Where Did The Money Go? The Obama Stimulus

Many on these boards look at the "failure" of the Obama stimulus and take it as proof that Keynesianism has failed. This is not the case, as the Obama stimulus was not as large as Keynesians said it would need to be and not only that - but it was made up of the wrong things (in terms of bang for buck, infrastructure for example would have been much more effective)... Krugman breaks it down:

Somehow I missed the BEA’s very useful page tracking the Recovery Act and how it is translated into taxes and spending. (Thanks to the commenter who mentioned it). It’s especially useful for thinking about what the Obama stimulus really involved — and what it didn’t.

Look at the peak quarter of stimulus (pdf), which was the first quarter of 2010. I’m going to rearrange the categories a bit. Here’s how I read it: at annual rates (in other words, actual numbers in the quarter were only 1/4 as large), the total budget impact was $357 billion. Of that, we had:

Tax cuts and refundable tax credits: $151 billion
Aid to individuals (mainly unemployment insurance and food stamps): $70 billion
Aid to state and local governments: $103 billion
Everything else: $33 billion

Note that the aid to individuals was basically safety net, and the aid to state and local was about mitigating spending cuts rather than spending expansion. Basically, this was at best an attempt to beef up automatic stabilizers.

So much for “we tried Keynesian policies and they didn’t work.”

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How's about some infrastructure spending, guys? 1+ million construction workers are currently unemployed or underemployed and interest rates are at historic lows (and will remain that way as long as the economy is depressed)... What is so wrong with putting people to work building things that our nation needs anyway considering our crumbling and increasingly behind infrastructure?

mame said:

Many on these boards look at the "failure" of the Obama stimulus and take it as proof that Keynesianism has failed. This is not the case, as the Obama stimulus was not as large as Keynesians said it would need to be and not only that - but it was made up of the wrong things (in terms of bang for buck, infrastructure for example would have been much more effective)... Krugman breaks it down:

How's about some infrastructure spending, guys? 1+ million construction workers are currently unemployed or underemployed and interest rates are at historic lows (and will remain that way as long as the economy is depressed)... What is so wrong with putting people to work building things that our nation needs anyway considering our crumbling and increasingly behind infrastructure?

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I know, they should build millions of homes. That will cure the depression!

Someone has in their head that the US Government is like some rich uncle with an inexhaustible source of funds completely separate from yours. The truth is that uncle has the same source of funds as you do, and its getting smaller every day.

And shovel ready jobs were not as shovel ready as we thought. YEA REAL FUCKING FUNNY. Face it odumbass is a stupid mofo. HAHAHA now thats funny

how about fix our bridges??

the army core of engineers gave a failing grade to around 50% of ALL the bridges in our country. and they took a representative sample in every state.

how about improve our flood control system??? did you forget about the floods we've had??

how about paying for improving the broadband network, take some of those costs away from the private sector and make the internet more affordable and therefore more accessible???

how about improving our railway system so that the interstate isn't completely clogged up with tractor trailers?????

or improving our ATC system so that we don't have guys sleeping on the job???

that's socialism@@@@@@@@@@@@@!!!!!!!!!

NoDrama said:

I know, they should build millions of homes. That will cure the depression!

Someone has in their head that the US Government is like some rich uncle with an inexhaustible source of funds completely separate from yours. The truth is that uncle has the same source of funds as you do, and its getting smaller every day.

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You argue that the government is broke, I point to debt levels and interest rates as a big fat GO for fiscal stimulus.

Let me ask you this, if fiscal contraction is contractionary (Austerity) does that not also mean that fiscal expansion is expansionary(stimulus)?

edit: and I never once said they should be building homes, they should be building things they would've built at some point anyway like roads, bridges, rail, etc...

redivider said:

how about fix our bridges??

the army core of engineers gave a failing grade to around 50% of ALL the bridges in our country. and they took a representative sample in every state.

how about improve our flood control system??? did you forget about the floods we've had??

how about paying for improving the broadband network, take some of those costs away from the private sector and make the internet more affordable and therefore more accessible???

how about improving our railway system so that the interstate isn't completely clogged up with tractor trailers?????

or improving our ATC system so that we don't have guys sleeping on the job???

that's socialism@@@@@@@@@@@@@!!!!!!!!!

