Friday, February 13, 2009

Where is the Stimulus Money Going?

Anyone interested in a high-level breakdown of exactly where the stimulus money is being spent, check it out here. Here are a few highlights (or low lights, I s'pose, depending on your position on all of this):

Aid to People Affected by Economic Downturn is $36 billion... Aid to State and Local Governments, most of which is targeted at people affected by the economic downturn, gets $58 billion.

Transportation and Infrastructure, one of the areas I think can do the most good in the long-term, gets $98 billion. Health Care comes in at $18 billion, Education is allotted $48 billion and Energy $41 billion.

Science & Technology receives $13 billion (nice, would've liked to see more here, but some of the Energy apportionment could rightly be lumped here, too).

And Business gets $870 million (a very small portion of the stimulus... about 1% actually).


Anonymous said...

The price to our children & grandchildren? Priceless! Uncle Sam, turning your children's dream into a nightmare.

Since Obama has been selling this thing like a used car salesmen, a little commercial lingo seems to fit.

Anonymous said...

Agreed 1A. He is beginning to sound & look more GWB everyday. A Surge in Afghan, threatening state & local governments, secret prisons overseas & poor vetting of key cabinet spots.
This huge spending package is absolutely unforgivable and more than likely guarantees him only 4 years. We don't need short-term thinkers running the nation and we sure don't need fear-merchants pushing through such irresponsible legislation.

csm said...

Hogwash! The last administration rang up the biggest debt our nation has ever had after inheriting a surplus. And what did we get for it? War and a recession/depression. If the stimulus plan helps to raise us out of the Bush Depression, and it might, give it a chance, Obama will easily win re-election. I mean, who will the Repugs run against him? They have nobody worth even considering at this point.

Lou said...

The clinton surplus is a proven lie that the clintons are still even today attempting to use.
While the public debt went down, the intergovernmental holdings went up each year by a far greater amount and consequently the total national debt which is public debt plus intergovernmental holdings went up. He just shuffled numbers and he ran up debt.

Obama will hold the record for greatest debt rung up and do it in his first term. He is using the fear card like Bush as well to sell this as a depression. If he sells long enough, he will scare the country right into a depression. Once again, the numbers prove him a liar.

coreydbarbarian said...

lol. such wingnuttery deserves its own am radio show.

when one considers that 2/3rds of americans actually approve of obama's stimulus, this sort of thinking becomes quite laughable.

G said...

What poll is that from? The last I saw (I think from Pew) was that more than 40% were opposed and about 34% in favor of it. I guess if enough different organizations take enough polls, anyone can eventually find one that proves they're doing the right thing.

This bill is not a stimulus, plain & simple. It is an omnibus spending bill.

coreydbarbarian said...

pretty sure it was gallup, g. as for stimulus vs. spending bill, consider this dirty secret: ya gotta spend to stimulate.

also, imo, the reason the stimulus was absolutely necessary is this: w/o it, the states and local governments would collapse before the national economy turns the corner. of course, i don't have to tell California residents that, do i?

G said...

I disagree that you have to spend to stimulate. But even if we accept that premise as true, it doesn't mean ANY kind of spending. I'm not going to rehash any of the spending that clearly has nothing to do with stimulating the economy. However, the CBO's analysis of the bill says that most of the spending won't occur until at least 2010. How is that supposed to stimulate anything?

As for the state govts, that's their own problem to deal with. It isn't the job of the federal govt to save states from their fiscally irresponsible ways. Bailing them out just allows them to continue in their irresponsibility.

California is a perfect example. We already have the highest state income tax rate, the highest state sales tax rate, and one of the highest gas tax rates (among the many other taxes and fees). But the state is going bankrupt. How is that possible? Simple. The state govt refuses to limit their spending.

coreydbarbarian said...

"However, the CBO's analysis of the bill says that most of the spending won't occur until at least 2010."

-- this is a conservative talking point that has been disproven. the cbo never released any such report, the last i read. and yet, it is repeated ad nauseum until folks just assume it's true, like the talk of al gore claiming he invented the internet..never even happened.

"As for the state govts, that's their own problem to deal with."

-- i understand the free market mentality that guides this thought, but i disagree. i honestly believe that history has shown us repeatedly that we desperately need these government services, only republicans are unwilling to fund them. from this side of the aisle, it sure looks like conservatives are hell-bent on seeing every level of american govt collapse.
just my opinion based on yrs of observation.

Lou said...

California spends 5 billion dollars a year on illegals. Sorry, we should not be paying that bill. That is CA problem.

