A College Grad's Take on the Bailout Bill - Part Two
Popplegem — Fri, 02/06/2009 - 18:01
Time for part 2 of my reading of the bailout bill! I didn't get very far. I skipped Title II and went right to Title III - Commerce, Justice, and Science. I'll get back to Title II. Title III just lasts a few pages, going from page 82 through page 89. Oh, before I get started - check out Part I to read my disclaimer and my thoughts on Title I.
Title III has 3 components. I started with Commerce. There is 1 billion for the 2010 census, which is good, because I’m looking for work and might be a Census taker. This makes sense (no pun intended) in a bill trying to create jobs.
Then the bill goes on to want 3 billion (for those that are more visual $3,000,000,000) to get wireless and broadband access to all areas. The media has toted this as being for wireless access in rural areas. I'm a little biased against this. I don't see how this will create jobs. Sure, a few will be needed to set up the infrastructure... but then when it's there, there will not be such a need. Granted, the same could be said about the Census Takers (or Enumerators, as they are called). But then again, I want to be an enumerator and not a wireless broadband structure creator.
650 million for digital converter boxes.... wait... what? Weren't we supposed to already be ready for the switch? Apparently this is now getting pushed back until a future date.
Provided, That these funds shall be available for coupons and related activities, including but
not limited to education, consumer support and outreach, as deemed appropriate and
necessary to ensure a timely conversion of analog to digital television. (pg 85)
I talked with a good friend in the TV biz. She was furious (and rightly so in my mind). Not switching will cost many companies millions of dollars... aren't we in a recession, and losing money in a company causes workers to be fired? How can this help?
Onward to the NOAA (National Oceanic Atmospheric Administration). This is a hard one for me. I’m a scientist by nature, so I want to fund more scientific research… and I understand that while I do not necessarily agree with some of the habitat restoration, 400 million seems fair to keep things like polar bears from dying away. But lets not forget that another 600 million (aka, 1 billion total) must go to developing a climate model. We HAVE a climate model. We HAVE data stations. What we NEED are data stations in places like third world countries, where the data is slim to none, and some of the oceans.. I’ll find a picture eventually. I don’t really believe in the hype that is global warming, but being a geologist, I’ll let this stand for me. I’m biased, what can I say? Maybe my former roommates (both IT specialists) want the money for the rural wireless access because they work with computers….. who knows?
On to the justice area. I like justice.
4 Billion for police, eh? I’m okay with that. My dad was a police officer for a long time, and I know the benefit that having a place with good police can do for you. I do not believe that the police are bad, and I believe that a community without police very often suffers some dire consequences. Even if there is no “official” police, someone steps up and does the work. So 4 billion for police… I’m in. PLUS this will create jobs.
Just in case you’re keeping count – 8.65 billion at this point, just for Title III.
Yay, the science section! For some reason, I think I should be hearing that woman that use to be in front of all the SimCity games… you know, the one who in that RIDICULOUSLY sultry voice said “reticulating splines…” I still don’t know what that means, but the Science part makes me wonder... makes me yearn...
400 million for science in the beginning, but 250 million MUST be for climate research? What the heck? Didn’t we already give climate research money earlier? Aeronautics gets a paltry 150 million. ONLY 150 millions? My brothers fly planes. According to them, there have been no major advances in airplane technology in decades. We need research to continue to advance. Does this cover anything for NASA? Or is this the part of the bailout bill intended for major airline companies? They already gouge out your eyes and require your left kidney to fly in this country - why give them more money?
50 million goes to cross-agencies to help with natural disaster and emergency costs – Katrina, anyone? I’m not saying this is a bad idea, in fact, I think it’s a good idea, but this is supposed to CREATE JOBS. How does giving more money to this area in THIS BILL create jobs?
Now, the NSF. I like them. My married friends keep trying to apply to get money from them. 2.5 billion. This is good… we need the NSF…. But, so little in such a big package? Research grants DO provide jobs, just perhaps not as many as other items. Still, at least this is better than nothing.
