4 replies on “Stimulus Spending”

  1. James, that’s just slick propaganda, easily contradicted with available data.

    Consider the claim about health care — we spend more than anyone, we have less to show for it the rest of the wealthy nations. They manage to cover more of their population than we do, yet (all of them) spend less. 20+ countries do this. Alternate explanations (e.g., obesity) have been proposed, but when tested, they fail to account for our terrible inefficiency.

    Why would you believe this video, when there is readily available data that contradicts one of the first claims that they make? Or, to put it differently, why are you so certain that we have better health care than other countries, when a basic statistic like life expectancy (or infant mortality) says that we don’t?

    And further, if you think that getting the budget into balance is so important, why not make common cause with all us crazy liberals and support tax increases? There’s more than one way to balance a budget, after all, and taxes were higher when we moved here (but we still moved here) and taxes were higher in previous decades, and the economy bumbled along on a generally upward course. One thing that we have tested as an accidental experiment, is to put much more money in the pockets of the extremely wealthy, and it did not trickle down; adjusted for inflation, median wages have not really grown much in the last decade. Why would you continue to believe that increasing the money that the very rich can take home is the key to prosperity, when we tried that, and it did not work?

    Again, this is all based on plain data — the income share of the highest brackets has been increasing for decades, median wages have been growing or not at all. You can look it all up. If wealth was going to trickle down, we should have seen it, and we did not. People have also plotted charts of inflation-adjusted economic growth versus highest marginal tax rate, and not only did high rates not damage the economy, on these simple charts, they actually helped it (however, emphasis on the word “simple” — there were clearly other factors, nonetheless, extremely high marginal rates were not a lethal economic poison. Surely, we could tolerate a return to what we paid when Clinton was president.)

  2. David-I am puzzled by your response. I looked at your statements then went to the video and could find no claims about health care; other than the government chose to make “massive changes to health care”. You would agree the present administration did this correct? I understand you agree with this decision but the video purports and I concur the cost curve will not go down and is likely to contribute to the bankruptcy of the country. I also agree with the video’s contention that the “stimulus” bill was a disaster and the goverment should not have taken over GM.

  3. Spencer – I agree, mostly, with Obama’s health care plan. Better if we had a Canadian-style single-payer plan. Long-term, it ought to make the cost curve go down. I say that because it worked for other countries (though single-payer worked better). The other money-saving proposals (health-care spending accounts, higher co-pays, etc) have not been tried in any other large, wealthy country — so though they may work in theory, they’ve not been tested. Single-payer has. Mandatory-regulated-insurance-for-all has been tested (and it worked).

    The stimulus was not large enough. The economists I read (one of them has a Nobel prize) were saying this as long ago as February of 2009. They also predicted correctly, then, that unemployment would not come down enough (because of the insufficient stimulus), and that interest rates would remain low. And, their predictions have thus far been mostly corrected. fFederal spending kept us from laying off (many) teachers. The crowd worried about inflation now, was worried about inflation then — they always worry about inflation, and look for the handiest reason to hang their worry on.

    Low interest rates are a signal to our town, too — if we can get money at low cost to build stuff, we should borrow it now, because it will cost more in the future.

    And last I heard, we’re no longer the majority shareholder of GM. I’d hope to make a profit on it, but our potential losses are now below the cost of a few months in Iraq (i.e., a BigDig or so).

    It has long been my understanding that this is an appropriate job for government. Raise taxes and pay down debt during booms, lower taxes and spend money during busts, and in all cases impose regulations to cut down on fraud, to act as a counterweight to the extremes of the business cycle. The thought of borrowing money to build stuff in a recession makes me a little bit nervous, but that is what a government should do. Similarly, now (and two years ago, even more so) is the time for pension fund managers to make investments; you can’t buy-low-sell-high, if you don’t buy low. That this takes a little bit of nerve, means only that not everyone is suited for the job.

  4. Re the deficit spending issue — I’m convinced that in the long run, we have to match our spending to our means — probably cutting both military spending and entitlements. That’s the true part of the ad. In the short run, I’m agnostic about the right level of stimulus. The ad doesn’t draw the short term vs. long term distinction.

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