rssExperts Hope Dems Learn Stimulus Lessons
Wednesday, January 13, 2010 at 6:00 am
- 26 Comments
House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry Reid (D-Nev.) (WDCpix)
The failure of Washington lawmakers to recognize the severity of the Great Recession has slowed the recovery and allowed unemployment to reach double-digit levels, according to some of the nation’s leading economists. The experts hope that the latest effort — in the form of a new “jobs bill” being crafted by Democratic leaders — will not only be sizable enough to tackle the problem, but also will focus only on programs providing the most “bang for the buck.”
“In retrospect, they were overly optimistic,” Dean Baker, co-director of the Center for Economic and Policy Research, a liberal policy group, said of the previous efforts to stimulate the economy. “They just didn’t appreciate the severity of the downturn. … Even now, they don’t seem to get it.”
[Congress1]Not that lawmakers don’t have some practice at the sport. In February of 2008, with the nation’s unemployment rate at 4.9 percent, President Bush approved $168 billion in direct, $600 tax rebates — much of which, the experts suspect, taxpayers saved rather than spent.
One year later, with unemployment tickling 8 percent, President Obama took a $787 billion stab at the same problem. Many economists maintain that Obama’s stimulus has been heroic in preventing the economy from tanking even further than it has over the past year. Yet, with unemployment now hovering at 10 percent, they also contend that there is plenty of room for Democrats to improve their stimulus design.
“It is doing what it was intended to do,” said Heidi Shierholz, economist at the Economic Policy Institute, a liberal analysis group. “It just wasn’t big enough. … At the time, we were losing 700,000 jobs a month. There was definitely [the thought that] this $800 billion is not going to do it.”
Also, Shierholz conceded, “There was stuff in there that just wasn’t that efficient as far as spending goes.”
An example, economists say, was the nearly $70 billion to prevent the Alternative Minimum Tax, or AMT, from hitting millions of middle-class Americans last year. That provision might have helped to solve a political dilemma, but it did little to help the ailing economy.
“That crowded out useful stuff,” said Chad Stone, chief economist at the Center on Budget and Policy Priorities, a liberal policy group.
Desmond Lachman, economist at the conservative American Enterprise Institute, was less enthusiastic about last year’s stimulus bill, saying that lawmakers “botched” the effort by allocating too much money to pork-barrel projects sought for political reasons, not economic ones. Now — as Democrats are eyeing yet another large spending package in hopes of curbing the still-rising jobless numbers — Lachman suggested they focus on projects that would get the money out the door more quickly. “You can’t mess it up like you did the last time around,” Lachman said, warning that there’s still a threat the country could slip back into recession.
There were other dubious elements of the $787 billion stimulus bill, economists say. Several billion dollars, for example, went to spur home sales by providing first-time homebuyers with a generous tax credit. Baker, of the Center for Economic and Policy Research, said that provision might have caused a temporary spike in the housing market, but likely won’t increase sales in the long run.
“If you get them to buy in 2009,” Baker said of homebuyers, “that means they’re not going to buy in 2010, or even 2011.”
Yet another stimulus strategy tried by Congress allows businesses to recoup taxes paid in recent years to make up for losses suffered in the recession. Yet research conducted by Mark Zandi, head economist at Moody’s Economy.com, indicates that the so-called “loss-carryback” strategy returns only 21 cents to the economy for every dollar spent by the federal government.
“As far as bang for the buck goes, it’s about the worst you can do,” Shierholz said.
Instead, economists of all political stripes are urging Congress to provide more federal funding for food stamps and Medicaid, while extending unemployment benefits and health coverage under the COBRA program. A simple and well-tested economic rule all but ensures the success of that strategy: Give money to people with little of it and they’ll usually spend it in a hurry.
Indeed, Zandi estimates that expanding unemployment benefits returns $1.61 for every federal dollar spent; increasing food stamps returns $1.74; and direct aid to states — for things like keeping teachers and firefighters employed — yields $1.41.