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Everything you mentioned except perhaps the bridge thing would be better served by the private sector. As far as the flooding is concerned, the floods were CAUSED by government policy. The Corps of Engineers was well warned back In February that if they didn't let out water they would have a huge spring flood on their hands, they kept the water sequestered in the dams because that is official policy. The Liberals got their way with the water and now are making it more "Natural" by flooding things just like back in the day before the dam, this makes it more natural and helps the environment so they say.

I would still like to know how much money will be enough? China,India and Saudia Arabia are broke from lending us money. How much money is enough?

nodrama, we've had floods because levy's have broken when they were'nt supposed to.

because they've sat there unattended for almost 60 years. not because of the liberals. lol....

POLITICAL OBLIVIOUSNESS AT IT'S FINEST FOLKS.

newatit2010 said:

I would still like to know how much money will be enough? China,India and Saudia Arabia are broke from lending us money. How much money is enough?

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Most estimates by Keynesian economists argued for 1-1.5 Trillion as opposed to the ~800 billion that went through. I believe one of the many arguments against more spending was that the bond vigilantes would get scared... so much for that.

I agree with you though Newatit, so much for "shovel ready" jobs, eh? If that 800 billion was infrastructure spending it would have been much more effective. As far as this stimulus bill goes, it only served to "stop the bleeding" for the most part.

mame said:

You argue that the government is broke, I point to debt levels and interest rates as a big fat GO for fiscal stimulus.

Let me ask you this, if fiscal contraction is contractionary (Austerity) does that not also mean that fiscal expansion is expansionary(stimulus)?

edit: and I never once said they should be building homes, they should be building things they would've built at some point anyway like roads, bridges, rail, etc...

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Fiscal expansion =inflation, Fiscal contraction =deflation. Whats so hard to understand Mame?

BTW I wasn't aware that it was the Job of government to build rail, you should let Burlington Northern SantaFe, Northern Pacific, Union Pacific, Southern Pacific know that they have been paying for all this rail to be put in when its Government that should be doing it!! Hi Speed rail is a Utopian dream, it will not work in the land of the car.

They can't build any dams, they are already built, maybe they could do some needed repairs to the dams, but the way they run things it seems they don't really care if half the nation floods.
Perhaps they could find a way to create energy from all you blowhards arguing over tax cuts to the rich. im sure we could power a few million homes that way.

redivider said:

nodrama, we've had floods because levy's have broken when they were'nt supposed to.

because they've sat there unattended for almost 60 years. not because of the liberals. lol....

POLITICAL OBLIVIOUSNESS AT IT'S FINEST FOLKS.

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I haven't heard of any DAMS crumbling. levies and dikes are the jurisdiction of the State, County or locality and HAS NOTHING AT ALL TO DO WITH FEDERAL STIMULUS. Pure ignorance and low levels of Education at its very worst for all to see here!!!

NoDrama said:

Fiscal expansion =inflation, Fiscal contraction =deflation. Whats so hard to understand Mame?

BTW I wasn't aware that it was the Job of government to build rail, you should let Burlington Northern SantaFe, Northern Pacific, Union Pacific, Southern Pacific know that they have been paying for all this rail to be put in when its Government that should be doing it!! Hi Speed rail is a Utopian dream, it will not work in the land of the car.

They can't build any dams, they are already built, maybe they could do some needed repairs to the dams, but the way they run things it seems they don't really care if half the nation floods.
Perhaps they could find a way to create energy from all you blowhards arguing over tax cuts to the rich. im sure we could power a few million homes that way.

