CBO: Effects of the Stimulus Spending Are Now ‘Diminishing’

It is fascinating how Compton here misleads her readers into thinking that the ARRA was 100% spending – even using the phrase “$814 Billion spent into the economy 2009-2019.”
The FCM seems intent on hiding the fact that it contained the largest two year tax cut in history.
People reading or hearing ABC news can’t be blamed for their ignorance when they write stupid things like “what Obama tax cuts?” and other nonsense.
I wonder if ABC slants the news this way because they just don’t report anything that doesn’t fit their narrative (in this case, that Democrats don’t cut taxes), or they are trying to hide the fact that tax cuts are really the worst type of economic stimulus.

Effects of the Stimulus Spending Are Now ‘Diminishing’?….what effects?

Dave 3:44- Exactly. Well said.

Dave | Nov 24, 2010 3:44:48 PM
….”they assume that taxpayer money is THEIR money”…….So true. For at least the last 40 years, the government has spent over 100% of the tax revenue.

“The FCM seems intent on hiding the fact that it contained the largest two year tax cut in history.”
Sorry, Flash, you’re wrong again.
What was enacted was not a “tax cut” but simply a temporary adjustment to tax tables for those who pay taxes and a credit for those who don’t.
A “tax cut” would apply only to those who pay taxes, no? This was simply more re-distribution of wealth…Obamanomics if you will…
Posted by: tjp612 | Nov 24, 2010 5:09:50 PM
Well said, tjp612. I’ve been trying to get the people I know to realize that for a while now. Giving people ‘credits’ when they do not pay taxes to begin with is just simply ignorant.
It’s like sitting at the poker table and not putting money into the kitty, but getting paid to you if you simply win the hand. I, for one, am getting tired of paying for those who do not put money in the kitty. Redistribution of wealth will eventually bring us all down. Obama knows it, Pelosi knows it, Reid knows it… and sadly, now WE (the taxpayers) are forced to know it.
One more thing someone might be able to answer for me-does anyone know the ratio of jobs “created/saved” within the Labor Union (including government jobs) compared to others?

“Redistribution of wealth will eventually bring us all down”
Do you mean redistribution in all cases or just redistributing wealth to those who have little of it? -because you are right: redistributing wealth to the people who already have the most of it like the Republicans were doing when they had majorities did indeed have dire consequences for the economy and the middle class in particular.

“I, for one, am getting tired of paying for those who do not put money in the kitty”
I think it’s pretty funny when right-wingers get so indignant about not being able to squeeze any more wealth out of people who don’t really have very much to begin with yet totally ignore environmental externalities, free-riders and loopholes which cost all us dearly and elect politicians who try to set government policy to funnel wealth and power to those who already have plenty of both. Poor people are ultimately responsible for everything that goes wrong don’t you know.

“In fact, didn’t he cut taxes for these “lower earners” more (on a percentage basis)”
“on a percentage basis” is statistical cosmetics for giving a relatively big cut of very little.

This president fathered the most profitable quarter for business EVER!
Get It?
No credible source agrees the stimulus didn’t work. The estimation of jobs saved are in the millions. Get IT?
Ford lobbied for the GMC and Chrysler bailouts to go through in order to save the industry from losing the supplier jobs. GET IT?
We pay 50% more for health insurance than any other modern country. GET IT?
The GOP stood united against all of these. They point out that the top 5% pay 45% of all taxes. They don’t tell you that that 5% earns over 70% of all income. (No kidding) Over the last 10 years, 80% of all increased wages went to the top 1%.
We are idiots for ever letting the GOP control anything. We will regret not getting behind this exceptional and brilliant President.
Anyone making less that $250,000.00 is only being a pawn for additional wealth for the rich in supporting CONservatives.

June 7, 2010:
“This morning on MSNBC, former Rep. Joe Scarborough (R-FL) pressed prominent Keynesian economist and director of the Earth Institute at Columbia University Jeffrey Sachs on whether it was too early to declare President Obama’s stimulus a failure. Scarborough had to ask the question twice, but Sachs finally relented: ‘It did fail.’
“For objective observers the failure of President Obama’s $862 billion stimulus has become increasingly difficult to deny.”