Baker is also pushing the creation of a federal work-share program, under which employers could reduce the hours of workers rather than laying them off, and the government would make up the difference in lost wages. Workers win, under this plan, because they keep their jobs. Employers benefit because they don’t have to train new part-time workers. And states stand to gain because the resulting payments would be less than the unemployment benefits they’d have to pay otherwise.
There’s some indication that Democratic leaders have already taken some lessons from the shortcomings of the first two stimulus approaches — at least as it pertains to marketing their yet-unveiled bill. For one thing, Democrats have abandoned the “stimulus” label, referring to their latest push instead as the “jobs bill,” lest the public confuse the legislation with the Wall Street bailout.
And another: Democrats haven’t made any grand predictions about the effectiveness of the measure before they even know what’s in it — a departure from last year, when White House economists said the Democrats’ stimulus proposal would keep the nation’s unemployment rate below 8 percent.
“The president’s mistake, and it was a mistake, was to underestimate how bad the situation was we inherited under Bush,” Rep. Jerrold Nadler (D-N.Y.) said this week. “He should not have said that unemployment would peak at 8 percent.”
Indeed, the ink was barely dry on the bill when the jobless rate hit 8.1 percent.
26 Comments
Comment posted January 13, 2010 @ 9:22 am
It's the Republicans who forced the Democrats to reduce the amount of the stimulus bill, suddenly talking about fiscal restraint because the budget is exploding while they are not in power anymore. You know, the guys responsible for creating this mess and the massive budget deficit, are still trying to prolong it, all the while trying to act like they are the ones who would have done better.
Comment posted January 13, 2010 @ 9:30 am
More smoke and mirrors from the non-transparent administration. A mistake is a one time deal where you admit your were wrong and attempt to correct the error. This administration perpetuates the “lie” with reporting bogus jobs lost numbers and as of yesterday, the change in the accounting of jobs created by the Stimulus. Actual unemployment in this Country is at least 10-15 percentage points higher then what is reported. There are zero jobs and what jobs are available are either temp or low wage. The unemployed need UI benefits based on today's reality as this depression is unlike anything this Country has seen and in my opinion, worse then the Great Depression. Get a clue!
Comment posted January 13, 2010 @ 11:12 am
the problem is the large psychological component to the economy combined with positive feedback loops and also lolwut?
Pingback posted January 13, 2010 @ 1:45 pm
[...] Experts Hope Dems Learn Stimulus Lessons « The Washington Independent [...]
Pingback posted January 13, 2010 @ 5:53 pm
[...] Experts Hope Dems Learn Stimulus Lessons « The Washington Independent [...]
Comment posted January 13, 2010 @ 6:56 pm
The democrats will always place the blame on someone else and not recognize thei short comings.
Pingback posted January 13, 2010 @ 7:34 pm
[...] This post was mentioned on Twitter by Daniel Arlt, Daniel Arlt, Washington DC News , Job Search Pages, TMC Member Feed and others. TMC Member Feed said: Wash. Independent: Experts Hope ‘Jobs Bill’ Learns Stimulus Lessons: “In retrospect, they were overly optimistic,”… http://bit.ly/6NIs0i [...]
Comment posted January 16, 2010 @ 10:14 am
The author made several errors in his article. Most importantly, he claimed that President Obama's mistake was to underestimate the problems inherited from the Bush administration. The biggest problem inherited from the Bush Administration was the housing bubble collapse which was in fact created by President Obama and his Senate/House cohorts when they derailed President Bush's proposed restrictions on lenders. If passed, these restrictions would likely would have prevented the bubble in the first place. Karl Rove will be discussing this soon in the Wall Street Journal, and I urge the author to at least read it so that he can see the hypocracy of enabling President Obama to Blame President Bush.
Comment posted January 20, 2010 @ 6:54 am
During the Great Depression, FDR understood that what Americans wanted was the dignity and pride that came from a job, not a handout. I support extending and expanding food stamps, unemployment benefits, and COBRA medical benefits.
