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To those who advocate the heavy spending that will come with this stimulus what's your take on this?
Quote:
But the CBO warned the long-term effect of that much government spending over the next decade could "crowd out" private investment, lowering long-term economic growth forecasts by 0.1% to 0.3% by 2019.
I thnik people think that the stimulus is freee moeny. It will be very painful for future generations like those under 40.OBM staes interest will be appox 348 billion on the stimulus alone ;not even counting the principal.
To those who advocate the heavy spending that will come with this stimulus what's your take on this?
I like the CBO - I have used them as supporting evidence many times.
I don't doubt their findings, or their non-partisanship (I treat them as an authority).
In an attempt to answer your question, I would say that increasing our debt is bad (always - even tax cuts that end up costing 1.6 trillion). But I believe the cost of doing nothing is larger than the cost of the stimulus + interest. If I believed otherwise, I would not support it.
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, and as those effects diminished the short-run impact on the economy would fade.
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In the long run, the economy produces close to its potential output on average, and that potential level is determined by the stock of productive capital, the supply of labor, and productivity. Short-run stimulative policies can affect long-run output by influencing those three factors, although such effects would generally be smaller than the short-run impact of those policies on demand.
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In contrast to its positive near-term macroeconomic effects, the legislation would reduce output slightly in the long run, CBO estimates, as would other similar proposals.
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Taking all of the short- and long-run effects into account, CBO estimates that the legislation implies an increase in GDP relative to the agency’s baseline forecast of between 1.4 percent and 3.8 percent by the fourth quarter of 2009, between 1.1 percent and 3.3 percent by the fourth quarter of 2010, between 0.4 percent and 1.3 percent by the fourth quarter of 2011, and declining amounts in later years (see Table 1). Beyond 2014, the legislation is estimated to reduce GDP by between zero and 0.2 percent. This long-run effect is slightly smaller than CBO estimated in its preliminary analysis of the Senate stimulus legislation last week due to refinements in our methodology.
At the bottom of that .pdf there is a table illustrating the negative numbers you mention.
From 2014 to 2019 there is a total of -1.1% real GDP for the low estimate and 0.0% loss from the higher estimate.
The flip side of that is what they say we'd gain:
Over the next four years, +3.0% real GDP total for the low estimate, and +9.8% for the high estimate.
Looks like a net gain according to the CBO.
Last edited by compJockey; 02-11-2009 at 08:19 PM..
To those who advocate the heavy spending that will come with this stimulus what's your take on this?
Yes, it is a concern in the long term, but there are reasons to be concerned right now as well. Between two concerns, we are better off handling the first, and keep in mind, to figure out solution for the next as we go forward.
It makes no sense to stay stuck in quick sand, in fear, and do nothing (that will guarantee a disaster). Do what it takes to get out, and use God given brain to plan the next course. Can we do it?
Yes, it is a concern in the long term, but there are reasons to be concerned right now as well. Between two concerns, we are better off handling the first, and keep in mind, to figure out solution for the next as we go forward.
It makes no sense to stay stuck in quick sand, in fear, and do nothing (that will guarantee a disaster). Do what it takes to get out, and use God given brain to plan the next course. Can we do it?
YES WE CAN!
Once things get really critical you can watch for eBay auctions with the US Government as seller.
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