The Spending bill is NOT supported by a majority of Americans. It is about 50-50 with Independents heavily against. Beware of those who throw numbers around with no support. Then you have those who will follow Obama anywhere. I listen to economist after economist hammer this bill and for good reason. When he raise taxes on businesses, the economy will fall even more. Watch the market continue to fall this week.

coreydbarbarian said...

i'm short on time but here's


and this.

G said...

CBO Report

From paragraph 2:
"Assuming enactment in mid-February, CBO estimates that the bill would increase outlays by $92 billion during the remaining several months of fiscal year 2009..." That means just over 10% will be spent by 10/1/2009.

After reading your links and looking at the Gallup poll in question, I would also have to challenge your statement that "2/3rds of americans actually approve of obama's stimulus." The question on the poll was:
"Do you approve or disapprove of the way each of the following has handled the government's efforts to pass an economic stimulus bill?"

There is a significant difference between approving of Obama's efforts to pass a stimulus bill and actual approval of the bill itself. Notice that in the same poll, Democrats in congress had an approval rating of 48%. Translation: Obama's a better salesman.


It probably won't come as a surprise that I am not in favor of this stimulus; I just don't think it will work as intended. I have heard the same thing; much of the money won't be spent until next year.

The thing that confuses me(again) is that we are trying the solutions which got us here to begin with. Much of the bailout and the stimulus is geared towards getting people to lend and to spend. This is what got us here to this point. The markets are just readjusting to a new atmosphere where prices are more realistic and the superfluous is non-existant. Housing prices here(Phoenix) have gone from a median house price of $260,000 to one today of $135,000. When the worth of an asset like your house gets halved shit is going to hit the fan and everyone gets sprayed. So the idea now is to get those housing prices back into the stratisphere? Or is it to get jobs which were in existance only because the economy was overheating back online? This looks to me like we are fighting the market which generally is a losing battle.

To me the best we could have done is to let the banks go either into bankruptcy or insolvency. To help pick up the pieces, we would then help all citizens affected through prolonged unemployment benefits, food stamps and re-training.

I will leave with this; I don't agree with these two generally, but they have diagnosed the banking problem well:

U.S. cannot go back to old ways, top economists say
Monday February 23, 2009, 12:37 pm EST

By Pedro Nicolaci da Costa

NEW YORK (Reuters) - The United States cannot battle its economic crisis by simply trying to go back to its old ways of spending too much and saving too little, two widely followed economists said on Friday.

Jeffrey Sachs, director of the Earth Institute at Columbia University in New York, said a $40 trillion loss in global wealth, a reflection of declines in stock prices and home values, would not easily be reversed.

"The scale and drama and rapidity is extraordinary," Sachs said at a panel at Columbia. "We're not likely to be sending demand and consumption back up. Fixing the banks is not really the key to unlocking the demand side."

Nobel laureate Joseph Stiglitz, a former chief economist of the World Bank and a professor at Columbia, said in a separate panel that the banking sector has shown itself to be a detriment to society rather than a positive driving force.

The world economy is in the grips of a crisis that shows few signs of abating, and which most analysts consider to be the most severe shock since the Great Depression of the 1930s.

Stiglitz said that, under the guise of innovation, banks discovered new ways of taking risks that brought few benefits to most people and are now threaten the entire global economy.

"They not only didn't innovate, they actually resisted innovations that were important," Stiglitz said. "It was heads I win, tails you lose. And you lost."

He argued that talk of increasing transparency is actually an effort to divert attention from the real issue: financial complexity designed to pad profits and hide them from the eyes of regulators.

He suggested that, to date, efforts to simply pump money into banks have been a fool's errand. "Think of what we could do if we had spent $700 billion in a new, good bank."

Talk about moving toxic assets off bank balance sheets is also misguided, Stiglitz said. "Moving things around doesn't actually create value."

With this in mind, Sachs said that rather than trying glue back together a broken financial system, policy-makers should focus on a long-term vision that includes productive investments in transportation and energy infrastructure.

"We ought to be thinking about how to get the saving into future oriented development, not to recreate the bubble," Sachs said.

Ceroill said...

Ok, here's my two cents.

