Thursday, February 12, 2009

Perriello, Danville, and the Stimulus Package

The Danville Register & Bee has an article in which they interview Rep. Perriello on the effects of the stimulus package for the Danville area. Money quote:
"We’re going to be funding a number of programs that should be valuable to our localities that could be game changers,” Perriello said.

Local officials, he said, have stressed their desire for infrastructure and school construction that could put people to work right away. Additionally, he said, immediate relief is on the way to families in the form of tax relief for small business and families and extension of unemployment benefits.

One important goal the House achieved after seeing the Senate version of the bill was making sure small towns and rural communities get their fair share of stimulus money, he said, ensuring that it doesn’t go just to big cities.


overburdened taxpayer said...

I hate to break it to you congressman but there is no such thing as government “stimulus” when it comes to the economy. You might as well believe in the tooth fairy. The government acquires money to spend in one of three ways (1) borrowing money, (2) printing money, (3) raising taxes. That is it. There is no other way for the government to “get” money to spend. In all three instances any government spending is offset by a decrease in private spending. There is no way around this fact. For example, if the government taxes me (and everyone else) $500 more to build a road the money will be spent on construction workers, equipment, materials etc. But I (and everyone else) would have spent the $500 somewhere else. Whatever I would have spent my $500 dollars on would have “stimulated” the economy, protected someone’s job, etc. When you take money from someone and transfer it to someone else, the net effect is a wash (except you now have someone who might vote for you). Same effect when you devalue the currency (all our money ends up being worth less and able to buy less) or borrow money on the open market. You can’t get around this simple fact. Government cannot create wealth or prosperity. If government spending like this “stimulus plan” worked, we would have recovered from the Great Depression long before WW2. The strongest economies would be the planned economies.

And if the stated intent is to create or save 4 million jobs (a dubious artificial guess if I ever heard one) then can anyone explain why you would spend $800 billion to do this? Does this math make sense? That means our Congress deems it wise to spend over $200,000 per job created/saved? Is job creation really the intent or is something else going on here? Don’t even get me started on the amount of pork in this bill (and can anyone explain why, under a Republican administration it is called “pork,” or “earmarks” but under a Democrat they are called “shovel-ready” and “infrastructure projects?” Convenient.

Kudos to Perriello for bringing some pork to southside. It isn't about doing what is best for the country so long as your constituents get a piece of the pie. I guess this is good pork as opposed to bad pork.

You libs are so confident that Congress and the President have the ability to “fix” our economy. Do you realize these are the same people in 2008 who voted to privatize the Congressional cafeteria system because it continued to hemorrhage money ($18 million since 1993). Do you get the totality of that fact? THESE PEOPLE CAN’T RUN A CAFETERIA for crying out loud. Yet, for some reason, you think they have the capacity and expertise to fix our economy. Talk about hubris.

Jesse said...

Okay, I can't resist... a few responses to Overburdened Taxpayer:

1) The economy's performance is measured in terms of GDP. Government spending is an important part of GDP. Usually our GDP growth occurs largely through private spending, but in the face of an economy where GDP growth has stagnated, increasing government spending is the most reliable and achievable way of driving up GDP. This isn't offset by taxes - increased government spending leads to economic growth. By definition.

2) The idea that every dollar spent on stimulus is offset in impact by a loss wherever that dollar came from is wrong: there are places where investing an extra dollar has a multiplier effect in the economy, and places where it has practically no impact. Reducing unemployment and infrastructure development do stimulate private sector spending. As for taxes, the multiplier is much smaller, especially with a progressive tax system. And speaking of taxes:

3) Two claims you make: first, that the stimulus package will increase taxation, and second, that $800 billion is too much money to be expected to create 4 million jobs. Both of those can be rebutted by one fact: nearly half of the stimulus money is going to what seems to be the LARGEST MIDDLE-CLASS TAX CUT IN HISTORY (see here: It's questionable whether that's good economics, but saying that the stimulus package raises taxes isn't just disingenuous - it's literally as wrong as you can get.

Alright, I'm done now. If anybody is better with econ than I am (which is probably most of you), feel free to amend what I posted, but I'm pretty sure this is accurate.

Overburdened Taxpayer said...

So i am either lying or wrong. Let's see...

the 2003 tax cuts (also touted as "the biggest" by some)expire in 2010 to the tune of $200 billion a year. Congress is a little more savvy than that. They know a tax increase would be a much harder sell.

The "largest tax cut in history" is government-speak for peanuts. (War is Peace). Those "billions" in tax cuts sound nice but spread among the total of working Americans it amounts to the $13 a paycheck people are joking about. Is the the kind of "change" Obama was talking about, i thought that was a joke...

we tried this stimulus before and it didn't work. FDR's entire pre-war presidency was nothing more than an attempt to stimulate the economy. It didn't work then, and it won't work now. Under your economic theory, the government could just spend us to wealth and prosperity...