Posts Tagged ‘Stimulus’
There has been much discussion recently over the following comparison in the New York Post between Travis the Chimp and the writers of the Pelosi-Obama-Reid Porkulus Bill:
Personally, I think it a little insulting to chips. SURELY a trained monkey would have done a better job at writing the bill!!
In any event, Jim Treacher provides this list of reasons why Barak Obama is nothing like Travis:
10. Travis understood TurboTax
9. Obama somewhat less likely to attack Biden
8. Travis never lied
7. Obama’s smile not quite as genuine
6. Travis could get through entire day without teleprompter
5. Obama takes more long-term approach to destroying people’s lives
4. Might actually be possible to get copies of Travis’s medical records
3. Obama much better at taking orders from trainer, David Axelrod
2. Travis really didn’t befriend William Ayers
1. Obama only talks your ear off
(From the comic geniuses at Americans for Tax Reform)
“With regards to my point on the depression, I have found the following quote from then Treasury Secretary, Andrew Mellon, made in 1930. His suggestion as a means to deal with the great depression was for the Fed to: “Liquidate labor, liquidate stocks, liquidate real estate… values will be adjusted, and enterprising people will pick up the wreck from less-competent people.” In other words, leave it to the market. As can be seen, this failed miserably, with improvement only really occurring around 1933 when government action was taken.”
This was later clarified with:
“I agree, spending did not lead to a remarkable recovery. It did, however, lead to a short term recovery. “
As the free market was impugned with a quote, allow me to respond also with a quote. This time from Henry Morgentha – FDR’s very own Treasury Secretary from 1934-1945:
“We have tried spending money. We are spending more than we have ever spent before and it does not work. . . . I say, after eight years of this administration, we have just as much unemployment as when we started . . . and an enormous debt to boot.”
— FDR Treasury Secretary Henry Morgenthau on May 9, 1939
On another note, people who support either Rudd’s or Obama’s stimulus packages would be a lot more convincing if they could cite a single example in the history of the world where a government increased spending and this led to increased jobs, income and wealth on any sustainable basis.
A good introduction on Keynsian stimulatory policy (and why it doesn’t work) here:
Update: On reflection, my snide remarks about UQLC were completly uncalled for in this forum. I should not fall into the trap of stereotyping an individual on the basis of a collective, nor using this to make cheap political shots. Mr. Trout’s comments so far – whilst wrong – certainly are well thought out and deserving of more. Sorry.
Just as applicable to Kevin Rudd as it is to Obama. The good people at Americans for Tax Reform put out this statement today on Obama’s first press conference:
Assertion 1: The government can create wealth
OBAMA: “It’s absolutely true that we can’t depend on government alone to create jobs or economic growth. That is and must be the role of the private sector. But at this particular moment, with the private sector so weakened by this recession, the federal government is the only entity left with the resources to jolt our economy back into life…when you have that situation; the government is an important element of introducing some additional demand into the economy. We stand to lose about $1 trillion worth of demand this year and another trillion next year. And what that means is you’ve got this gaping hole in the economy.”
FACT: The government cannot put into the economy what it first did not take out of the economy. That would be like scooping up water from one side of a lake, dumping the water into the other side of the lake, and announcing that you’ve just filled the lake.
Assertion 2: Cutting taxes doesn’t work
OBAMA: “But as we’ve learned very clearly and conclusively over the last eight years, tax cuts alone can’t solve all of our economic problems, especially tax cuts that are targeted to the wealthiest few Americans. We have tried that strategy time and time again, and it’s only helped lead us to the crisis we face right now.”
FACT: Pro-growth tax cuts are the only proven remedy for economic weakness. In the 1960s, the Kennedy top rate cut from 91% to 71% produced average economic growth of 6.2% until LBJ scuttled them for the Great Society and Vietnam. In the 1980s, the Reagan top rate cut from 70% to 28% produced average economic growth of 4.3% until the Andrews Air Force Base bipartisan Bush tax hike of 1990. In this decade, cutting the capital gains and dividends tax rate to 15% restored a healthy 3.0% average growth rate until the Pelosi-Reid-Obama leadership publicly announced they were going to raise taxes.
Just when Turnbull has reinvigorated the Liberal Party’s base, made members think we really do stand for our values again, and generally done a great job, the following story appears. I hope and pray it is not true.
The Coalition is willing to negotiate with the Government over the stimulus package and its primary concern is the Government’s $12.7b tax bonus handout, Malcolm Turnbull has said.
Turnbull this morning told the Coalition joint party room that while he was happy to take a short-term political hit, he was willing to negotiate with the Government to pass the package. Turnbull initially declared last Wednesday that the Coalition would not support the package at all. On the weekend, Turnbull called on the Prime Minister to negotiate with him.
The Coalition has consistently argued that tax cuts rather than handouts should be used to provide a short-term stimulus. Coalition MPs today debated what would yield the best multiplier effect in terms of stimulus.