Title III wraps up with some basic comments about more money for education. Science education, based on NSF documents, gets 100 million… I don’t LIKE saying this, but I don’t see how teaching children who are already in school science, without making more jobs available, helps stimulate the economy. Maybe those research grants.
That wraps up Title III of the HR 1. Page 89! I skipped rural construction, and Title IV is Defense – woo hoo! But don't worry, I'll get back to Title III.
I am also going to
Olorien — Mon, 02/09/2009 - 17:34I am also going to discontinue my argument in this forum due to a lack of attention to my job today. But wanted to encourage popple to keep up the good work.
Minor Sidenote Popple, are
Dragon — Mon, 02/09/2009 - 13:54Minor Sidenote Popple, are you making sure that you are using the most updated and amended Bill in the Senate. I think there were a few alterations made to it late Friday Night.
As far as Broadband cable, you have to count not only the jobs from installation (This is the quick jumpstart part of it) but also repair and maitinence work.
The catch with this is, or rather this is I believe the general plan, is that these jobs are being made to employ people NOW. In theory, by creating the jobs now, the economy gets flowing and then when these people as their jobs finish here and there with a jumpstarted economy in anywhere from 3-10 years (its hard to nail down an exact amount of time to encompass all of them) they will be able to be hired somewhere else by a new employer now that cash is flowing again.
My problem with this bill is
Olorien — Mon, 02/09/2009 - 13:26My problem with this bill is that the government is trying to create jobs by taking money from employers, i.e. taxes, and hire people. Now wouldn't it just be more effective to give the guy who you took that money from a tax break so that he can continue to employ the people and he already has working for him, and maybe even hire someone new.
It works across the board from small towns to cities because the jobs are already there, rather than trying to create them. there is no need to worry about pork, like funding for teaching children who are already in school science. And does not relocate jobs to high population areas due to Congress wanting to make sure that their constituents get as much of the stimulus as possible.
I know I am a right wing nut job but that is the way I see it. =)
False #1: Unemployment is
Dufe — Mon, 02/09/2009 - 14:27False #1: Unemployment is currently far higher than the "natural rate." The assumption that people getting government jobs will necessarily "steal" those employees from private industry is just not valid in any circumstance, but especially so in this high unemployment economy. Also, most governemtn work like this will be contracted out to private entities for implementation in any case, so many of the jobs will technically remain in "industry."
False #2: Taxes are not currently paying for the stimulus. You'll notice that income tax rates haven't had any abnormal increases or anything. What is paying for the stimulus? The short answer is this: The treasury will print off money that doesn't really "exist" currently in order to pay for the various projects. This would normally lead to inflation. But to minimize inflation, the FED will sell government bonds to suck the extra money created back out of the money supply. The end result is that the deficit goes up and will, in theory, be paid off in the future when the bonds mature. (Anyone just get interested in buying government bonds right now?)
The reason for doing this instead of tax breaks is exceptionally complex, so I'll just say that it has to do with the fact that this current recession largely originated in the loanable funds market and not the consumer goods markets. The end result is that it is not a simple demand-side shock recession, but has large elements of supply-side shock as well. Basically this means that just giving business owners and consumers more moeny via tax breaks won't provide any lasting fix.
False #1 My assumption is not
Olorien — Mon, 02/09/2009 - 15:37False #1 My assumption is not that government is stealing jobs from the private sector but that government assume that they are the only ones that will employ people. Government spending in this manner never is very efficient and thus more costly and much slower than providing funding to business in the form of tax relief. Also Tax releif doesn't come with superfluous spending on social programs and environmental concerns, which while important do no do anything to "stimulate the economy and encourage job growth."
False #2 While taxes are not currently paying for these programs the same prinicples of economics that allow the government to print money for spending also allow ti to print money to cover these said tax breaks. I do understand the process by which fed regulates the flow of money and that said do not need to, or want to expand on that piece of waht you said. But the way the fed regulates the amount of currency in circulation does not mean that the government must spend money in order for the public to put it to use.