The Democrats have to do two things. Put people to work, even if it means another WPA. Put people to work cleaning up inner cities and national parks. Put people to work caring for the elderly. And two, they have to seriously take on Wall Street and the top one percent of the rich. The Dems could start by requiring all corporations doing business with the federal government to close down their financial entities in tax havens. They could push even harder to get rich Americans to pay their taxes that they are hiding in tax havens. The could make the estate tax more progressive with a top rate of 80 percent on estates worth 2 million dollars. They could dismantle Too Big Too Fail Wall Street banks on anti-trust grounds. They could move to re-install Glass-Steagall. They could push for a strong, robust Consumer Financial Protection Agency.
Americans need, as Krugman and others have argued, a New New Deal. Or, they can keep pretending to be a liberal party and get clobbered in November by the false populists in the Party of Delusions.
Comment posted January 22, 2010 @ 1:09 pm
I HOPE THIS JOBS BILL WORKS AND INCLUDES A DECENT SIZE EXTENSION OF UNEMPLOYMENT BENEFITS 6-7 WEEKS AT A TIME JUST MAKES US FALL BEHIND IN ALL OUR BILLS, AND NO MONEY FOR GAS TO KEEP LOOKING FOR JOBS IVE SPENT HALF MY BENEFIT CHECKS JUST DRIVING AND GOING TO INTERVIEWS, SOME 40 MILES AWAY JUST TO GET A JOB!!1 GAS IS EXPENSIVE AND NOW OUR BENEFITS RUN OUT IN THREE WEEKS AND WE ARE IN THE SAME BOAST AS IN NOV, THREE MONTHS LATEER AND WE KNOW HOW FAST THEY VOTE , THEY ARE MORE INTERESTED IN CONGRESS ABOUT WHO CAN BLOCK WHO THAT NOTHING GETS DONE!! NOW WITH THE NEW SENATOR FROM MASS BEING GOP THEY WILL ANT TO BLOCK EVERYTHING THEY CAN EVEN MORE WE ARE SCREWED!!!
Comment posted January 22, 2010 @ 1:12 pm
I THINK WE ARE ALL SCREWED NOW!!!!! HOW COULD MASSACHUSETTES ELECT A REPUBLICAN/ ITS KENNEDY TOWN FOR GODS SAKE!!! TEDDY IS ROLLING OVER IN HIS GRAVE!! ANYONE HEAR NEWS ON NEW EXTENSIONS AT ALL?
Comment posted January 28, 2010 @ 5:05 pm
YOU KNOW HWAT I FIND DISTURBING? THAT OUR PRESIDENT SPOKE LAST NIGHT AND ALL THE NEWS COVERS IS HAITI, AND RAISING MONEY FOR THEM AND OF COURSE THE REPUBLICAN REBUTTLES ALL DAY. I FEEL BAD FOR HAITI ALSO I PRAYED FOR THEM SENT 25 DOLLARS AS THATS ALL I COULD AFFORD WITH NO JOB AND NOW THAT WE ARE ALL OUT OF WORK AND OUR UNEMPLOYMENT IS ALMOST DONE WITH NO EXTENSION IN SIGHT AS YET AND WE ARE SCARED HUNGARY AND SLEEPLESS ALL THE NEWS COVERS IS MONEY FOR HAITI AND THE PART OF THE STATE OF THE UNION ADDRESS THAT REFERREDT O HAITI. WAKE UP WASHINGTON CAN WE FIX OUR PROBLEMS HERE FIRST? I DONT HAVE A DIME TO GET A SCAR REMOVED OR MY HINI SHOT OR GOD FORBID CHEMOTHERAPY OR EVEN TO BUY FOOD SOMETIMES WHERE ARE ALL THE DOCTORS AND PLASTIC SURGEONS FIXING AMERICANS FOR FREE. ON TV YOU SEE THEM ALL LOADING UP MEDICAL SUPPLIES AND FOUR PLASTIC SURGEONS FIXING PEOPLES FACES BACKS LEGS ETC I HAVE A BAD SCAR THAT EVEN MEDICAID WONT FIX.I PAY A HUNDRED DOLLARS TO THE DOCTOR WHEN I HAD A SORE THROAT AND NEEDED ANTIBIOTICS…IM SO SCARED WHAT IS GOING TO HAPPEN AND PRAYING A HUNDRED TIMES A DAY IS NOT WORKING LATELY. IF WE GET NO EXTENSION WE WILL HAVE TO MOVE TO A SHELTER AND LOSE OUR HOME IVE SOLD EVERYTHING I COULD THERE IS NO MORE TO SELL!!!! HOW IS EVERYONE ELSE HOLDING UP? PLEASE SOMEONE TALK TO ME