July 15, 2010:
“So what does the actual objective real world data show? When the President first began selling his stimulus plan to the American people in November 2008, he promised it would create 2.5 million jobs. But as employment fell at the end of 2008, President-elect Obama increased his employment promise by one million to 3.5 millions jobs created. At the time, employment stood at about 135.1 million. Using these two data points, one can objectively establish the Obama jobs target for December 2010 at 138.6 million. Fast forward to July 2010 and the latest jobs report shows total U.S. employment at almost 130.5 million. This means President Obama’s stimulus has failed to meet its own standard for success by 7.4 million jobs.
“Why has the President’s $862 billion stimulus failed by 7.4 million jobs? Because government spending does not stimulate economic growth. All it does is move resources away from one sector of the economy to another. And government has a horrible track record at efficiently allocating resources. All that really happens is that, on net, jobs get destroyed in the transfer process.”

“the Bush tax cuts created very few jobs…”
With the Bush tax rates in effect, the unemployment rate was low and GDP growth was very healthy, until the housing bubble burst. Mi have not seen a single person contend that either the the bubble or its bursting had anything whatsoever to do with the marginal tax rates.
The government does not and cannot create jobs. It can, primarily by forbearance, preserve the conditions under which diligent, creative and entrepreneurial citizens can contribute to economic growth and prosperity from which all benefit.
Tell us, Skip: if the stimulus worked, what did it stimulate you to do? Have you hired anyone lately? If you hire someone tomorrow, what will be the tax rate applied to the benefits he brings to your enterprise?

I never said the stimulus “worked”. Nobody is hiring because there is still low demand. Government spending is generally believed, outside of right-wing economic circles apparently, to increase demand. If demand is still too low a reasonable hypothesis, outside of right-wing circles again, is that the stimulus was too small to raise aggregate demand sufficiently to spur job creation. As you pointed out yourself it cannot be definitively proven either way, without controlled experiments which would be highly impractical to say the least, we can only rely on expert opinion to render a judgment.

“The country will need another stimulus package soon. But the next one should be given to those who need it most.”
Sure. That oughta work. Of course it doesn’t matter that ther is no money to be “given”–we can always borrow it from the Chinese, right?
And who will pay the Chinese back, and how?

Just keep the presses going and print more notes. Then give it out as a stimulus.

Fascist Hyena brings up a useful point:
“Is it windmills? Solar panels? Electric automobiles? Organic vegetables?
If the demand for such items is so low that no one can feed his family by providing them, should we bribe people to buy them by subsidizing their production with money taken from people who provide things that people are actually willing to pay for?
If so, why?”
We the public have been subsidizing the internal combustion automobile for a century by externalizing the costs; every road the government builds, all of the billions in tax breaks for the oil industry, and all of the effects of the pollution are paid for by the public, while all of the profits are sucked out of the system by private profiteers on Wall Street who pay little if any taxes back.
Not to mention all of the costs of the electricity we use, whose true costs are externalized as well, whether it be the cost of the pollution, the tax breaks for coal and nuclear, and most absurdly, the insurance and risk costs the public bears for the nuclear industry.
Why should be bribe consumers to buy these products indeed?

Top reason why unemployment is still incredibly high—insecurity.
Government spending does not create long term financial security. Governmnet taking over banks, and car companies even temporarily scare the living daylights out of businesses and business investors are already wary of Chavez style take-overs.
You have to pass the bill to find out whats in the bill—how do you expect any business owner or private citizen not to hog whatever capital they have when congress passes secretive, penalizing legislation such as obamacare? We dont know what to expect, businesses dont know what to expect-its an act of self preservation to put away when you expect hard times coming at you.
Other countries once thought secure are failing. The unsure foreign markets, riots over “entitlements”, talk of raising the age for ss, the bashing the economy has taken for the last 8 years by Dems and Pubs alike leaves a frightened employer. There is no recovery. The new employment numbers only reflect those unemployed people who now are dropped from the system because their benefits ran out. They are not employed by those “terrible capitalist employers” the left seems to bash so often. What can those unemployed people now buy, who are they going to employ? No one. Had the stimulus been used properly in the first place, instead of going to special interest groups, we could now be looking to better times, instead we are looking at failure of govt and the only people having to pay for that is the middle class.

On the subject of “private profiteers,” pause a moment, look around you. Look at your furniture, your clothing, your food, everything in your house. How many objects can you spot that were not made by private profiteers? It is a good bet that everything you own and enjoy was grown or made by someone seeking to make a profit. If that fact makes you unhappy, try to console yourself by reflecting on how much you enjoy having those things for yourself and your family.

