@Foxfyre,
Foxfyre wrote:Even the CBO doesn't think there is much economic stimulus there.
This, by the way, is just plain wrong. And it's wrong in a way that goes to the heart of your arguments here.
Read
this letter by the director of the CBO to Republican Sen. Gregg.
The director, Douglas W. Elmendorf, first explains that, for sure, considering the unprecedented nature of both the crisis and the stimulus package, there is much uncertainty about what "the macroeconomic impacts of any economic stimulus program" would be. Some economists, he points out, "remain skeptical that there would be any significant effects", but others "expect very large ones."
OK, but what does the CBO think? Elmendorf explains that the CBO "developed a range of estimates of the effects of stimulus legislation" on GDP and employment "that encompasses a majority of economists’ views." And what did they find?
Quote:By CBO’s estimation, in the short run the stimulus legislation would raise GDP and increase employment by adding to aggregate demand and thereby boosting the utilization of labor and capital that would otherwise be unused because the economy is in recession. Most of the budgetary effects of the legislation would occur over the next few years
Significant short-run effects, thus.
The potential problem the CBO signalled is not, as you claimed, that there just isn't "much economic stimulus there". It is that the stimulus package would - just like other similar proposals - "reduce output slightly in the long run" ... "although such effects would generally be smaller than the short-run
impact of those policies".
This is how that breaks down into numbers, according to the CBO:
Increase in GDP compared to how GDP would develop without stimulus package:
1.4 - 3.8% by the fourth quarter of 2009;
1.1 - 3.3% by the fourth quarter of 2010;
0.4 - 1.3% by the fourth quarter of 2011.
Conversely, without corrective measures in the years in between, the package would depress GDP "by between zero and 0.2 percent" after 2014.
Increase in employment compared to how employment would develop without stimulus package:
0.8 - 2.3 million by the fourth quarter of 2009;
1.2 - 3.6 million by the fourth quarter of 2010;
0.6 - 1.9 million by the fourth quarter of 2011.
Conversely - well, there is no conversely. "The effect on employment is never estimated to be negative".
By ways of context: the NYT reported the other day that "a staggering 3.6 million jobs" had been lost since December 2007. In the best of scenarios, the stimulus package would make up for all of those losses by the end of 2010, softening the blow of the job losses that will undoubtedly occur in the meantime significantly.
Another way of putting these numbers in context: Wal-Mart - the largest private sector employer in the world - employs 1.4 million people. So the stimulus is the equivalent of creating a new, equally huge Wal-Mart - or two of them.
Of course - if it wasn't for the costly compromises that Republican Sens. Collins, Snowe and Specter and conservative Democrats like Ben Nelson pushed through, the stimulus would have created many more extra jobs ... Krugman
says as much as 600,000. But unfortunately the liberals did not get their way.
So there you are. The CBO predicts slightly adverse long-term effects, involving a potential depression of GDP by 0.2%, but significant positive short-term effects -- involving GDP being 1-4% higher in the next two years with this stimulus legislation than it would otherwise have been, and some 1-3 million jobs that would have been lost or not have been created without the stimulus in the next two years.
