expected spending relative to the poor-balance-sheet state?

 

[Zarn]

You should just spell it out Zarn! I'm too lazy to connect the dots.




What proportion of the US's GDP is $800 billion?

I really "hope" you didn't vote.

 

[useless]

I really "hope" you didn't vote.

Ouch, Seriously though, why do you dislike Obama? It was bush who screwed over USA economically..

 

[Whomp]

Ouch, Seriously though, why do you dislike Obama? It was bush who screwed over USA economically..

It was decades in the making and was simply accelerated during the "ownership society" promoted by Bush.

This is not a new phenomenon either. Housing stock was the biggest contributor to the U.S. stock of capital and investment was in the late 20's. After that bubble burst it took 22 years for nonresidential construction investment to regain its pre-crash peak and 24 years for real spending on residential construction to recover from its pre-crisis highs. Anyone who believes we'll be able to reset the current housing market quickly should bear this mind since even the 1870's depression was no different.

There will be new consumption patterns and innovations that come out of this crisis like they did during those two.

 

[GoodGame]

The actual note isn't that long, about 20 pages or so.



From another table further down, it looks like they essentially assigned low and high (95% confidence interval?) multipliers to the various provisions of the stimulus package, tossed them into a medium-scale model, and reported the simulation results. But don't quote me on that, I'm guessing after a brief scan of the report.

Thanks for finding the link.

So I'd say really they're just saying there's been change, but they aren't presenting a convincing argument that the change was due to the stimulus, which is what I'd expect a linear curve fit and R-squared value to demonstrate.

 

[Whomp]

What's interesting is the projections seemed to have hit the GDP goals but not the employment goals. This is the considerable headwind this administration must contend with.