“…resentment toward working class people and away from the tax evaders at the top. Everybody pays taxes. Tax rates on working people who don’t make enough to pay income tax are still onerous, higher than the tax rates on people who make most of their income in capital gains.”
Even after their alleged “evasions,” the top 10% of earners pay 70% of the federal income tax.
Everybody pays taxes, but 47% pay no federal income tax.
There is no tax levied on those who pay no income tax that is as high as the capital gains rate. In any case, there is a reason to tax capital gains at a lower rate: those who make them take the risk of a capital loss, and without such risk-taking the economy stagnates.
One of the reasons for the colossal failure of Obamanomics is the uncertainty faced by the risk-taking venture capitalists. As of November 25 they do not know the rate at which they will be taxed should their risk pay off. So they sit on the sidelines, and the working people who depend on them remain without jobs.
One of the unsung benefits of being wealthy is listening to the dulcet tunes sung by the freeloaders and parasites. Their whining and complaining is very sweet music indeed.

The major effect of the so-called “Stimulus” was to terrify people with the massive expansion of federal debt. That fear caused investors to hunker down, and the costs of the capital strike far exceeded any benefits of “Stimulus”. It was far more properly called “Porkulus”, because the majority of the spending wasn’t “stimulating” to the economy in any meaningful way, or in a useful time frame. Democrats larded the thing up with every liberal wet dream spending program and earmark they couldn’t get away with for the last ten years, as Rahmbo recommended. Pelosi, Reid, and the rest of the Obama team didn’t let the crisis pass without exploiting it to do things they could never have done otherwise.
A REAL stimulus package might have done far more to help the economy, but we will never know.

young voter, Governor Palin has definitely NOT weakened America, she may be one of the few who can save her.
This assault on the economy is brought to you by President Obama and Company…

“Even after their alleged “evasions,” the top 10% of earners pay 70% of the federal income tax.”
The top ten percent happen to own 83% of the financial wealth of the country, so your figures would indicate that they are not paying their fair share.
Their average income tax rate is between 18 and 19%.
For working people, close to 100% of their income is taxed for sales tax, since they spend about 100% of their income. Count in property taxes, and payroll taxes, and they do indeed pay a higher rate than the rich.

The typical worker pays an effective 15.3% payroll tax rate.
The 250k/yr lawyer pays about 5% effective payroll tax rate.
The $1m/yr banker pays about 1.2% effective payroll tax rate.
Many, many families pay more payroll than income taxes. Also, keep in perspective that the inequality also falls on the spending side:
The relative size of things like unemployment insurance, “welfare”, food stamps, and other direct assistance to the poor is paltry, when compared to the huge subsidies given to things like highway maintenance, home mortgage and tax subsidies, investment subsidies, and the like.
That doesn’t even count the gorilla in the room, “defense” spending, which theoretically benefits us all, but for practical purposes only benefits defense contractors and defense industry investors.

“For working people, close to 100% of their income is taxed for sales tax, since they spend about 100% of their income.”
That depends on the sales tax rate, which depends on where they live. If they are unfortunate enough to live in Democrat strongholds like New York and California, the sales tax is relatively higher for them.
“Count in property taxes, and payroll taxes, and they do indeed pay a higher rate than the rich.”
Property taxes are determined by the value of the property, and is zero for those who don’t own any. As for FDR’s favorite, the payroll tax, although it is forcibly taken by the government, it is taken for the benefit of the worker, and is repaid to him in his retirement. Or at least that’s the way the Democrats who enacted the program explained it. If it is unfair they shouldn’t have done it.

Typical fascist propaganda, trying to hide behind men and women in uniform, as if they were the ones making the policy.
Shame on you.

Exhibit1: (this person actually believes that 815 billion was spent – you can’t really blame him, based on the sloppy reporting though)
What happen to our economy since the WH economy committee chairwoman said the jobless rate will stay below 8% after the stimulus spending ? What major infrastructure has achieved after spending 815 billion dollars ?
Posted by: austin | Nov 25, 2010 6:13:35 PM

Economists define wealth in terms of marketable assets, such as real estate, stocks, and bonds, leaving aside consumer durables like cars and household items because they are not as readily converted into cash and are more valuable to their owners for use purposes than they are for resale.
Financial wealth is “non-home wealth” — which is defined as net worth minus net equity in owner-occupied housing.
“Financial wealth is a more ‘liquid’ concept than marketable wealth, since one’s home is difficult to convert into cash in the short term. It thus reflects the resources that may be immediately available for consumption or various forms of investments.”