I do understand that the currentstate of the economy is complex but that does not mean that our government is reacting to it properly. This recession is very similar to that of the 1930's which was extended by many years by the policies enacted by Roosevelt in his attempts to spur the economy and create jobs. All I am saying is that there are otherways to spur growth like lowering corporate tax rate which is one of if not the highest in the world.
Ah, the good ol' "FDR
garreth — Mon, 02/09/2009 - 17:03Ah, the good ol' "FDR Failed" myth.
More info here: http://digg.com/political_opinion/The_FDR_Failed_Myth
If you want to match
Olorien — Mon, 02/09/2009 - 17:49If you want to match publications I can do that. And I can find one equally biased to the one linked above.
http://www.fff.org/freedom/0498e.asp
But if you want some real info that is
much less politically biasedCheck out Thomas Sowell. He is a member of the Hoover Society.http://www.hoover.org/bios/sowell.html
He is an economist and has written some very enlightening articles on the stimulus, the bailouts that have already past, and a variety of social issues. And not some right or left wing nut job.
Edit: Had to edit this in good taste. Sowell is still Conservative. But I think he is certainly more moderate than the article I have linked above.
Almost forgot, the Government
Dufe — Mon, 02/09/2009 - 16:45Almost forgot, the Government doesn't have to "assume" that they are the only ones that will employ people. The high/rising unemployment rate makes that a given for now. It's partially irrelevant in one sense though, since most of the actual jobs would be for private companies contracted to provide the goods/services/project deliverables and not directly for the government.
And I guess the one thing
Olorien — Mon, 02/09/2009 - 16:59And I guess the one thing that I haven't said outright but should have a long time ago is that it is the government that got us into this mess. More federal government is not the answer.
Self-regulation of the
starstalker — Mon, 02/09/2009 - 17:01Self-regulation of the financial industry is what got us into this mess, or at best has worsened it. Do you think self-regulation is appropriate going forward?
As stated previously,
Dufe — Mon, 02/09/2009 - 16:34As stated previously, government spending DOES CREATE JOBS. Rather than restating it, I'll just refer to my post above.
Also, FAST recovery is NOT the goal here. LASTING recovery is the goal. Rapid changes in the economy, whether "positive" or "negative" do have definitively negative side-effects. Rapid "positive" changes in any form are rarely sustainable, in part due to these side-effects. This is a case where supply and demand need to be kept as close to equilibrium as possible during the implementation of any proposed recovery initiatives, or you risk whichever element is "lower" in the balance simply pulling the "stimulated" element back down - especially if the "stimulated" element is not where the root cause of the problem originated. That said, we do have both supply and demand elements involved in the current recession. Different markets have different profiles with regard to the side in which the problem originated. Offering any economy-wide measures like tax breaks, as a result, will likely not have the appropriate impact for all markets. The markets with stronger demand-side problems, for example, would not witness more than a temporary relief from a corporate tax break.
Further more, there is an underlying assumption that cash flow is the only problem here. Confidence is a HUGE player in this recession. Banks have recieved bail-out funds by the billions, but aren't loaning it out due to a lack of lending confidence. In addition many companies aren't even requesting loans due to a lack of confidence that the returns they generate will outweigh the cost of the debt. This in turn is related to a lack of consumer confidence that is causing many consumers to be more conservative than in years past, meaning that giving them handfuls of money via tax breaks won't have the normally proportionate impact on consumer demand. Investor confidence (stock markets) is obviously down as well, causing further problems in the loanable funds and stock markets. These are all issues that money alone cannot fix, as demonstrated by the widespread lack of confidence in the bail-out and stimulus plans. Think Return of the King - the "armies of middle earth" were nearly defeated by their own fear before the enemy even attacked. So long as this lack of confidence, or "fear," that we are experiencing as a society continues, no amount of money spent in any area will be successful in getting us back on our feet. So long as the media and the generally economically ignorant populace continue to propogate the belief that the stimulus plan will fail, the predilection is that such belief will become a self-fulfilling economic doom.
