Unemployment, and so on

[kandrathe]

I'm saying they spent the money on keeping unemployed people on unemployment insurance, so they don't get kicked out of their homes, or starve to death. You're saying this is "blowing" the money on "something that got us nothing." I'm all for civil conversation, but I'm not misrepresenting you - I'm repeating what you've said, tone and meaning intact. If you think that money was a waste, you're free to believe that, but don't be surprised when other people find this not only incorrect, but more than a little cruel.

You are assuming that the trillion or so dollars was spent on paying people unemployment. My comments weren't directed at the pittances devoted to actually helping people...

To make your case, the economic policy institute wrote "Spending $65 billion on unemployment insurance extensions will increase GDP by an estimated $104.7 billion, which is roughly 0.7 percent of our $14.7 trillion GDP. This increase in GDP translates into 488,000 payroll jobs. In other words, extending the federally funded unemployment insurance extensions through 2011 would not only be a lifeline to the families of millions of unemployed workers, it also supports spending responsible for the existence of nearly half a million jobs."

Which is just simple math really. If it were all spent and used to sustain employment... $65 billion / $100,000 salary = 650,000 high end jobs. Or, $65 billion / $50,000 salary = 1.3 million average jobs.

The 2009 stimulus was $787 billion. And if you throw in the 36 billion for extending the other aid to keep people from starving, and etc. That leaves $686 of spending that went into things other than helping with unemployment and starvation.

The problem is simple really. During the nineties, and the naughts, we had huge increases in economic growth and hence tax revenue. The federal and states budgets swelled with new programs and spending to take advantage of the windfall. The recession curbed back revenue severely, and so a large part of the federal stimulus was used to balance the out of whack states budgets. Some states did the smart and responsible thing, which was to correct their spending in relation to their revenue. Most states, including mine, did nothing except take the federal money. Then, in 2010, we had the same problem and got bailed out by the feds again. In 2011 we had the same problem, but didn't get the same level of bailout. Each time, our state politicians were unable to make the hard decisions on creating a balanced budget.

They expected the economy to just snap back, like it did before. But, it didn't and they were unprepared for the "new normal".

Well, they did actually pour quite a lot of money into infrastructure. Nowhere near enough, but then, there are those who oppose all such spending, including on "shovel-ready" projects. Apparently the only stimulus Republicans will agree to is tax cuts, full stop...

Tax cuts as stimulus allow everyone to decide on a productive use for the money. Isn't it more democratic?

The problem with our government's approach was that it was half baked and tepid. The original stimulus bill devoted $36 billion for construction on "shovel ready" projects. They didn't really have the projects in mind, so they just put out the call for "shovel ready" projects and every kook and their brother in law submitted one.

I've argued this before... If Obama had led on one of his campaign promises, to transform the energy sector to become greener, and less fossil fuel dependent, then we'd be in a better place. Instead, they picked donor cronies to shower with huge loan guarantees. I'm talking about a comprehensive plan meeting measurable and tangible goals. So... Don't just mandate x% of vehicles will be electric by 2015, but step in and list the steps required to make it so. Don't just mandate that x% of coal fired plants will be replaced with solar or wind, step in to make a plan and follow it through.

But, instead, we had a shoddily cast together miasma of government spending wish lists that increased the size of an already unsustainable government bureaucracy, funneled reward money into the hands of big campaign donors, and did very little to give the economy any traction towards recovery. Then add into that mix the uncertainty of drastic changes to the health care obligations and drastic changes (Dodd/Frank) to the consumer credit industry, and financial sectors, and you get the present result of 3 years of a stagnant economy, with suffering and hopeless people protesting variously our government, corporations, or just the damned wealthy.

Because you don't understand what you're buying? Because a large financial institution is supposed to be more diligent with other peoples' billions than just taking off-the-shelf ratings at face value? Because the ratings agencies are famous in the industry for getting the analysts who can't hack it at Goldman or Merrill? Because hedge funds and insurance companies are, by definition, in the business of managing risk?

Yes. Maybe. I don't know. No, everyone has their specialty so it's not like one insurance is like any other. You need to trust that the people who's job it is, are actually doing theirs. Otherwise, it's no better than palmistry.

Simply pointing to a few debacles is just cherry picking, since that's the fate of most businesses, private or otherwise. If government could guarantee that speculative, innovative companies would be successful, we'd have no need for capitalism at all. They can't, and neither can anyone else.

You say cherry picking, but I see them as examples of waste, fraud, cronyism, and abuse. Or, all of the above. Can you honestly with a straight face tell me that our government is objectively handing out this money according to sound financial investment principles, and without being influenced by politics? The mounting evidence shows exactly the opposite. Even the checks to prevent bad investments are being rode roughshod.

Treading water is the right thing to do when you're drowning. Look at the construction sector. Look at the unemployment rate. Look at capacity utilization in steel, concrete, and so on. Tell me they wouldn't be able to make good with some bridges to build, some roads to repair. And yes, build energy infrastructure. Build nuclear power plants. Upgrade the energy grid. No time like the present to spend on the future.

We agree on that part. The original stimulus bill devoted $36 billion for construction.

Had we instead spent $200 billion per year since 2009 on just these things we'd have made a bigger dent in improving the economy. The construction industry in the US was about $615 billion. And... they could have done something in 2009 to stabilize the housing market, but instead it was pretty much frozen to help keep people in their homes and protect the politicians from the ire of an electorate dispossessed of housing. They could have done a better job in broaching a deal between lenders and mortgage holders to deflate the bubble and still get the best deal for all parties concerned. Instead, they tried to re-inflate the bubble and bring housing prices back up.