I concede the argument that income for income tax purposes is not the same as income from wealth, but thats really the point. There are some people in the top income brackets, therefore, who are not “wealthy” in this sense, but the point remains that the wealthy as a whole do not pay their fair share.

“It is not true that people without property do not pay property taxes; they are collected from every renter through rents.”
Economic illiteracy. The landlord sets the rent he charges at the highest the market will bear, as well he should. If his property tax went to zero tomorrow, the rent he charges would not change unless competition required it. The landlord pays property tax ; the renter does not.

“Typical fascist propaganda, trying to hide behind men and women in uniform, as if they were the ones making the policy.”
Ever hear of the Joint Chiefs of Staff? Are you suggesting they do not make policy? And if the civilians who approve or disapprove their policies agreed with your nonsense, they would abolish the armed forces tomorrow. Unless, of course, Barack Obama is a captive of the defense contractors.
Having worn the uniform proudly, I would hardly “hide behind” them, even if I could (and even if I knew what that meant).

Flash: “You are arguing that the burden of public services should be borne by those least able to afford it.”
Am I? Do tell…
Otherwise, your comments regarding tax rates paid in Massachusetts seem nonsensical…
Back to my point/suggestion: If those who whine about not getting their “fair share” would spend more time applying themselves they would find their lot in life would improve.
You will not be able to convince me otherwise. My wife’s grandfather was killed by N. Koreans during the Korean war when my father-in-law was a teenager. He and his brothers provided for his sisters and mother. He and two of his brothers emigrated to the U.S. in the 70s and earned PhDs (including one with PhD in Engineering from MIT). Another brother owns two businesses in the U.S. Had they spent their time worrying about what the “rich” were not paying, they instead applied their time and talents towards becoming “rich”.
But yet, we have some American citizens who can trace their roots in America back 100+ years who claim they have not received “equal opportunity” to become wealthy. It’s quite sad that they have relegated themselves to toil on the Government .

Hope to the end of the economy to recover. In this continues, we all lost their jobs. Had to rely on government relief. buy runes of magic

Posted by: tjp612 | Nov 25, 2010 7:39:47 PM
+10

Real men don’t complain.

All in the interest of “fairness” of course…After all, per The-We’ve-Been-Waiting-For: “I do think at some point you’ve made enough money” and “I think when you spread the wealth around, it’s good for everybody” and let us not forget “Well, Charlie, what I’ve said is I would look at raising the capital gains tax for purposes of fairness”.

A corollary of Hauser’s law:
“The target of the Obama tax hike is the top 2% of taxpayers, but the burden of the tax is likely to fall on the remaining 98%. The top 2% of income earners do not live in a vacuum. Our economy and society are interwoven. Employees and employers, providers and users, consumers and savers and investors are all interdependent. The wealthy have the highest propensity to save and invest. The wealthy also run the lion’s share of small businesses. Most small business owners pay taxes at the personal income tax rate. Small businesses have created two-thirds of all new jobs during the past four decades and virtually all of the net new jobs from the early 1980s through the end of 2007, the beginning of the past recession.
“In other words, the Obama tax increases are targeted at those who are largely responsible for capital formation. Capital formation is the life blood for job creation. As jobs are created, more people pay income, Social Security and Medicare taxes.”
Fools ignore these truths, and fools populate the Obama administration from top to bottom.

“Your argument that those who have wealth have it because they are good…”
They do not have it because they are good. As with people at every level of wealth and income, some are good and some are bad.
But the ones who have wealth have it because they provide goods and services that others want and are willing to pay for. And around such people we will always find the parasites and freeloaders who fell they should get a share of it all simply because they put their hand out. Sorry, Flash–not happening here.

Bank of America taxes (-1.9billion) on 4.4 billion pretax income.
General Electric (-1.1 billion) on 10.3 billion pre-tax income. In 2008 its effective tax rate was 5.3%; in 2007 it was 15%. The marginal U.S. corporate rate is 35%.
Ford Motors, 69million taxes on 3billion pretax income (2.3% effective tax rate)
Verizon did pay an effective rate of about 10%
IBM paid about 25%, but over half of that was overseas
Citibank has racked up about 17 billion in credits, and won’t be paying taxes anytime soon.
Chevron paid about 19 billion taxes, only 200million in the US
I think that we can all agree that the US over reliance on income and payroll taxes to balance the budget is a bad idea. The US is supposed to have one of the highest corporate taxes in the world, but when you look at what is actually paid, not so much.