Comment posted January 28, 2010 @ 5:14 pm
PIZZA 77 HOW CAN YOU SAY BUSH DIDNT START THIS SHIT,IF YOUR MEMEORY SERVES YOU AT ALL.. BUSH INHERITED AS HE WALKED IN TO THE OVAL OFFICE MY FRIEND NO DEBT AND THE LOWEST UNEMPLOYMENT FOLLOWING CLINTON IN ALMOST 50 YEARS, THATS WHAT HE HAD TO WORK WITH AND HOW DID HE LEAVE IT SIR WHAT DID OBAMA WALK INTO 9 PERCENT UNEMPLOYMENT THAT BUSH WAS ALREADY GIVING EXTENSIONS FOR 2 WARS, AND A HUGE DEFICIT WHERE WERE YOU FOR THE EIGHT YEARS THAT ASSHOLE WAS IN OFFICE HE COULDNT EV EN STRING TWO SENTENCES TOGETHER WITHOUT LOOKING LIKE AN UNEDUCATED MAN FROM TEXAS AND BY THE WAY HES NOT A TEXAN HES FROM THE EAST COAST NORTH.. AND IS THE ONLY ONE IN HIS FAMILY TO HAVE A TEXAS ACCENT!!! I THINK ALL THE COKE HE SNIFFED AND PEOPLE HE SCREWED TO MAKE THE BILLIONS OF DOLLARS HE HIMSELF MADE WHILE IN THE OVAL OFFICE IS HORRIBLE HE WAS NOTHING BUT A DRINKER, DRUG ABUSER ,CROOK, AND A EMBARRASSMENT TO THIS COUNTRY. IF IT WASNT FOR CHENEY BEHIND HIM HE WOULD OF FELL ON HIS ASS LONG AGO AND YOU ALL KNOW IT CHENEY HAD THE BALLS ION THAT ADMINISTRATION BUSH WAS A PUPPET TO THE WAR MONGA CHENEY AND MY FAMILY FRIENDS HAVE NEVER DONE SO BAD IN HIS EIGHT YEARS WEVE LOST EVERYTHING!!!!! MY MOTHER EVCEN DIED FROM THIS SHITTY HELTH CARE SYSTEM FOR THE ELDERLY UNDER BUSH FOURTH YEAR IN OFFICE I HOPE HE GOES STRAIGHT TO HELL WHEN HE DIES IN HIS 10 MILLION DOLLAR HOME AND BURNS THER EFOREVER, GOD FORGIVE ME
Comment posted January 28, 2010 @ 5:25 pm
WALT YOUR ANOTHER ONE!! IF YOUR NOT OUT OF WORK AND A DEMOCRAT WHY R U SLINKING AROUND ON HERE GETTING US UPSET? GO TO YOUR JOB AND LEAVE US ALONE. WE DONT NEED PEOPLE LIKE YOU HURTING US MORE THAN WE ARE ALREADY HURT SIR….MY KIDS ARE ETTING CREAM CORN AND BREAD FOR DINNER WHAT ARE YOU HAAVING TONIGHT SIR?I WORKED MY WHOLE LIFE AND YES WE MIGHT BE SPENDING ALOT IN DC BUT ITS WHAT WE NEED TO SURVIVE. WHAT GOOD IS THE FUTURE OF SOCIAL SECIRITY IF MY KIDS DIE IN THE STREETS FRON HUNGER AND COLD AT 10 AND 8 YEARS OLD?SO GO AWAY SIR YOU ARE NOT WELCOME HERE IF YOU WILL JUST KNOCK US FIND A GOP BLOG AND HAVE A GRAND OLE PARTY COMPLETE WITH CHAMPAGNE AND CAVIER
Comment posted January 29, 2010 @ 9:09 am
Hello Angie:
First, your argument has diminished merrit based on the language you are using…. Shit…Asshole..Ass… Puppet…Shitty…etc. You are venting, and I'm okay with that, but you do little to convice me you are right. Putting your entire reply in capitals isn't necessary either. Are you trying to visually imply you are yelling? If so, I get it, but why? Your message becomes lost in anger.
