Later On

A blog written for those whose interests more or less match mine.

Posts Tagged ‘stimulus package

Stimulus will fail?

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It has been pointed out that, as the nation strives to understand what’s necessary to right the economy, TV talk shows in general are avoiding having any expert voices—economists—to explain the situation to us. They much prefer to have the situation discussed by the anchor and a beat reporter, neither of whom understands an iota of economics. Paul Krugman has been on a talk show a couple of times, but you would expect, in a situation this dire and costing this much money, that the talk shows would be filled with economists. Not so. I haven’t blogged much on this because I don’t watch TV. (Some of the reasons are found in this very paragraph.)

Kevin Hall of McClatchy Newspapers has a good article on the stimulus:

The compromise economic stimulus plan agreed to by negotiators from the House of Representatives and the Senate is short on incentives to get consumers spending again and long on social goals that won’t stimulate economic activity, according to a range of respected economists.

"I think (doing) nothing would have been better," said Ed Yardeni, an investment analyst who’s usually an optimist, in an interview with McClatchy. He argued that the plan fails to provide the right incentives to spur spending.

"It’s unfocused. That is my problem. It is a lot of money for a lot of nickel-and- dime programs. I would have rather had a lot of money for (promoting purchase of) housing and autos . . . . Most of this plan is really, I think, aimed at stabilizing the situation and helping people get through the recession, rather than getting us out of the recession. They are actually providing less short-term stimulus by cutting back, from what I understand, some of the tax credits."

House and Senate negotiators this week narrowed the differences between their competing stimulus plans. In so doing, they scrapped a large tax credit for buying automobiles that would’ve caused positive ripple effects across the manufacturing sector. They settled instead on letting purchasers of new vehicles deduct from their federal taxes the state and local sales taxes on the cars they bought.

The exception to this is for buyers of plug-in hybrids, cars that run off a battery that can be charged at home or in the office. Buyers of these vehicles, available in very limited supply, could get a tax credit of up to $9,100.

A Republican-backed proposal that would’ve provided a $15,000 tax credit to first-time homebuyers …

Continue reading. And see this graph from the article:

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Written by Leisureguy

13 February 2009 at 10:17 am

Obama faces scrutiny

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Via Brad DeLong, an excellent short piece in Financial Times by Edward Luce:

Barack Obama faces an unexpectedly early test on Tuesday of whether he can govern as a bipartisan president when he meets Republican lawmakers to try to roll back the growing tide of conservative hostility to his $850bn stimulus plan.

Republican leaders have become increasingly strident in their opposition to the plan, which they claim is stuffed with spending on Democratic special interests and contains little in the way of genuine stimulus. Mr Obama has portrayed the vote, which is expected to take place in the House of Representatives as early as this week, as a critical test of whether he can govern from the centre.

Unless he comes up with a new incentive for Republicans to change their position, Mr Obama’s bipartisan aspirations could go up in smoke before he has completed a week in office.

“It looks like the Republicans have decided to take on Obama sooner rather than later,” says Doug Schoen, a leading Democratic pollster.

“It is a low-risk strategy. If the stimulus fails, Republicans can claim they were right all along. If it works, then they were fulfilling their role as the loyal opposition.”

Nevertheless, observers are taken aback by the harsh tone of Republican opposition to the bill at this early stage in Mr Obama’s presidency – particularly given his willingness to make compromises over its content. At the risk of alienating the liberal wing of the Democratic party, Mr Obama conceded $275bn (€208bn, £187bn) in tax cuts even before he was sworn in.

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Written by Leisureguy

7 February 2009 at 11:48 am

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