And my point is not that no
Olorien — Mon, 02/09/2009 - 16:56And my point is not that no jobs will be created. I am not claiming that, what I am claiming is that there are better ways, than this Bill, to encourage job growth, and that the lasting recovery you are talking about will not be acheived through this Bill. The goals and reasoning for the bill stated by the government is FAST RECOVERY and IMMEDIATE JOBS. This bill is being sold as necessary because of its immediate impact on the economy.
But even if we skip over that point the consumer confidence issue you are talking about is not there either. It is not inspiring consumers that everything will be okay, and banks to lend, and businesses to attempt to borrow. it is inspiring thoughts of hugely increased inflation.
But I will go even farther and say that I and the rest of the economic ignorant see with this bill, is not the idea of attempting to stimulate the economy it is that everyone is using this "Essential piece of legislation" to push through a large amount of unnecessary spending. It is like trying to do you food shopping at a restaurant. Will you end up with food sure, will you overspend on it most definitely. Spending just to spend is not going to encourage any beleif in the system.
I guess I forgot to include
Dufe — Mon, 02/09/2009 - 17:50I guess I forgot to include an issue of translation here. "FAST and IMMEDIATE" mean something different to economists than to the lay public. When such references are made in this bill, the implication is this: "Here are the first things that need to be done, as quickly as we can." Much of the impact of this bill would not be seen immediately, no matter who you hear it from. Will this bill fix everything or make us all happy tomorrow or next month or even next quarter? No. Of course not. Such an expectation is in the realm of lunacy.
So why do they use these words? Simple: they want to inspire confidence. Would such confidence be unfounded? No. This bill would absolutely have a positive impact on the economy and said impact would be more effective, dollar for dollar, than a tax break. But I don't think the problem people have with this bill has do so with whether or not it's going to have a positive or negative impact. The problem people have is that they don't understand how it will work and they don't understand that this is only the first of many bills that will be needed for the ultimate solution. Most of the others will be more about regulation changes than spending. Since people can't understand how it works or see that it's only one part of a larger plan, they simply assume it won't work or assume that their own idea must be better since it makes more sense to them according to their own limited knowledge. This doubt or pessimism based upon limited knowledge and understanding will keep many people from gaining said confidence.
The money supply controls of the FED will deflect most of the inflationary impacts this bill would otherwise have. No tax increases are needed now. These are the two concerns I hear every time this bill comes up. Yes there are negative impacts in the form of future taxes and possibly in the form of the value of the Dollar abroad, but those complaining don't know that that's where the real payment lies because they don't have a full knowledgte of how the system works. Should this keep us from spending this money? No. We put money into depreciating assets all the time. Think of all the money spent buying and maintaining cars even as they lose value. To claim that this is spending "just to spend" is nonsense. It isn't "just to spend" it's to stimulate supply and demand as appropriate in certain areas of the economy in order to put us on the road to recovery. It is the proliferation of this erroneous belief that spending this money serves no purpose other than to spend that erodes confidence.
This bill is essential for recovery as much as land is essential for farming, but those unable to see how will hamper it's success with their unfounded doubts. Are there real doubts? Of course. There are flaws in this bill. That is expected. We can either push through a generally good measure for recovery and get moving, or we can wait 100+ years for the first peice of perfect legislation in the history of mankind to be passed after several million revisions. Some amount of imperfection and uncertainty is just a fact of life. I would urge you to follow with economics the wise council once uttered by a wise, wise man: "I can get a good look at a T-bone by sticking my head up a bull's ass, but I'd rather take a butcher's word for it."
Wow!
Popplegem — Tue, 02/10/2009 - 20:42Wow! I wanted to stimulate some conversation, and this is great! Dufe, props man for bringing in this great explanation. I'm with Garreth one hundred percent - if you had been in my econ class, I wouldn't have had to take it twice!!!
I can't put an opinion into this like Dufe can, or like Olo - all I can do is analyze what I got. And, though I don't remember who said it - no, I do not have the most up to date copy - that's over 700 pages, and hasn't passed the Senate as of this writing. I'm using the version that passed the House already.
And I really wish that "fast and immediate" meant the same to economists as it does the public - I really want to buy that big screen TV!!!