My memory serves me very well. Here are some facts you forgot to mention. We went to war after being attacked, not because George Bush woke up one day, and decided to start a war. We went to war with nearly unanimous consent of our Congress including most Republicans and Democrats. There were many fingers in this pie.
I would say that you, along with many others are angry at George Bush, and like our President, continue to blame him (GB) for the current state of our nation. President Obama needs to Man-up and deal with the problems, not blame the former president whether he inherited them or not.
I agree with you that the war was a huge problem that was inherited by President Obama, but its very interesting how George Bush was blasted by the media and the Left over it until the day he left office only for it to be a non-issue after he departed. I would have to say that we'll have to disagree which one is the greater causal issue…. War or Housing bubble.
I'm sorry to hear about your mother. I live in California, and am thankful that we have an excellent, for profit, private healthcare system (We live in a rural community) Medicare stepped in for my father in his dying years and was wonderful. I'm not sure how it is in other states, but the healthcare system during the George Bush years was the same system that has been around for 40 + years.
It's been nice chatting with you, and I wish you all the best
Comment posted January 29, 2010 @ 9:27 am
Sorry Walt, but I couldn't help getting involved in this one.
Angie:
You act like you are being personally attacked. Walt only pointed out a simple observation, which if you read the message and tone of your own post, is confirmed to be true. How can anyone reply coherantly to your personal rant above. You reveal too much of your personal life, which appears to be bleak at best, and include absolutely no facts with bold ascertaions of your kids dying in the streets??? If it's that bad, this is what we have public assistance for. Please, go and apply for it.
Who do you think you are, telling Walt to “go away”? This is a public forum, and he has every right to post here whether you, I, or anyone else agrees with him or not. If you are the one who can't stand the heat, consider taking your own advice.
It's again been a pleasure chatting with you, and I wish you the best.
Comment posted January 29, 2010 @ 9:32 am
Well said. I don't agree with you, but you have an excellent presentation.
Comment posted January 29, 2010 @ 10:39 am
Dear Pizza77 well said yes i am venting i guess. And by the way the only thing public assistance does for you when you lose your home is get you into a shelter.I paid into this system for 32 plus years sir and this blog is good for those of us in the same vote can vent. Now why in the world if you have a job are you so concerned about a new extension?I would think that you wouldnt be interested in unemployment checks if you havnt been receiving them.As far as my children go i am sick that they get hungary and that i haver to ration their food. i made 1375 dollars a week for a long time and they are not used to having nothing.when they stop this unemployment then we really have nothing.Food stamps cant be recieved if you have any home under your name and have escroe, we tried to sell but cant so yes im venting, when i see the gop so against the unemployment extension because of acorn knowing hundred os thousands are going hungary yes i need to vent. LET ME SAY IN CAPITOLS IM SORRY TO ANYONE ON HERE I OFFENDED BY USING CAPITOLS.But its sickening to watch a session of congress in the past few years. i was regestered republican until 6 years ago i was so against Bush and cheney i switched parties as did alot of people i know who were also gops their whole lives.NOW THAT WE HAVE A PRESIDENT TRYING SO HARD FOR THE PEOPLE AND NOT BIG CORPORATIONS I get a little upset that people are saying hes trying to do so much.PIZZA Im sorry but i guess you have your life turned upside down first to see what we are going through. God bless you and your life and your family but as far as politicians like bush and mcconnell they should burn in hell and thats my opinion.Thanks for all your good wishes though.
