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Obama Stimulus: Less Than 25 Percent is Actually Stimulus

February 2, 2009 RSS Feed Print

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President Obama used some pretty gloomy language in his radio address over the weekend: "Americans know that our economic recovery will take years -- not months. ... Rarely in history has our country faced economic problems as devastating as this crisis."

Let's say your house is burning down, and you have a water hose in your hand. Do you a) try to put out the fire; b) start filling up your pool; c) sprinkle your lawn; or d) some combo of "a," "b" and "c." To the Obama administration's credit, it didn't choose "b" or "c." Unfortunately, it went with "d." Although there has been a sense of urgency in getting the stimulus bill passed, the bill itself shows little urgency in doing much to help the economy.

Economist Robert Brusca of Fact and Opinion Economics analyzed the House and Senate versions of the stimulus plan and categorized the main elements as either Cushion (they make the downturn feel less painful), Agenda (they are items from a Democratic policy wishlist) or Stimulus (they are actually intended to boost the economy.) Here is his take on the Senate plan:

It is hard to categorize the spending. But I have looked at the Senate plan in more detail and my rough estimate is that its $365bln of spending is roughly 24% stimulus, 36% cushion and 40% agenda.

And here is his take on the House plan:

The CBO has scored the HOUSE plan and has found that of the House plan's $819 bln of spending and tax cuts only 21% will have impact in 2009 and by the end of 2010 only 64% of the plan will have had its impact on the deficit. Almost by definition then, we can say that 36% of the House plan is 'Agenda' since it is going to have its impact beyond the year 2010 and can't be categorized in any reasonable way as a recession buster.

His bottom line:

There are all sorts of clear Democrat agenda items in the spending portion of this bill. Much of it is on social welfare type plans. But the monies being spent in pursuit of Green also look much more agenda-like that stimulus-like. I say that because the markets, left alone, don't do Green. They don't because Green is not economic. So spending in which you spur that which is not economic surely is 'agenda' driven. ... It is no wonder Republicans are angry about how this is being done. You can disagree with my numbers but clearly there is a lot of Democrat policy that is whizzing past us in the sheep's clothing of stimulus.

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I think what this writter is saying is that green is not economical. It will need ongoing money thrown into it.
It is interesting that the Democrats cry foul at subsidies for big oil, but are more then happy to give even more of this to big solar and big wind.
It also seems that for this to work they want a smart grid. Do we really want the goverment shutting off and on the things we use in our homes? Do you want the goverment to decide to turn down your thermostat?
Think twice about it! It was reported that the chosen one, Obama, has cranked up the thermostat in the Whitehouse! Seems what is good for you and me, is not good enough for the president!

Heather of MA 4:39PM February 10, 2009

You label items in the bill as being an "agenda" item (based on your subjective opinion alone), and then without any apparent reason other than that label you've affixed, you declare the item not to provide stimulus. "Stimulus" and "agenda" are not mutually exclusive, of course. In fact, a stimulus that also serves a longer term agenda, is a good thing. Why would you want to throw money at something, and only get short term results, when you could also get longer term results?
Your criticisms of "Green" are equally not well thought out. Before evaluating the relative economic viability of "green" vs "dirty" technology, let's first try shifting government spending away from subsidies to oil and gas industry and away from military spending to fight trillion dollar wars in Iraq (among other places) and take into account the health costs and quality of life costs associated with polluted waters and air, and instead invest that money and cost savings in a "Green" infrastructure. What impact does that have on the relative economic viability of the two approaches now? Not only would investment in "Green" infrastructure provide a stimulus, yes, it is ALSO an investment in our future (both security and economic future)... much the same way that investment in the Interstate Highway and the Internet infrastructure were both immediate economic stimulus and an investment in our future.
Just imagine where we would be know if the U.S. government HAD NOT invested money into the invention and creation of the Internet. It's the single most important technology driving the American economy right now, and it was created, almost entirely, by government investment. It's hard to imagine how the Internet could have come about without the government and out Universities making it happen.
But you want to just throw money into a "stimulus" that gets spent and has no long-term lasting impact? What sense does that make?

Mark LeBay of WI 2:30PM February 06, 2009

I am 20 years old, and gay, but I must say, all of this scares the hell out of me. I am all for equal rights, which is a big factor in me supporting Obama. But I must say, I think I would rather take a hit in the "rights" department, than see this stimulas plan go through. Right now, we need something that is going to boost the economy, NOW! Not democratic agendas that may or may not help the future of this world. I for one, would rather see the world get a little less green, than see my neighbors move into a homeless shelter. This is our lives people. Before you jump on the Obama band-wagon, do a little research. Please!

Ty of ID 1:54PM February 06, 2009