I think we can all agree that n korea is responsible for the shelling and ongoing brinkmanship….at least we could if Flash would walk back his claim that the s koreans military exercises were responsible.

“I don’t see Flash arguing that the wealthy are overcompensated for their business activities.”
Barry has repeatedly made those arguments as pointed out by tjp612 | Nov 26, 2010 10:59:08 AM

“The US is supposed to have one of the highest corporate taxes in the world, but when you look at what is actually paid, not so much.”
Citing a few examples does not alter the fact that the rate is extraordinarily high relative to the rest of the world.
Taxing the income of corporations is inherently unfair anyway, inasmuch as it is double taxation. That portion of the company’s after-tax revenue that is distributed to the shareholders is taxed a second time. All terribly inefficient, and contributing to unemployment.
But it pleases the left, even as it creates more parasitic dependents.

I will concede in the interests of the truth, that the nominal corporate tax rate IS one of the highest, but that doesn’t alter the fact that the ACTUAL tax rate isn’t.

Foghorn, that claim came from the public statements of the SOUTH Koreans, don’t take my word for it.
Posted by: Flash Override
That’s beyond absurd.
“On state television and in editorial pages, several Chinese commentators appeared to endorse the North Korean viewpoint that Pyongyang’s bombardment had been prompted by South Korean military exercises that sent fire toward North Korea.” – latimes

As I reflect upon this Thanksgiving and the state of our nation I want to borrow just a few words from an excellent essay by Sophie Kerr on the subject. “ . . . the first Americans who had a Thanksgiving were people of great and illuminating character. They were not high-rolling adventurers hunting gold and gems. No, they were hunting freedom of spirit and belief for themselves and their descendants, and they were willing to work and sacrifice to get it. On that memorable feast day they sat down to eat with no great assurance that there’d be any food before them on the morrow. But they were free, and freedom is a magic sauce for the poorest dish. It is relish and sustenance for the soul. Brewsters, Bradfords, Carvers, Winslows, Cushmans, Allertons, John Alden the carpenter, Miles Standish the captain, what a dauntless company! All of us have inherited some of their passion for freedom. For this we can give thanks on this holiday which they unknowingly bequeathed to us.”
They endured such hardships to achieve freedom, they asked no nanny-state for assistance indeed they were escaping oppressive rule. Yet today many turn to the state hoping that it will somehow redistribute the wealth of others to satisfy their selfish needs. Little do they realize that much like the “how to catch wild pigs” essay they are losing freedom with each bailout and someday, as with the pigs, the final section of fence will be erected and the gate slammed closed and freedom will be lost forever.

The North Koreans and the South Koreans both say that the incident began when the South Koreans held military exercises in disputed waters which included firing of artillery.
It doesn’t excuse the fact that North Korea responded with an artillery attack of its own, but it is a fact.
Just because facts don’t fit into your worldview doesn’t mean they aren’t true.

Flash — that’s because corporations shuffle money around to try to avoid paying taxes, wasting valuable time and resources in the process.

The fact that North Korea’s response to an exercise in which no lives were endangered is to target civilians with artillery shells fits precisely into my world view. In that view, North Korea is a uniquely repressive, murderous and dangerous nation, presided over by evident madmen.

Fascist, I do appreciate your honesty, however. Making the argument it is accespable to provoke someone as an excuse for war is not so bad as trying to lie about it and say that he wasn’t provoked.

“The president is outraged by this action,” Burton said. “We stand shoulder to shoulder with South Korea….North Korea has a pattern of doing things that are provocative. This is a part of that pattern.”
…
Of significance in the White House statement is the use of the word “attack” to describe North Korea’s action — an indication the US is standing firmly with South Korea and is asserting the action was a violation of the 1953 armistice.
-Jake Tapper

“The skirmish began when Pyongyang warned the South to halt military drills in the area, according to South Korean officials. When Seoul refused and began firing artillery into disputed waters, albeit away from the North Korean shore, the North retaliated by bombarding the small island of Yeonpyeong,”
beyond absurd, indeed
Posted by: Flash Override | Nov 27, 2010 7:07:37 AM
It would be best to eliminate all males and their killing toys on the planet . ..

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