Fast and Immediate
Dragon — Wed, 02/11/2009 - 06:32The problem with the "Fast and Immediate" to economists as opposed to the general public is that it is often detrimental anyway for the economy whether or not it is a good or bad "FnI"
If its a bad version we get what hapened last September, where we literally saw a crash in about a week of pretty much everything.
If its a "good" version then the money hits the system to fast and we end up with a rapid skyrocket in Inflation above and beyond what the Fed. can handle.
If this plan works the way Obama and his Economic team envision it will, we are aiming for between 3-4 million jobs created by the startish of 2010, so that is about where I'd peg a "fast and immediate" response in this case.
Even in the Great Depression when FDR had all his ABC Bill's paid for job creation it took about a year and a half to begin to see those effects being felt.
This is also not to say that jobs won't be created immediately with this, they are trying to fund as many "Shovel Ready" (They just need the money to get it going) programs in states passed. So depending on the exact program and how exactly the weather is in your area (Asphault needs something in the temperature of 80-90 degrees with no humidity in order to dry and harden for example) depends on just how quickly these things could get underway.
Ok Ok Zifter I bit
Dragon — Mon, 02/09/2009 - 16:15"This recession is very similar to that of the 1930's which was extended by many years by the policies enacted by Roosevelt in his attempts to spur the economy and create jobs"
Fact #1: When Roosevelt took office in 1933 Unemployment was at 24.9%
Fact #2: By the time 1940 Hit unemployment had fallen to 14.6% Unemployment.
So I'm failing to see how his policies extended the many years to spur the economy and create jobs. Now part of this may be because I do actually believe in Keynesian Economics versus Adam Smith's La'Saise Faire Economics or Regan's Supply Side Economics.
By the very facts given, Roosevelt did in fact create more jobs in the economy before World War 2 finished things off.
Now if you are talking about the 1937 Recession, that is something completely different, however even with that he managed to preside over 10% drop in unemployment rate over 7 years.
And for anyone who thinks that the economy will be all ok in the next year is unfortunately also greatly mistaken. I think we are at least looking at 4 years before things will be fully back on track.
Zifter, you propose lowering
starstalker — Mon, 02/09/2009 - 16:04Zifter, you propose lowering the corporate tax rate, as well as the personal tax rate, to solve the recession? We just finished 8+ years of heavy tax breaks. If it has not helped the economy up to this point, how will lowering tax rates help us out of this one? I'm not advocation raising them, I just fail to see how lowering the taxes further will help the economy, other than pressuring states that are already having budget trouble.
You really can't cut one as well as the other without also cutting the underlying services that the government (both state and federal) performs.
You note that the coporate tax is currently one of the highest, but you have to understand that many, many companies do not pay all the tax, if they pay it at all. Some studies put the numbers at 72% of foreign companies, and 42% of US companies, that have avoided paying income tax on profits they earned. Before the tax code is messed with furhter, I'd rather see those taxes collected, then see what we have from there.
As I said Star, I propose
Olorien — Mon, 02/09/2009 - 16:36As I said Star, I propose maintaining currentlvls of service the same way they are paying for the stimulus package. I am not advocating cutting funding I am advocating not raising it. And the 8+ years of tax breaks did casue the current economic crisis.
As too the corporate tax rate, I realize their are tax breaks and loop holes but this is just further proof that we have an overconvoluted tax code. There are many corporations that are small businesses that would benefit greatly from a cut in the corporate tax code.
Dufe, I really wish I had you
garreth — Mon, 02/09/2009 - 15:27Dufe, I really wish I had you around during my econ classes. That answer right there was no doubt a final project this semester for hundreds of business students ;)
I'm bummed to not see any
Sabre — Mon, 02/09/2009 - 02:02I'm bummed to not see any work on high speed railroads to connect major cities, much like in europe, japan, and china.
And i agree about using some science money to put more monitoring stations in areas we don't already have them. Although this is only effective if we can keep monitoring over time to build up a good dataset.