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Fiscal expansion is not inflation. Monetary expansion is inflation, fiscal expansion is just economic growth; True with economic growth comes inflationary pressures, but fiscal expansion doesn't just cause inflation in the same sense as printing money... Because the inflation that comes with economic growth is fine, you bring inflation into it like you're trying to scare somebody into disliking stimulus... There's a reason the Fed targets 2% inflation and not 0%... There would be no growth without a little inflation. Oh and last time I checked inflation wasn't an issue; Delfation last I checked, makes debts harder to pay off and it also encourages savings rather than spending (because deflation makes money worth more) which only further contracts demand - which is why we're still in a slump in the first place(lack of demand).

mame said:

Fiscal expansion is not inflation. Monetary expansion is inflation, fiscal expansion is just economic growth; True with economic growth comes inflationary pressures, but fiscal expansion doesn't just cause inflation in the same sense as printing money... Because the inflation that comes with economic growth is fine, you bring inflation into it like you're trying to scare somebody into disliking stimulus... There's a reason the Fed targets 2% inflation and not 0%... There would be no growth without a little inflation. Oh and last time I checked inflation wasn't an issue; Delfation last I checked, makes debts harder to pay off and it also encourages savings rather than spending (because deflation makes money worth more) which only further contracts demand - which is why we're still in a slump in the first place(lack of demand).

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You cannot spend a dime in the USA without someone incurring debt. A dollar is just a paper representation of someone elses obligation or debt.


Without Savings there can be no capitol from which to borrow from and use to grow. You cannot "Save" more debt. If no one saves then everyone must be in debt, if there is no capitol then there is no growth, no matter how much debt the system piles on.

NoDrama said:

I haven't heard of any DAMS crumbling. levies and dikes are the jurisdiction of the State, County or locality and HAS NOTHING AT ALL TO DO WITH FEDERAL STIMULUS. Pure ignorance and low levels of Education at its very worst for all to see here!!!

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Dude now I know that you smarter then that...The feds do give money for U.S infrastrutures..Hell Bush actually cut some of the funding that was to go to New Orleans before Katrina...Did you know we actually have federal dams..

londonfog said:

Dude now I know that you smarter then that...The feds do give money for U.S infrastrutures..Hell Bush actually cut some of the funding that was to go to New Orleans before Katrina...Did you know we actually have federal dams..

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Did I know we had Federal dams? WTF why do you think I said " I haven't heard of any dams crumbling"? It was a response to Redivider saying that the reason we have floods is because we haven't taxed people enough and the Fed has not spent enough money fixing the Levee in PoDunk, Ohio. He assumes all levees and dikes are under the jurisdiction of the Federal government and the Taxpayers are the ones funding it all. But that is a complete fabrication.

The real reason we are flooding has less to do with the Federal Government and more to do with the weather, unusually high amounts of snow fall and a late spring. Most of the flooding could have been avoided in the Missouri river basin by listening to the experts who told the corps of Engineers that this would happen if they didn't let more water out of the dams alot sooner, but the US Water Control Manual is written in stone and no deviation was noted, after all it had worked without massive flooding for generations. The Dams were originally built for the purpose of flood control, but the mission has changed.

People who build their homes next to a river should expect this kind of thing to happen, not even the US Government can control mother nature. You live on a flood plain expect to be flooded from time to time.

NoDrama said:

Did I know we had Federal dams? WTF why do you think I said " I haven't heard of any dams crumbling"? It was a response to Redivider saying that the reason we have floods is because we haven't taxed people enough and the Fed has not spent enough money fixing the Levee in PoDunk, Ohio. He assumes all levees and dikes are under the jurisdiction of the Federal government and the Taxpayers are the ones funding it all. But that is a complete fabrication.