Comment posted January 29, 2010 @ 11:01 am
Angie dont let these people get to you.You are right if pizza has a job and is a republican and bush lover why is he on here. My wife and i have lost everything also, lately all she does is lay and bed and cry .We did lose our home already and are living in a room with a bathroom .I lost my business and then our home.We also raised our children put them through college and they cant even find jobs I have two children on food stamps with great educations.I think Mr.Obama is trying to help the people just as you do.There is no need to apologize for saying ass though to anybody.Just take it one step at a time, i have done as you asked and have emailed and called alot of senators already and will not stop. Icalled family and friends and they are doing the same thing.This extension will come through try to get some sleep, cuddle your kids it seems to help, and also shares warmth.Go to churches food pantries as well , we did.People also think its so easy to get on public assistance I am here to tell you its not.They dont give cash to anyone unless they are pregnant.Food stamps are available but you need an address you can not receive them if you have no legal address or are recievng any income weekly.Hang in there and if you need to vent I am here.Thats what human beings do for each other.As far as your comment about burning in hell I AGREE THEY TAKE FROM US AND GO TO THEIR MILLION DOLLAR HOMES AND SLEEP LIKE BABIES FROM POSITIONS THE PEOPLE THEY ARE HURTING GO HUNGARY! If yu post your email for me. I will write often if you need a friend, as you see here the people on here only care about themselves all the best.
Comment posted January 29, 2010 @ 11:43 am
TO JOHNDEM: I THANK YOU SIR FOR YOU HUMANITY ITS NICE TO HEAR. I WILL TAKE YOUR ADVICE, AND YES I HOLD THOSE BABIES KIDS A LITTLE CLOSER EVERY NIGHT.I TRY TO KEEP MY HEAD UP BUT ITS NOT EASY.GOD BLESS YOU SIR AND I HOPE YOUR SITUATION GETS BETTER ALSO
Comment posted February 11, 2010 @ 2:04 pm
If these idiots are hell bent in getting involved in your personal lives and telling you how to live it then why they didn't just pay everyone's mortgage off instead of bailing out their political fundraisers, 'er big banks and those in bed with the unions. Everyone would have then had money to buy cars, vacations, and even contribute a little to their short sighted political majorities.
Comment posted February 11, 2010 @ 7:04 pm
If these idiots are hell bent in getting involved in your personal lives and telling you how to live it then why they didn't just pay everyone's mortgage off instead of bailing out their political fundraisers, 'er big banks and those in bed with the unions. Everyone would have then had money to buy cars, vacations, and even contribute a little to their short sighted political majorities.
Pingback posted June 24, 2010 @ 1:59 pm
[...] I mention all this to say that while people were distracted by ridiculous claims about Obama, they failed to notice the lack of Republican support for a stimulus bill aimed at helping middle class and working Americans, like those who might watch Fox News for example. And many, if not most, Obama supporters failed to notice the bill was deficient in various aspects. [...]
Comment posted July 30, 2010 @ 9:16 am
The Democrats have to do two things. Put people to work, even if it means another WPA. Put people to work cleaning up inner cities and national parks. Put people to work caring for the elderly. And two, they have to seriously take on Wall Street and the top one percent of the rich. The Dems could start by requiring all corporations doing business with the federal government to close down their financial entities in tax havens. They could push even harder to get rich Americans to pay their taxes that they are hiding in tax havens. The could make the estate tax more progressive with a top rate of 80 percent on estates worth 2 million dollars. They could dismantle Too Big Too Fail Wall Street banks on anti-trust grounds. They could move to re-install Glass-Steagall. They could push for a strong, robust Consumer Financial Protection Agency.
Comment posted October 13, 2010 @ 6:20 am
The Democrats have to do two things. Put people to work, even if it means another WPA. Put people to work cleaning up inner cities and national parks. Put people to work caring for the elderly. A
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