It might also be a good idea to start restructuring cities to be more about people than about cars. making it easier to walk, bike or use public transportation to commute to work, shopping, play, etc. Perhaps that could create jobs and reduce our dependence on oil. Also i would imagine if people weren't trapped in their metal cages they would interact more, which could build better communities. Much like a university has many people walking, biking or riding the bus to a central location, and some people living on site in the dorms. Living in the dorms sucked for me but when i moved out i was always within a mile of campus, the place where i worked, studied, excercised, etc. Now where i live i am able to bike to work, walk to the grocery, bars, beach and a park where i play soccer. I don't need a car, which is great, but i have one anyway to get around the island with my 20ft long outrigger canoe. The traffic can be bad here, but that is only because everything is uneccessarily spread out.
okay, this was more of a rant or poorly structured and worded sample of my thoughts.
To save myself and everyone
Dufe — Sun, 02/08/2009 - 18:10To save myself and everyone else from the multi-page dissertation I would normally write in response to something like this, I will simply offer the following short version:
The government spending money will (almost) always make jobs. First, people have to be hired by the government to plan, implement, and oversee whatever the money is being spent on. Second, whoever is hired or contracted to do the work will have to hire people to assist in doing the same. Third, any tangibles involved have to be made by someone somewhere, and generally federal bills such as this require that said tangibles (or a high percentage of them) be produced in the US. Also keep in mind that the jobs created aren't necessarily intened to be permanent, they are only intended to be a crutch to help bolster demand in some areas and supply in others. Think of it as an economic defibrilator - leave it on continuously and it would just become an electric chair.
Government JObs
Popplegem — Mon, 02/09/2009 - 09:00My problem with the government creating jobs is that they will pull industry away from other people. John Lott on Foxnews has a good point - if you create alternative energy jobs in Cali, you pull away from all the jobs in the coal states in the east. There will be more unemployment in the long run.
His article is located: http://www.foxnews.com/story/0,2933,487425,00.html
False: DOE has already
Dufe — Mon, 02/09/2009 - 14:12False: DOE has already released a large report in which they outline a massive energy shortage in the coming decades. Adding to our generation capacity in one location, in this case, is only allowing supply to keep better pace with ever-growing demand.
oh hai dufe
Dragon — Mon, 02/09/2009 - 14:16oh hai dufe
Ideally though we will be
Dragon — Mon, 02/09/2009 - 09:10Ideally though we will be making "Green" jobs in all 50 states eventually, so those former people working on coal who go out west to work in California on new jobs. They will in turn be able to move back east with more experience to get higher paying jobs.
I mean the argument is like saying that by promoting mass transit and changing to it we will be crippling our domestic car front. However just in my area alone by changing to an Effective Reliable mass transit system over Automobiles will lead to a net INCREASE in 50,000 jobs.
lobbies
moriella — Sat, 02/07/2009 - 14:24The American Israeli Lobby that encourages the BILLIONS of dollars we send to Israel each year ... well, I'll just say I'm against subsidizing a country so heavily that has wealth of it's own.
Cessation of this practice would do much to raise the way we are viewed by other countries in the area.
after reading your overview
Grasen — Fri, 02/06/2009 - 19:16after reading your overview of this section it says to me we are throwing alot of money around to create jobs but are only creating a fraction of the jobs we say we are creatin,
hum, kinda shitty if you ask me. Now if we had Downfall running the country, Iraq, North Korea and Iran would be on farm status and therefore we would spend less on consumables and thus have a good economy selling the BOE;s to India, Isrial and Kuwait.
Forgot that Weed be legal in
Caronte22 — Sat, 02/07/2009 - 18:42Forgot that Weed be legal in this country Grasen and we be number 1 in weed sales :P. Also grasen would use his skills to grow a crop :P
I don't intend to get mired
Shihli — Fri, 02/06/2009 - 20:03I don't intend to get mired in political debate, but please don't assume that all of us in the guild have any desire to decimate other countries, or sanction the activities in Israel in any way.
change country names as you
Grasen — Thu, 02/12/2009 - 11:19change country names as you see fit, it was ment as ammusement.