The real reason we are flooding has less to do with the Federal Government and more to do with the weather, unusually high amounts of snow fall and a late spring. Most of the flooding could have been avoided in the Missouri river basin by listening to the experts who told the corps of Engineers that this would happen if they didn't let more water out of the dams alot sooner, but the US Water Control Manual is written in stone and no deviation was noted, after all it had worked without massive flooding for generations. The Dams were originally built for the purpose of flood control, but the mission has changed.

People who build their homes next to a river should expect this kind of thing to happen, not even the US Government can control mother nature. You live on a flood plain expect to be flooded from time to time.

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ok so you did realize that we have federal dams....you also stated that you have not heard of any crumbling..well let me give you one..WOLF CREEK....also you said that levees and dikes are the sole responsibility of the state and /or county...Nodrama bridges,roads, dams,dikes. and levees still fall under US infrastructure which means that they can and do get monies from the Feds for repairs and upkeep...I think you were kind of hard on him seeing that you yourself made some incorrect statement as well( which are highlighted in red at bottom) due to you not knowing or not looking at the big picture... We could have used some monies to assure that ALL U.S infrastructures are sound and fit which would have put people to work and could have been a part of Federal stimulus..

NoDrama said:

I haven't heard of any DAMS crumbling. levies and dikes are the jurisdiction of the State, County or locality and HAS NOTHING AT ALL TO DO WITH FEDERAL STIMULUS. Pure ignorance and low levels of Education at its very worst for all to see here!!!

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YOu know how much that would cost? Did you see that show they did on the history channel? bout the dude going the nation finding all these infractions on bridges, buildings, roads, and what not...

redivider said:

how about fix our bridges??

the army core of engineers gave a failing grade to around 50% of ALL the bridges in our country. and they took a representative sample in every state.

how about improve our flood control system??? did you forget about the floods we've had??

how about paying for improving the broadband network, take some of those costs away from the private sector and make the internet more affordable and therefore more accessible???

how about improving our railway system so that the interstate isn't completely clogged up with tractor trailers?????

or improving our ATC system so that we don't have guys sleeping on the job???

that's socialism@@@@@@@@@@@@@!!!!!!!!!

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[video=youtube;C31IlOHNzbM]http://www.youtube.com/watch?v=C31IlOHNzbM[/video]

god made this bridge collapse. no amount of infrastructure repair can deny god's will.

^^^^^actually if that is the one in Minnesota the NTSB said that undersized gusset plates, increased concrete surfacing load, and weight of construction supplies/equipment caused this collapse.

what i find funny is doesnt matter who is sitting in white house they can only promise but do fck all all this shit goes back johnson days / nixon where USA was in trouble then its only gotton worse and will still continue to deterioate only way your goin to ever recover will be at your expense

Our nation is broke, bankrupt, and having sold much of its machinery and technology (or given it away to political donors), is unable to easily return to those endeavors which once made our nation great. Our infrastructure is in decay (the percentage of roads in the US with major damage doubled last year alone), our public schools unable to produce a workforce able to function in a high-tech manufacturing environment, and those managers end engineers with manufacturing experience have in great part been lured away to other nations. The severity of our total government debt has reached a point where the promise that the taxpayers can be made to cover any foreign investment loss rings hollow, because we can no longer pay the debts our government has now. Our nation is in trouble. We don't make many of the products we used to make. Consequently we don't have the products to sell that we used to. We don't even make most of the products we need ourselves (like that computer you're staring at this very moment). Result: we have a massive trade imbalance. Cash is flowing out of the nation, and it's not coming back in anywhere near as fast. There's no way to spin it; that is a major problem. Our nation is becoming poorer, it is hopelessly in debt, and all the artificial escalation of stock prices cannot conceal that. And as the artificially pumped up stock market continues to decline, the true scale of the economic horror which is the product of decades of government corruption, will become apparent to all. At that point you the average American citizen could become the terrorist's and your activities will need to be tagged and tracked with your new micro chipped ID card. This assures your obedience to an out of control taxation policy and possibly even discourage citizens against any type of organized rebellion to enforce the US Constitution