However, Turnbull’s position today leaves the Coalition open to supporting the majority of the package — the $28b infrastructure component providing funding for school and housing projects. It comes a day after Newspoll revealed a slump in support for both the Coalition and Turnbull.
The tax-bonus isn’t perfect. It has a LOT of flaws – particularly the payments that go to people who don’t pay taxes. But, at the end of the day, it is returning tax dollars to people who have earned them, and as such, is easily the less odious part of Rudd’s package, and can almost be considered tax cuts. Indeed, these rebates at least let people spend their own money, whereas the alternative is the government spending your money for you. Which is what the so-called “infrastructure” spending is. So if this is true, these tax rebates would be purged, and the spending provisions – exactly the opposite of what we need, and the course of action that that exacerbated the financial crisis when it was tried in Japan etc – will be kept.
I hope, I really hope, that this is all untrue. I still have faith that the party will hold the line. But at times I worry. I worry for the Liberal Party, but more importantly, I worry that my generation shall become the “indebted generation”.
Let us hopethere is nothing to this and Turnbull sticks to his course of calling for the tax cuts that we desperatly need to stimulate the economy!
Original ad here.
Malcolm Turnbull I feel has very, very cleverly positioned himself as trying to reach bipartisan consensus, and genuinely trying to work together, while Labor just wants to impose its will with no regard for others. Although my viewpoints on ‘bipartisanship’ are well known, it tends to resonate well with the electorate, and Mr. Rudd has completely blundered in his handling of this.
The longer this drags out, and the more people peer into the details of this package, the more damaging it will be for Rudd. By turning attention to future debt and our children, Turnbull has succeeded in framing the issue, and, while a dip in the polls of a few percent in the short term is expected, the longer this goes on the better for Turnbull it shall be.
Other than in the mind of Fairfax Journalists and the ABC, I think Turnbull has seized the initiative on this debate.
Good policies, smart politics.
What we know so far is that earlier this week Australian Prime Minister Kevin Rudd (fresh from calling for a New Ultra-Keynsian World Order) proposed the biggest spending increase in Australia’s history.
- Building a new building (apparently if needed or not) in every one of Australia’s schools (even though constitutionally a state responsibility)
- $950 Welfare Check to “eligible families, single workers, students”
- “Local community funding” – up to $650 million
- Build 20,000 “new social housing dwellings” – ie government housing ($6.6 billion)
- Free ceiling insulation for 2.2 million households. And a $1000 rebate for 500,000 others.
- $3.9 billion in “green incentives”
This bill – equivalent to 4% of Australia’s ENTIRE national output and will turn a forecast budget surplus of $21.7 into a $22.5 billion deficit.
Yet all we have is a media release. They have not put up for public scrutiny the actual legislation. Yet they want to rush it through parliament in ONE DAY. Having given legislators the bills THE SAME DAY THEY ARE TO BE VOTED ON! (Update: the first of the bills as just been introduced at about 9:30am AEST. Update 2: As of now – 10:00am AEST Coalition staff still havn’t received copies, so it will be some time)
I repeat Rudd wants to push through the biggest spending increase in our nation’s history in one day. With no consultation. This is just farcical. No other words can describe this affront to democracy.
I am sure when we go through this bill in detail, we will find out why he is refusing transparency and where this money is going.
In the interests of transparency and good governance we CAN NOT pass the greatest spending increase in our history with no consultation. Without expert analysis. Even if you support Keynsian economics, surely you must realise that rushing this through without any proper debate or examination can’t be good.
This bill needs a senate majority to pass. PLEASE contact Senators Xenophon and Fielding and tell them to vote against this bill. We can not pass the biggest spending increase in our nation’s history in one day – heck not even a week would be enough. Please contact them and tell them to vote no. We don’t have much time.
Update: From the ALS Blog
“It [the Government] estimates the plan will support up to 90,000 jobs over the next two years.”
$42b/90,000 = $466,667 per job. Wow!
Of course, they claim that two thirds of the money was on “long-term investments to generate future growth,” so it’s really only $155,556 per job. That’s better.”
Update 2: The gov is moving a bill to lift the borrowing limit the government is authorized to borrow from 75 billion to 200 billion. Wow. I mean. Wow.
Update 3: Bipartisan pressure has forced the Bill to be delayed. Thank God. “Independent Senator Nick Xenophon and Family First’s Senator Fielding have reached agreement with the Opposition to vote to refer the legislation to a Senate committee this afternoon“. Word on the street is the immense public pressure on them forced them to do so. Good. Let’s now just keep it up!
From the Wall Street Journal:
Each time past presidents have cut taxes–in the 1920s, ’60s and ’80s, as well as George W. Bush’s 2003 tax cuts (which generated $785 billion in additional tax receipts)–the economy has expanded. As Investors Business Daily noted earlier this year, former White House economist Greg Mankiw cited data showing that every new dollar spent by the government expands the economy from $1 to $1.40, but in a study of tax cuts going back to 1947, each $1 in tax cuts generated $3 in additional GDP.
Thanks to Matthew Martini for the link