A lot of this goes back to the sixties (well, the thinking probably goes back a bit further), when what we know as the credit card industry was invented.
At one time you had 'charge cards', or 'credit cards' that were issued by merchants (Sears, etc) for use as a valued customer at that establishment. It was essentially a deferred payment plan club. Instead of paying for the item at time of purchase you could pay for it over time. There was a small interest on the balance over time, and if you didn't keep up your payments two things happened- first, your card got revoked and second, demand for completion of payment.
Then came the first 'universal' credit card (Diner's Club I think it was). This one could be used at a variety of locations (various restaurants and nightclubs). Again, originally this was more of a 'charge card' than today's 'credit card'. If you didn't pay in time the card was revoked and a demand for payment was issued (passed on to collectors). When it was seen how much the various businesses involved liked this, and how much the customers liked it, the bright idea came up to make truly 'universal' credit cards. The first three were of course Mastercard, Visa, and American Express.
There was a big push by the first two there to promote this, by having a guy travel around the world, paying for everything on plastic. Big ad campaign. This was the beginning of the debt based economy that just collapsed so hideously. first they were still 'charge cards'. You had to work hard to improve your credit limit, there were no 'pre approved offers' for cards, and some cards (sears, amex) were status symbols because they scrutinized you as a risk, and only the most reliable could get those cards. At this point you were not yet encouraged to maintain a running negative balance and keep paying on it forever. The idea was still to pay it off as fast as you could.
The next sea change happened ( not sure of timing) when mastercard and visa moved to the current model of operation, becoming spiraling debt machines. For a while Amex held out as a 'charge card' and still had that patina of greater respectability. (they try to play like they still do, but I'm pretty sure that nowadays they operate just like the rest)
Over the decades the norm began to be operating through debt, instead of keeping debt minimized.

That's my very long two cents on some of what started this whole mess.

csm said...

Good points, Bob. I don't know that this is solely what "started this whole thing", but it is a strong contributor to it. I would add in the usurious interest rates as a contributor, too. Of course, people SHOULD know that the interest rate on their credit cards is asinine, but on the other hand, the rates should be regulated and the credit companies should be held accountable for just handing out credit to anyone and everyone (even dogs have gotten credit cards).

Ceroill said...

csm, I never meant to imply it was the sole cause. It was only one part, but it led, I believe to the establishment of a debt based economy (as far as consumers are concerned).
Then there's the 'pure' financial end of it, where investors decided it was a good idea to package and trade peoples' debts as commodities.
Of course a popular thing to blame in some circles is virtual money the world uses these days. I can sort of see the point, in that basically being able to just decide how much money your country has is a dangerous thing.

Here's a simple sounding, far reaching, and totally unlikely proposal. Since the world's monetary systems are basically imaginary nowadays, why not just reset the whole thing back about 50 years, including prices of goods and services, wages, etc. You know, back when the average Joe could actually afford to live on what he earned as well as to put away savings for 'rainy days' or old age. Just hit the big economic reset button, and do a overall reboot.

Nah. Never work. Idea is too simple.

csm said...

It couldn't work for a lot of reasons, Bob. What would happen to the mortgage I hold on my house? If we go back 50 years my house would be worth a whole lot less than what I owe. But the person who owned it before me already got the money... but even though I "only" owe about 10 years more on it, going back 50 years would mean I owe more than the house is worth even after paying quite a bit for it already.

Gas cost 33 cents/gallon in 1967 (I read that today at lunch in a restaurant). That is 42 years ago, so maybe gas would have to go to less than 30 cents/gallon. The average wage in 1967 was between $7000 and $8000 a year. There was no Internet, no cable TV, no cell phones, etc. etc. What would they cost? An economic reset is not a viable option, my friend (oh shit, I'm starting to sound like John McCain, my friend)

Ceroill said...

Yeah, I know it's not really an option, and that it's too simple an idea to really work.

It's just that another of the basic problems behind our current situation is the growing imbalance between costs and means since the mid sixties at least. It's been at least 30 years since what a man was able to earn (your average joe not the corp exec or wall street greedmonkey) was able to support a family on his income. This is an underlying reason for the popularity of the credit system. When you make say...$30K a year, and your annual expenses are at least $40K (and that's just you and wifey, no kids included), what are you gonna do? You're gonna use that plastic card to defer payments as long as you can, and hope you can catch up eventually.

But, see...that won't happen because the prices keep going up faster than your salary, and the interest on your card balance keeps going up too.

Back when a single income could actually support a family you could save for stuff. Put aside 50 or 100 a month. In a few months you can get that new tv. In a year or two you can get that new car. You could actually afford health insurance.

Hence my pipe dream of just rolling back all the prices and wages to a point where they were actually compatible.

csm said...

If what you describe becomes the reality for enough people for a long enough period of time, there will be a revolution of the working class to change things. Right now too many working class folks still have dreams of wealth and wouldn't consider an uprising... things are still too good...