stimulus

During most of 2010, two issues kept coming up. The first was an extension of benefits for those unemployed between 26 and 99 weeks. The last extension of these died on December 1, 2010 due to Congressional inaction. The second was what to do about the Bush tax cuts which were set to expire at the end of the year. Things finally came to a head on both in the last days of the 2010 post-election lame duck session of Congress. Read below the fold...

The debates between the deficit doves and the deficit owls continued at New Deal 2.0 (ND20) today. Jeff Madrick, a dove, gives us a post entitled: “Stimulate Now: On Inflation and Deficits.” In this post, I'll evaluate Jeff's views paragraph by paragraph.

Jeff says:

”Some have suggested that if a country nears the point that it must consider default, that is, it can’t generate enough tax revenues to pay debt and meet other minimal commitments, then all it need do is create reserves if it has a sovereign (aka ‘fiat’) currency.”

Maybe Jeff is right that “some have suggested . . .” the above, but I've never seen anyone do that. The economists I read who write about the capabilities of Governments sovereign in their own currencies say that such countries can't be forced to default, that they can only do so voluntarily, and that if they do, it's only because their decision makers don't understand that they can't be forced into default by international markets any external authorities. Read below the fold...

It looks like the Democratic Leadership will get its wish, a sprawling “health care reform” bill, mostly focused on changes to the health insurance system that deliver many millions of new customers to the health insurance industry. The Democrats are making many upbeat claims about this bill, calling it historic and claiming that it will produce affordable “universal” health care coverage for Americans, and for 32 million more than are covered by insurance today, while blithely ignoring the contradiction between these two statements. Read below the fold...

Infowars: Read below the fold...

CNS News:

The GAO reported that of the $787 billion in spending authorized by the Obama stimulus plan, only $173 billion (or 22 percent) had been spent by Sept. 30, 2009, the end of the fiscal year. Of this $173 billion, only $47 billion (or 25 percent of the 22 percent) went to contracts, grants or loans for projects. The rest of the money went to federal entitlement programs such as Medicaid and to immediate tax relief.

Read below the fold...

From the BBC:

The tax cuts announced on Saturday are part of a $787bn stimulus plan that Mr Obama signed into law this week.

The plan, aimed at reviving the US economy amid a global economic crisis, is split into 36% for tax cuts and 64% percent allocated for spending on social programmes.

Mr Obama said the US treasury had already begun directing employers to reduce the amount of taxes claimed from pay cheques.

The savings will reach 95% of American families, he said.

"Never before in our history has a tax cut taken effect faster or gone to so many hardworking Americans," the president said.

Read below the fold...

Go read his editorial, The Union Way Up. Fifty years ago, the nation still thought Unions (or organized labor) were good for the economy, good for the nation, good for the middle class, good for the working man and his family.
Excerpt from Reich:

The way to get the economy back on track is to boost the purchasing power of the middle class. One major way to do this is to expand the percentage of working Americans in unions.

Tax rebates won't work because they don't permanently raise wages. Most families used the rebate last year to pay off debt -- not a bad thing, but it doesn't keep the virtuous circle running.

Read below the fold...

On deficit spending and the need for boldness in addressing our economic woes:

Jamie Galbraith responds to the question posed by the National Journal, "Is the deficit a threat to future recovery?"

James K. Galbraith, National Journal: No. The question is grossly misconceived. Right now and for the immediate future, the budget deficit is the only source of demand that can fuel a recovery. Our present problem is not that it is too big, but that it is too small. Far too small.

Read below the fold...

Joe Stiglitz in the NY Times:

A $1 Trillion Answer
By JOSEPH E. STIGLITZ
Published: November 29, 2008

WHAT President-elect Barack Obama will need to do is horribly complicated but also very clear.

First, he must stop the economy from going deeper into recession. Then he needs to bring about a robust recovery, preferably in ways that support the long-term needs of the United States: by repairing our neglected public works, invigorating our technological leadership, making our society greener, fixing our health care problems, healing our social and economic divide, and restoring our social compact.

Read below the fold...